Fake chit fund in police net
Amidst various micro-level chit funds operating amok in Guwahati, a city-based chit fund cooperative society running deposit-collection scheme and which allegedly cheated people off about Rs 10 crores has fallen into the police net.
The office of Subhasakti Thrift Credit Co-Operative Society Limited at Odalbakra was sealed on January 23 while four persons -- Chandra Das (39), Paritosh Mandal (52), Paresh Basak (42) and Prakash Saha (48) – were arrested.
Of the four arrested, Mandal, Saha and Basak were taken to Dispur police station on the evening of January 20. Das surrendered on Sunday morning.
Police said that Das of Odalbakra was the founder and secretary of the society while Mandal of Odalbakra was the chairman. Basak of Lal Ganesh and Saha of Barpeta Road were members of the board of directors.
They were arrested under Sections 420 (cheating and dishonesty), 406 (criminal breach of trust), 34 (acts done by several persons in furtherance of common intention) of IPC and Section 5 of Prize Chits and Money Circulation Schemes (Banning) Act (penalty for other offences in connection with prize chits or money circulation schemes). They were presented before the Kamrup (Metro) Chief Judicial Magistrate on January 22 and were sent to five days’ police custody.
The four were arrested after a complaint signed by 48 clients of the society was filed in Dispur police station after they stopped receiving returns on their investments and the collection agents could not be reached on phone.
“Based on the address on the clients’ passbooks, police raided the society’s head office on the second floor of Bandana Bhawan on Odalbakra Main Road and sealed it. Police also seized three computers, hundreds of pass books, cheque books and other investment papers which have been sent to the Bureau of Investigation (Economic Offences) for further analysis,” police said.
Police sources said that the raid revealed that the society was currently handling more than 300 accounts and have, over a 13 year time span till the time that account details were available in the office, have duped more than 5,000 investors in and around the city. (See modus operandi in box)
Das is learnt to have confessed to the police that the society was running at loss and had a cash deficit of Rs 10 crores.
“He said that the board of directors of the society consisted of 15 more members who have gone into hiding after the police raids. He also alleged that he doesn’t have a penny of the money with him, but we don’t believe that. On receiving the court’s order, we will raid his house. Meanwhile, police is in search of the other board members who, according to Das, have fled with all the investors’ money,” the police said.
Though Das claims that the amount of money misappropriated is somewhere around Rs 10 crores, according to the clients’ claims, it is somewhere near Rs 26 crores.
The society was registered as a cooperative society in 2002 with a small office in Maligaon and later shifted to Odalbakra under Lal Ganesh Police station in 2012.
Clients demand return of their investments
The 48 investors of the chit fund society who had filed the case have raised a demand for the state government to realise the assets of the society to return their investments.
Haripad Saha of Sreebhumi Nagar under Odlabakra outpost of Dispur police station, who was the lead signatory of the complaint, said that the society was paying good returns until recently.
“I have been a client of the society for the past 13 years. All four members of my family are clients too. In my locality there are around 200 to 250 clients of the society. They have many savings plans where one can deposit from Rs 20 to Rs 200 daily through agents. All was well but since the past week, the agents did not come to our houses to collect the money. Their phones were switched off and their office closed,” Saha said.
Saha further added that with the society getting sealed, he has Rs 80,000 still stuck.
“I am not the only one. From among those I know money worth at least two to three crores is stuck with the company. This is just the residents of my vicinity. There are several others who had invested,” Saha said adding, “The society had been giving high returns for the last 13 years and that is why, there must be assets of the company through which it was getting high returns. If the state government can realise those assets and return our money, then it will be very convenient for us.”
According to the Chit Fund Act, 1982, a chit fund business has to be registered and regulated only by the respective state governments. In case of failure of a chit fund business, the responsibility for winding up such a business also vests with the respective state governments. Moreover, the prize chits and money circulation schemes are illegal and are banned under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. Powers of investigation under this Act are vested with the concerned state police authorities.
However, the Subhasakti Thrift Credit Co-Operative Society Limited was registered as a co-operative society and not under the Chit Fund Act due to which, all their operations are considered illegal.
Also, the society is booked under Prize Chits and Money Circulation Schemes (Banning) Act, 1978.
“According to the law, the police are taking the enforcement activities but compensation is not in the police’s hand,” the police said.
Crack down on Chit-funds
According to a top cop in the Bureau of Investigation (Economic Offences), the city police commissionerate has been asked to launch a combing operation to check any chit funds operating in the city.
“If there are any such funds operating, we will check their documents and see its solvency. Any discrepancy in the documents will lead to shut down of such companies,” the cop said.
The chit fund society operates in deposit-collection scheme which means, the interests are provided on the basis of the deposits it receives and not through any investment plan. This is how most co-operative societies perform, but this society was providing more interest rates than normal.
According to the investors, the rates are as high as 50 percent to the investments.
The cooperative had long term and short term plans. It returned to the short term plans which keep on recurring from the long term investments and keeps the rest of the money with the cooperative as and when the long term investors lay a claim.
According to Das, the secretary, the company was having a cash deficit of Rs 10 crores which means it was in no position to return to any long term investors.
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