The Law Enforcement Branch said on Saturday that it had seized new assets worth more than Rs 110 crore as part of its money laundering investigation against Karvy Stock Broking Limited (KSBL ), his CMD C Parthasarathy and others.
The money laundering case was filed under FIRs by Hyderabad Police on complaints from lending banks which alleged that the Karvy Group profited from large amounts of loans by illegally pledging the shares of their clients in ‘ worth approximately Rs 2,800 crore and said loans became non-performing asset (NPA) after the release of the client’s securities in accordance with the orders of NSE and SEBI.
“In order to safeguard the proceeds of crime from alienation, the Law Enforcement (ED) Directorate has identified and seized movable assets totaling Rs 110.70 crore,” the investigative agency said in a statement.
With the latest order, the total seizure of properties by the ED in this case amounts to Rs 2,095 crore.
“KSBL was one of the nation’s leading stockbrokers with millions of clients. The scam came to light after a limited-purpose inspection of KSBL conducted by the NSE in 2019 revealed that KSBL had failed to disclose a DP account and credited the funds raised by pledging securities from clients on 6 of its own. bank accounts (Stock Broker-own Account) instead of stock broker-client account,” the ED said earlier.
He arrested Parathasarathy, Group CFO of G Krishna Hari in January this year as part of the investigation. Both are now out on bail.
A “highly complex web” of financial transactions, using multiple shell entities and non-bank financial companies (NBFCs), was executed to disguise the source of these funds in order to project them as uncontaminated funds, the ED had said.
“Parthasarthy had made arrangements through his group companies to pay financial benefits to his sons Rajat Parthasarthy and Adhiraj Parthasarthy in the form of salary and reimbursement of household expenses and thus the proceeds of crime were projected as l ‘uncontaminated money in the hands of family members,’ ED alleged.
He claimed that the investigation revealed that V Mahesh, managing director of KDMSL (a related company) and key management personnel of the Karvy Group, was a close associate of Parthasarthy and that he “actively assisted and planned the execution money laundering operations”.