Demonetization scam: ED attaches assets worth ₹130 cr of Hyd-based Musaddilal jewelers

The attached assets include 41 immovable properties registered in the name of various jewellers and others involved in the case and movable properties in the form of stock in trade worth Rs. 18.69 crores and investments made in the stock market in the form of shares worth Rs. 63 lakhs by persons involved in the demonetization scam.

The ED also attached other assets like gold jewellery, bullion, and ornaments seized during earlier searches which are valued at Rs. 83.30 crores.

The investigating agency had booked a money laundering case against Musaddilal Gems and Jewels Pvt. Ltd. and others based on an FIR registered by the Telangana state police. Investigations revealed that Musaddilal Gems and Jewels, Vaishnavi Bullion Private Limited, and Musaddilal Jewellers Pvt. Ltd. had deposited Rs. 111 crores in demonetized notes of Rs. 500 and Rs. 1,000 in their bank accounts immediately after 8 November 2016.

How the scam unfolded

The accused had raised fake cash receipts and sale invoices showing that around 6,000 fictitious customers had visited their showrooms to purchase gold jewellery between 8 p.m and midnight on 8 November immediately after the demonetization announcement.

The investigation revealed that the owner of Musaddilal Gems and Jewels Pvt. Ltd, Kailash Chand Gupta, and his sons, following the advice of Sanjay Sarda, their Chartered Accountant, had raised fabricated invoices to create fictitious sources of income to justify the large amounts of cash deposits. Sarda had advised them to raise fabricated invoices below Rs. 2 lakh so that there would be no need to provide KYC proof or PAN of customers. The CA also contributed demonetized cash for conversion and received a hefty commission for rendering this advice, the sleuths of the ED found.

Apart from converting their own unaccounted demonetized cash, with the help of family members Nitin Gupta, Neel Sundar Tharad, and bullion dealer Pavan Agarwal, they actively solicited similar cash from other jewelers and friends and deposited the same in their accounts to convert it into gold bullion.

The converted gold was delivered back on hefty commission charges. Many other prominent jewelers and friends knowingly participated in this fraud scheme to convert their unaccounted demonetized cash into gold. Immediately after depositing around Rs. 111 crores, a major portion of these deposits were transferred to gold bullion dealers to buy bullion, which was delivered to various jewelers, individuals, and entities involved.

Further investigation revealed that Rs. 111 crores was pooled from various jewelers, individuals, and entities, including Sanjay Sarda, a Chartered Accountant; Pavan Kumar Agarwal of Balaji Gold; Neel Sunder Tharad of Ashtalakshmi Gold; Manish Gupta of Musaddilal and Sons; R. Tej Prakash and R. Praveen Kumar of P. Satyanarayana Gems and Jewellery; Nityesh Sachdev of Sachdev Sports; Aditya Vikram Saraogi; Himanshu Bapna of Shree Kalpataru Jewellers (I) Pvt. Ltd; Naveen Sanghi of L Bajrang Pershad Jewellers; and Varun Goel of Vijay Jewellers.

A majority of the accused jewellers admitted that they had contributed cash and said the demonetized notes were sourced from unknown customers. However, they could neither provide the list of the customers nor explain the reason for depositing it in the accounts of Mussadilal jewellers instead of their own.