Chit Fund scam: Ramoji Rao-led MCFPL 'operates' ghost chit groups; company on verge of collapse

Amaravati: Investigation has revealed that Margadarsi Chit Funds Private Limited has been operating ghost chit subscriber groups and not paying the chit amounts to its members.

Many chit memberships were run without knowledge of persons by impersonating common citizens (Ghost subscribers) and in some cases branch managers have fraudulently siphoned off subscribers' money.

In the last three days, teams of the Stamps and Registration Department have visited all 37 Branches of Margadarsi Chit Funds in Andhra Pradesh to do verification regarding certain complaints received from subscribers of Margadarsi Chit Funds. Irregularities such as non-payment of chit amount, insistence on sureties, and siphoning off the money by the branch managers had come to light during their verifications.

Addressing the joint press conference, Additional DGP, Crime Investigation Department (CID), N. Sanjay, and Inspector General of Registration and Stamps Department V. Ramakrishna highlighted how Margadarsi chit fund is on the verge of a financial crisis.

"Large numbers of subscribers are turning up with complaints of non-payment of chit money and undue harassment for sureties which has necessitated booking of FIRS at various Police Stations", said N Sanjay.

So far, three FIRs have been registered at Anakapalli Town, Chirala I Town of Bapatla, and II Town police station of Rajahmundry.

Margadarsi facing financial crisis

According to the CID, the current financial situation of Margadarsi Chit Funds Private Limited is very grim. To make the payments to the subscribers, it is banking upon the fresh and recent subscriptions made by the subscribers.

"It is no surprise that Margadarsi Chit Funds Private Limited would turn out as one more Agri Gold for the subscribers," said Andhra Pradesh Crime Investigation Department Chief N Sanjay.

There are around 50,000 subscribers who are yet to receive payments from the Margadarsi Chit Funds. As of date, there are more than 1000 prized subscribers across the state from 37 branches. These thousand subscribers' auction amount has been delayed by more than one month. The management of Margadari is delaying the payments in the name of insufficient sureties. But, in reality, there are no funds with Margadarsi to make the payments to the price of subscribers.

"This situation exists after the unearthing of Margadarsi frauds from November 2022, thus leading to the confidence among the subscribers and public in general eroding and the new subscriptions have come down", said Sanjay.

Money diverted to main branches

The money that was already paid by the subscribers has been misappropriated at various levels in one or the other way.

Investigation revealed that many times it has been diverted to the main branch in Hyderabad and other financial organisations maintained by Margadarsi and Eenadu management.

"Payments to be made by the Margadarshi to its subscribers is the big question. As a result, the subscribers are approaching the branches in panic and police stations to report against Margadarsi," said Sanjay.

In light of these developments, the AP CID is taking into account the various complaints of subscribers and enquiring into them. To facilitate the subscribers, the authorities have created WhatsApp No 9493174065.

Ghost subscribers

Ghost subscribers means the chit fund is found running of chit membership without knowledge of actual persons impersonating common citizens and in some cases, branch managers have fraudulently siphoned the money of subscribers.

In every group, there are some vacant sheets where Margadarsi is the chit member. If the vacant chits are not filled by regular subscribers, the company shall pay the installments for every month. To avoid this situation, the company and the branch managers are enrolling some persons as subscribers without their knowledge termed as ghost subscribers.

Such subscriber's first instalment will be paid by the company as if it is paid by the subscriber and the other payments will be defaulted. Subsequently, the company is free from paying the installments because the vacant chit has been filled.

So a query in which a subscriber who paid only one instalment and became a defaulter will give rise to this kind of fraud.

Black money holders:

CID found that Margadarsi is a haven for tax evasion. It is like one more Swiss bank for the black money holders of Andhra Pradesh and neighboring states.

"Many a time black money is invested in Margadarsi in the name of benamis under the knowledge of the management. This needs further probing by the departments of enforcement directorate, income tax, etc.," said the official.

While the government focuses specifically on safeguarding the financial aspects of the subscribers it also considers escalating the frauds of Margadarsi to central government agencies.

CID has earlier registered seven FIRs based on the complaints received from the assistant registrar of the Stamps and Registration Department against media baron Cherukuri Ramoji Rao, Sailaja Kiron, and others alleging financial irregularities in the functioning of Margadarsi Chit fund.