Mumbai, Jun 17 (IANS): The Enforcement Directorate (ED) on Wednesday said that it has arrested former Maharashtra MLA Vivekanand Shankar Patil in connection with an over Rs 500 crore money laundering probe, officials said.

He was sent to the agency's custody till June 25 by a special PMLA court here.

An ED official related to the probe said that the agency arrested Patil on Tuesday night from his residence in connection with fraud at the Karnala Nagari Sahakari Bank.

According to the ED officials, Patil is of the Peasants and Workers Party of India and a former chairman of the Panvel-based bank.

The ED official alleged that Patil created fictitious accounts and siphoned off about Rs 500 crore.

The ED case of money laundering is based on the FIR lodged by the Economic Offences Wing of Navi Mumbai last year against 76 persons after the Reserve Bank of India detected the fraud following an audit.

The official said that the audit revealed that Patil was siphoning off funds since 2008 from the bank through 63 fictitious loan accounts to the loan accounts of Karnala Charitable Trust and Karnala Sports Academy, which were founded by him.

"It was found that the management of the bank was under the control of Patil. In order to siphon the funds, Patil used some old accounts of bank and get them renewed and large amounts were transferred from these accounts to the said trust accounts," he said.

The official further said that no collateral securities were taken against such loans and no correspondence was made with revenue authorities regarding payment of stamp duty for the purpose of purchasing immovable properties for which loans were obtained, thereby making the loans unsafe/unsecured.

He said that further, all the above loan accounts from where funds have been transferred to the said trust were found to be NPAs.

He also said that it was observed that the said loans were sanctioned and disbursed at the instruction and for gains by Patil, without following KYC norms and other RBI guidelines.