Mumbai, Oct 1 (TNN): The economic offences wing (EOW) of the Mumbai Police on Monday registered an FIR against Financial Technologies India (FTIL), which owns the National Spot Exchange (NSEL), its office bearers and two dozen private firms for a Rs 5,600-crore financial fraud.
The FIR named FTIL group chairman Jignesh Shah, MCX Stock Exchange MD Joseph Massey and auditor Mukesh Shah. Among other officials, the FIR also named Anjani Sinha, Shantilal Gurav, B D Pawar, Shreekant Javalgekar, R Devergar, Amit Mukherjee, Jai Bhaukhundi, M C Pandey, Santosh Mansingh, H B Mohanti, Shasidhar Kotian and Neerav Pandiya, along with some private firms.
The accused have been booked for forgery, criminal breach of trust and criminal conspiracy. The FIR has been registered on the complaint of an investor Pankaj Saraf. He alleged that NSEL built its business model around trading in "non-existent " goods and giving investors an impression that goods were in warehouses, when none existed. "Jignesh Shah is the brain, trust and alter ego of NSEL and primarily responsible for the affairs and the fiasco at NSEL and he abused his position to create a false impression in the minds of investors regarding the legitimacy of the operations at NSEL."
In mid-September, around 58 investors and 17 brokers and members of NSEL filed a complaint with the EOW against Jignesh Shah and the board of directors of NSEL. The complaint was also made against executives of NSEL.
In a statement, NSEL said that it had also filed complaints with the EOW. "We welcome any action by the government authorities. It is to help recover the money from the borrowers," said Jignesh Shah. Himanshu Roy, joint commissioner of police, crime branch, said, "Our teams raided 35 locations in Maharashtra, 18 in New Delhi, five premises in Rajasthan, 15 in Chandigarh and Mohali, several places in Haryana, Madhya Pradesh, UP, etc. We filed an FIR on the basis of the findings of our preliminary enquiry. Our teams are in many parts of the country, raiding various places and will be back in a few days."
Rajvardhan Sinha, additional commissioner of police, EOW, said, "EOW has set up two control rooms for officers from the other states to coordinate with us."
The police said while the NSEL dealt in selling and buying of commodities as well as gold and silver in demat form (e-series ), it did not have those items in their warehouses, and 45 such warehouses were raided on Monday. "We are trying to find out where the money has gone," an officer added. Police have seized hard disks of over two dozen computers, books of accounts, records of financial transactions, etc. Several of the locations raided on Monday have been sealed by the police.
In a related development, Lotus Refineries, one of the entities that used to trade on NSEL and was earlier declared a defaulter by the commodity exchange, has filed a suit against the bourse in the Bombay high court, claiming nearly Rs 2,800 crore in damages. The claims pertain to goods which are in several of the warehouses owned and managed by the commodity bourse, Lotus Refineries said in a statement. In the suit, the company also said that, pending hearing of the case, the court may appoint a receiver to oversee the operations of the exchange.