The Enforcement Directorate has uncovered a foreign exchange scam worth Rs 700 crore involving Capstone Forex. The financial probe agency alleged that the company submitted forged air tickets and passports as proof of customers they sold foreign exchange to.
ED's investigation so far has revealed that Capstone allegedly received more than Rs 700 crore from various shell companies. The agency said that most of these companies could not present a legitimate reason for transferring funds to Capstone.
"The sudden spurt in the trend of turnover in 2017-2018 compare to previous years, caused interest to examine the business practice and the source of revenue of the said company. On examining bank account statement of the said FFMC, it was found that the said company has received hundreds of crores of rupees from various business entities, firms and companies during the period of 2017 -2019," according to ED documents.
"On checking of few of those air tickets, it was found that the said tickets were forged and fake. This led to the suspicion that the foreign exchange sold by the said company to the said individual customers as indicated by them on their records. Capstone Forex Private Limited has been purchasing foreign exchange and foreign currencies from the other AD banks, other FFMC's by using the funds received by them in their bank accounts," the documents further added.
Entities under the ambit of ED investigation include big names like CG Power Solutions, Indianapolls Hospitality, Consultshah Financial Services, Eros International Media, Jain Energy (Jain Irrigation Group), Navarkar Builders, Next Gen Films, Swatantryaveer V D Savarkar Multistate Cooperative Credit Society.
Indianapolls Hospitality is owned by Jay Mehta, who is the husband of bollywood actress Juhi Chawla. The ED is expected to summon the suspects involved into the scam for questioning.
The Maharashtra-based Capstone Forex first came under the ED scanner during the probe against Edelweiss Financial Services. The Enforcement Directorate (ED) had recently interrogated Edelweiss chairman Rashesh Shah in relation to a forex scam. Edelweiss had later clarified that none of its companies had any dealing with Capstone.
"Edelweiss has no relationship with Capstone Forex Pvt. Ltd. and all allegations of FEMA violations are false. We appreciate that regulators and agencies have an obligation to investigate; if any information is sought from us, as a responsible corporate citizen, we will of course provide the same," Shah said in a statement.
Rashesh Shah also reiterated that Sanjay Shah, who is allegedly associated with Capstone, is only an independent director of a few of Edelweiss group companies and is in no manner related to him. "You will appreciate that Shah is a common name," the Edelweiss chairman said.
Meanwhile, Eros International clarified that it does not have any business ties with Capstone. "We strongly condemn the allegation and want to reassure the market, investors and stakeholders that Eros International Media Limited have not received any communication from ED and we have no business transactions with Capstone Forex," Eros International said in a statement.