ED attaches properties worth Rs 110 crore of Karvy Group under PMLA

Directorate of Enforcement (ED) has identified additional assets and provisionally attached properties in the form of lands, buildings, shareholdings, cash, foreign currency and jewellery worth Rs 110 crore under the Prevention of Money Laundering Act (PMLA), 2002, in the money laundering investigation against M/s Karvy Stock Broking Ltd (KSBL) and its Chairman Comandur Parthasarathy and others.

ED had previously attached assets worth Rs 1,984.84 crore in the same case. Earlier in January, an Indian law enforcement agency arrested Parthasarathy and Group CFO Mr G Hari Krishna. Both Parthasarathy and Krishna are presently on bail.

These arrested accused were allegedly involved in fraud through the illegal diversion of clients’ securities by KSBL worth Rs 2,873.82 crore and pledging of securities with banks and non-banking financial companies (NBFCs) to seek loans and subsequent default.

The ED had initiated the money laundering investigation based on the HDFC bank’s FIR with Hyderabad Police under various sections of IPC for defrauding the bank. Subsequently, more FIRs were filed by other investors and banks.

The ED, according to officials, uncovered the senior management of the Karvy Group’s complex web of transactions to misuse the securities of clients and raise loans fraudulently. These loans were then rotated via multiple related companies and diverted away from the stated purpose.

The financial probe agency had also alleged that the fund trail investigation revealed that the borrowed funds were transferred to other group companies, particularly to Karvy Realty India and then to Karvy Group’s 14 shell companies.