Enforcement Directorate detects 50 bogus companies involved in money laundering

As many as 50 companies, all fake, were found to be involved in a huge money-laundering racket that could run into several hundred crores. They also had bogus directors on board, including a tea vendor. And, three individuals were engaged in the fraud. No one has been arrested yet though.

The Enforcement Directorate (ED) raided seven premises, including six in Ahmedabad and one in Vadodara, under the Prevention of Money Laundering Act on Tuesday. Investigation revealed that Ashok Shah, a resident of Ellisbridge, had been using those fake companies for money laundering.

ED also found that most of these companies existed only on paper and they were being used to hide transactions in a series of layers from one company to another. ED believes Shah used to convert illegal money into white money through various bogus transactions.

Shah, in his mid-40s, admitted that the companies were fake and that the directors were appointed mostly through him. ED stumbled upon him during an investigation into three-year-old Vishal Exports forgery case. Shah was found with shares of Vishal Realty, a subsidiary of Vishal Exports worth Rs8 lakh. The shares have been sealed by ED.

ED officials said the bank accounts of all the companies would be checked to find out the actual amount of fraud committed by Shah.

ED also recovered Rs10 lakh from Neha Khatri of Vadodara, an associate of Shah.

He had also helped in providing fake directors to companies listed on the Bombay Stock Exchange. Investigation revealed that Viral Kapadia of Ahmedabad, who was appointed director of Malabar Trading three months ago, was director only on paper.

Kapadia admitted before the agency that he had no relation with Malabar Trading and other companies. Top ED officials believe that investigation of each company and money trail from bank transactions could throw up further leads on masterminds and beneficiaries of the money-laundering racket.