Appa Rao, son Srinivasa Rao held for Chit fund Rs.11 crore fraud
CID on Sunday arrested former Telugu Desam Party (TDP) MLC Adireddy Appa Rao and his son Adireddy Vasu husband of Rajamahendravaram MLA Adireddy Bhavani, for running a chit fund.
KAKINADA: The CID on Sunday arrested senior Telugu Desam leader and former MLC Adireddy Apparao his son Srinivasa Rao the husband of Rajamahendravaram Urban MLA Adireddy Bhavani.
The two are directors of the Jagajjanani Chit Funds Pvt Ltd (JCFPL). The arrests were in connection with alleged frauds in the running of the chit fund company, of order of more than Rs.11 crore.
The assistant registrar of chits of Kakinada district has reported to the authorities that criminal activity was detected in the running of the chit fund company. “The firm created an ingenious, vicious cycle of perpetrating fraud, cheating, criminal breach of trust, at the cost of gullible chit subscribers,” the registrar has noted.
As per a charge-sheet, “At the time of commencement of new chit croups, the company submitted agreements it entered with new chit subscribers to the assistant registrar of chits and it would submit an undertaking in the statutory form that all tickets were fully subscribed. However, it was noticed that the company did not pay any subscription money for the mandatory ticket as well for the tickets subscribed.
It has received the prize amount pertaining to its statutory chit and was circulating the subscriber amount for payment in other groups. “It did so by misappropriating the subscribers’ amounts with a view to making use of this amount to discharge its obligations pertaining to another chit group,” it was stated.
The assistant registrar stated in the complaint that a study of the minutes of the auction proceedings for the months from May to August 2022 showed that the date of payment of the prize money to the prized bidder, as was shown in the minutes, differed with the actual date of payment as per the bank records and statements.
The actual date of payment was much before the auction date, which showed that the process of auction has been compromised and that the chit firm has been deceiving the non-prized subscribers, who have not attended to the bidding process, the complaint said.
The assistant registrar found as many as 15 such instances in the four-month period.
On verification of 49 payments of prize money amounting to a total of `11,76,82,000 to the prized bidders, it was found that these were originally shown as bank transfers in the respective vouchers filed with the registrar of chits office along with the minutes. But, only 21 payments totaling `4,68,45,753 were actually done through banking channels. The remaining 28 payments totaling `7,08,36,247 were done in cash. “This clearly proved the wrong declaration of facts submitted to the chits registrar,” the complaint said.
On verification of 11 payments of prize money, the actual payments done through the bank were much less than the amount shown as having paid in the cash voucher filed with the registrar of chits along with the minutes, which amounted to `76.64 lakh.
“This clearly shows the company has been creating the false accounts vis-a-vis the payments to subscribers and it also has been doing clandestine financial transactions with subscribers’ amounts.”
“The difference between the minutes-book and the bank statement clearly shows the default on the part of the company or foreman in paying the full prize money amount to the subscribers.”
The company was sanctioned permission to run chit business with its office /branch at Rajahmundry, as per the records.
It is observed that the company was unauthorisedly running another branch office at Jagannadhapuram in Kakinada and deceiving the subscribers. “The company, it being the trustee and custodian of the amounts of subscribers, has been utilizing the amounts for its own purposes to do business or for making payments to the prized subscribers by circulating the amount in all the chit groups, thereby committing a default in depositing the subscribers’ amount in the bank accounts as specified in the chit agreement and in paying the prize amount to the prized subscribers.”
“It has also been diverting the subscribers’ amounts and there is much difference regarding the interest received and paid. There is irregularity in the chit amounts and it requires in-depth investigation on the amount defaulted and diverted, to safeguard the interests of the subscribers, the complaint said.
Mangalagiri CID officials registered a case under sections 420, 409, 120 (B), 477 (A), R/w (34) IPC and Section 5 of APPDFE Act 1999 and Section 76, 79 of Chit Funds Act and the CID DSP M Krishnamurthy Naidu is investigating the case.
