51 Lakh Customers Duped Of Rs 7,035 Crore By PanCard Club; EOW To Probe

The Logical Indian Crew

December 14th, 2017

EOW

Courtesy: The Times of India, Business Standard | Image Credits: JDMagicBox, Odisha Bhaskar

The economic offenses wing (EOW) has reportedly taken over the probe in PanCard Club (PCL) investment cheating case in which more than 5 million investors from across the country were allegedly duped of Rs 7,035 crore, a report by The Times of India said.

Earlier market regulator Securities and Exchange Board of India had asked PCL, a timeshare company, to not sell its properties. It had also appointed Judge RM Lodha for selling PCL’s properties and to use sale proceeds to refund investors who had put their money in the company’s schemes.


Filing a complaint

An EOW officer said the agency has registered a case of cheating under the Indian Penal Code (IPC) and also invoked sections of the Maharashtra Protection of Interest of Depositors (MPID) Act against PCL and its six directors. “Their head office at Prabhadevi is now shut,” a police officer said. It was Narendra Vataukar, a resident from Dadar, who lodged a police complaint against PCL on December 10, 2017.

PCL had come up with schemes for hotel stays. They would enroll members and ask them to invest. They would offer holiday packages at these hotels,” the officer said. Several investors who were promised higher returns did not avail any of the holiday packages. Meanwhile, an investor complained about this to SEBI, which in turn began an inquiry into the matter.


EOW investigation

SEBI also found out that the company ran a collective investment scheme, which required SEBI’s approval. The directors, however, did not have any permission to run this scheme. The probe by Sebi also revealed that merely 1% of the investors used this scheme.

According to a report by the Business Standard, the EOW officer said, “It was an investor who approached the Dadar police station and lodged a cheating complaint of Rs 40,000. That apart, 82 more investors approached EOW that there are 51 lakh investors from whom PCL collected Rs 7,035 crore as an investment,” the officer said. He further added that EOW has just taken over the probe from the police station and will start collecting documents related to the case and recording statement of the victims.

Earlier, SEBI put restrictions on the firm and asked it to shut down its business, saying that it cannot accept new deposits. They had also asked the firm that it must return the investors’ capital within three months. SEBI has attached 34 properties of the PCL including land parcels and resorts and frozen over 240 bank accounts. The properties include office buildings across the country.

SEBI also ordered the firm to not sell any of its properties. PCL challenged this order in the Securities Appellate Tribunal (SAT). The SAT, however, upheld the SEBI order. Most of PCL’s investors belong to middle-class families and they are spread across the country. The company failed to comply with SEBI’s direction to refund over Rs 7,000 crore to investors raised through illegal CIS.

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