Wednesday, May 8, 2013

Rose Valley raided in Gangtok on suspicion of being chit fund scam

GANGTOK, 05 May: Flagged by the Reserve Bank India for its suspiciously irregular ways and under inspection of the Ministry of Corporate Affairs, the Rose Valley Group - Rose Valley Real Estate & Constructions - was served its first police raid on Saturday when the Sadar Thana here raided its branch office in Tadong and seized documents and other records. The Kolkata-based Rose Valley Group is suspected of being a chit fund scam, and one of even larger proportions than the Sarada racket which shook West Bengal up last month.
A Sadar Thana team led by SP [East] Manoj Tewari and accompanied by SDM [Gangtok], Tashi Chopel, and armed with a search warrant issued on Friday evening under Section 93 of the CrPC, arrived at the Rose Valley branch office here on Saturday at around 10:15 a.m.
The office was locked, and even its signboard taken down [a few days earlier, it is informed]. The search warrant allowed the police to break the locks and carry out the raid. The police have seized registers, files, receipt books, other documents and a computer. These will now be studied and charges filed if evidence is found of the company’s operations being illegal.
The Superintendent of Police [East], informed media persons that complaints of suspected chit fund companies had come in from the people and through media, and Rose Valley Group was found having operations in Gangtok, but initial checks revealed that the office had been locked for the past few days raising suspicions.
He informed that while this preliminary investigation was underway, the company removed its signboard on Friday night and concerned personnel there could not be contacted, raising suspicions. One must bear in mind that all this was happening in the wake of the Sarada bust and with murmurs against Rose Valley already circulating. Accordingly, a search warrant was procured and the raid carried out on Saturday.
The SP informed that the police also tried to contact the MD and GM of the company at the regional office, but they did not show up. Following the same, he informed, the police obtained a search warrant from the District Magistrate and carried out the raid in the presence of the SDM Gangtok.
He informs that during the search, registers on depositors and other documents were recovered which indicated that the company had collected money from people in a manner which preliminary scrutiny is in violation of the Sikkim Protection of Interests of Depositors Act.
“To protect the interest of the consumers we took suo motto action, and after verifying the facts we will register a criminal case against the company and its officials,” the SP said. He informed that the list of depositors along with their contact numbers and details reveal that money had been collected from people and deposited to the Rose Valley office.
The SP further informed that the MD of the company informed the police that the branch office was not collecting money from depositors anymore and contended that they were only paying depositors on the maturity of their deposits.
One may add here that as far back as on 05 January 2011, the capital market regulator, Securities and Exchange Board of India (Sebi), had, in an interim order passed on 04 Jan 2011, barred Rose Valley Real Estate & Constructions from raising public money and from launching any scheme. At the time, SEBI had also ordered Rose Valley Real Estate, the flagship of the group, not to divert funds raised from public, which is kept in the bank account or in the company's custody.
Last month, SEBI imposed a penalty of one crore on Rose Valley and filed an FIR against its officials.
Meanwhile, the SP further informed that the company also has a branch office in Gyalshing and that this information has been passed along to the SP [West]. Meanwhile, the SP urged people to be alert and vigilant against chit fund scams and immediately bring such suspect schemes to the notice of the concerned authorities.
Chit fund scams are not new to Sikkim, and apprehensions among depositors must have been high in the wake of the recent collapse of Sarada in West Bengal. It is not clear as to how much Rose Valley collected from Sikkim, but media reports quoting Sebi sources on its activities suggest that the group could have mobilised as much as Rs 4,000 crore. Its operations, it is informed, were extensive in West Bengal and the North East as well as Sikkim.
A recent Times of India report further stated that after the Saradha fright, customers and depositors are queuing up at branches of Rose Valley to collect their money prematurely, but the company is not giving them cash. They are being handed a coupon and a token slip as an IOU. How the depositors in Sikkim are faring is not clear at present.

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