Three Forex co directors arrested, taken to police custody

Coimbatore, Aug 12, 2011 (PTI):

Three directors of a Forex trading Trading Company of Tirupur, which allegedly cheated investors of Rs 1,600 crore were taken into custody today. The trio, who had been at large for more than a year, were traced to Guwahati by CBI, which is investigating the case, arrested and brought here this afternoon, police said. All of them were produced before the CBI Court which granted the agency seven days custody for questioning them. A CBI press release said K Mohanraj, Managing Director, K Kathiravan, Director and Kamalavalli, Director of Paazee Group of Companies, were arrested yesterday in Guwahati It said they had collected around Rs 1600 crore from 48,000 depositors between 2008-09 with a promise of more than 100 per cent return on investments within 90 days to one year. Madras High Court granted them anticipatory bail in 2009 after their promise of settlement, but cancelled it in 2010 on reviewing the settlement.

As the Supreme Court too later upheld cancellation of their anticipatory bail, they were on the run, it said. Since some depositors moved Madras High Court to transfer investigation of these cases to CBI, the Economic Offences Wing, Chennai began investigation on June 15 this year,it said They were found in possession of a computer, two laptops, data cards, 21 cell phones and many SIM cards and credit and debit cards.

IN DETAIL

COIMBATORE: After a massive nationwide hunt that lasted more than three months, sleuths of Central Bureau of Investigation (CBI) have arrested three absconding directors of a Tirupur-based finance firm, which allegedly duped over 48,000 depositors from 12 states including Delhi and Haryana, of 1600 crore, in one of the biggest financial frauds in the history of Tamil Nadu.

K Mohan Raj, managing director of Paazee Forex Trading Firm, was arrested from a hotel room at Guwahati on Thursday while company directors K Kathiravan and A Kamalavalli, who were staying at a resort at Chirapunjee, were arrested after summoning them to Guwahati on the same day. They were taken to Coimbatore and produced before a special court dealing with cases under Tamil Nadu Protection of Interest of Depositors (In Financial Establishments) Act 1997. The court allowed CBI to take them in custody for seven days for interrogation.

According to CBI sources, the sleuths seized a number of incriminating documents along with two laptops, 20 data cards, 21 cell phones, 30 SIM cards, 35 credit and debit cards and one desk top computer from the three persons. As CBI informed the court, the trading firm reportedly lured investors with a promise of 200% to 300% annual interest. The three had been evading arrest for the last three years.

In June this year, the Economic Offences Wing of the Tamil Nadu police handed over the three year old case to CBI. The hunt for them began in June last week with the CBI seizing their passports and alerting all airports in the country. Their bank accounts have also been frozen. As many as 48,000 people, including at least 1,000 from Mumbai,Delhi,Haryana,Uttar Pradesh,Madhya Pradesh and Chhattisgarh, have lodged complaints of cheating against the firm. The company took away deposits worth 1600 crore, CBI informed. As many 10232 complaints were received by the investigating agencies so far.

K Kathiravan (60), former reporter of a Tamil daily in Tirupur and his son, K Mohanraj (29),started the forex company in 2008. A Kamalavalli, a Chennai-based woman, too joined as a managing director of the company. With agents appointed all over Tamil Nadu, the company collected the huge sum from depositors in the state. The agents would get 15% commission on every deposit while 10% commission would go to the depositor. So, the depositor was lured with not just the astronomical interest but 10% commission too. For the first six months, most of the depositors got the promised interest of 300%. As the word spread and the deposits piled, payment of interests got delayed. Following complaints, the Tirupur district police registered a case against the directors of the firm in 2009.

However, they obtained anticipatory bail from the Madras high court with the assurance of returning the deposits.

After the Madras high court cancelled their anticipatory bail, the three accused moved a revision petition. The Supreme Court dismissed the bail petition on September 21, 2010. Following the court order, all the three managing directors of the firm went underground. The CBI team is now interrogating them at Government Circuit House at Race Course here.

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