The Mumbai zonal office of the enforcement directorate (ED) has provisionally attached assets worth Rs11.07 crore under the Prevention of Money Laundering Act (PMLA), 2002, in connection with the ongoing investigation into a US$125mn (million) fraud involving Geodesic Ltd.
The attached properties include residential flats, commercial spaces, agricultural land and fixed deposits located across Uttar Pradesh, Maharashtra and Gujarat, the agency says in a release.
The ED's probe stems from a first information report (FIR) registered by Mumbai's MIDC police station against Geodesic's directors—Prashant Mulekar (director and compliance officer of Geodesic), Kiran Kulkarni (managing director-MD of Geodesic) and Pankaj Kumar Srivastava (chairman and director of Geodesic)—along with tax consultant Dinesh Jajodia. The individuals are accused of defrauding foreign currency convertible bond (FCCB)-holders of US$125mn.
Investigations revealed that Geodesic raised FCCBs through Citibank, London, in 2008 to fund overseas acquisitions and joint ventures. However, the funds were allegedly misappropriated for unrelated investments and transferred to Indian accounts under false pretences. The company reportedly engaged in fictitious software transactions with shell companies, diverting large sums to entities controlled by Mr Jajodia and others. These transactions, disguised as legitimate business deals, were ultimately found to be fraudulent.
The agency says that four individuals, including Mr Srivastava, Mr Mulekar, Mr Kulkarni and their tax consultant, Mr Jajodia, have been arrested so far.
In October 2023, the ED attached properties worth Rs40.62 crore in the form of 26 residential flats and shops situated in the states of Maharashtra and West Bengal in this case. The agency said that it attached the properties in the form of 26 residential flats and shops in the name of various companies and persons—Savi Commodity and Capital Services Pvt Ltd, J&J Network Consultancy (P) Ltd, Mr Jajodia and others situated in the states of Maharashtra and West Bengal. (
Read: ED Attaches Properties of Geodesic, Others in Money Laundering Case)
Earlier in December 2022, market regulator Securities and Exchange Board of India (SEBI) has banned the directors of Geodesic and former owners of the Chandamama magazine from the securities market for a year for siphoning off US$125mn raised through FCCBs. Chandamama India Ltd was one of the five subsidiaries of Geodesic, and the publishing company was placed for sale by the Bombay High Court (HC) when it ordered the liquidation of Geodesic around 12 years ago.
SEBI started an elaborate investigation after receiving a letter from the company registrar of the Bombay High Court in 2016. The letter intimated the market regulator about a High Court order in the matter of HDFC Bank Ltd vs Geodesic, in which the court had directed the market regulator and the ED to take action against directors of Geodesic and their tax consultant Mr Jajodia.
SEBI appointed a forensic auditor Sarath and Associates, to examine the books of Geodesic, and the forensic audit revealed a web of companies that were created to funnel money to various parties. It began with the FCCB fundraising in 2008. The bonds were to be redeemed by 18 January 2013. But when the date arrived, the company didn't redeem the bonds and the High Court had ordered its liquidation which involved putting the children's favourite magazine too on the block.
According to the SEBI order, of the US$125mn, US$93.9mn was claimed to have been invested in the company's subsidiaries Geodesic Holdings Ltd (GHL), and US$26.8mn in Geodesic Technology Solutions Ltd (GTSL); US$3.52mn went towards the expenses of FCCB. But, as the whole-time member SK Mohanty noted in the order, the noticees furnished broad details of the money that went into GHL, and details about the money that went into GTSL were 'conspicuously absent'.
Even in the use of money given to GHL, the SEBI order notes discrepancies—such as a questionable book entry on the US$20.1mn acquisition of a company; a US$15mn transferred to a company for investment in government treasury bonds was accounted for unsatisfactorily, and a US$8mn acquisition for which explanations were found to be 'wanting and grossly deficient'. The order also questioned a US$64.8mn loan by GHL to a company named Zomo Technologies that invested the money in a fund named Absolute Diversified Fund (ADF), which then invested the money in two companies that were later liquidated. One of the two liquidated companies, named Eland Crown, had Mr Jajodia as a director. (
Read: US$125mn Vanishes into Thin Air; SEBI Bans Directors of Geodesic, Former Owners of Chandamama from Market for a Year)
