Dinesh Dalmia, the notorious founder of the DSQ Software group, is back to his old tricks. After spending significant time in jail for fraud, stock manipulation and other legal transgressions in India and the US, he is once again embroiled in allegations of fraud. This time, he has allegedly duped nine banks and finance companies of Rs200 crore and may have trapped a few others in his activities.
Despite these serious allegations, Mr Dalmia denies everything. In a string of WhatsApp responses to me, he claimed he has ‘no livelihood’ and no money and is living in Kolkata ‘at the mercy of his mother’. He insists he is a ‘victim’ and a ‘scapegoat’, knows nothing about the dairy business (which is at the centre of this fraud) and is confident there will be no document linking him to any borrowing from the nine financial entities.
The story and Mr Dalmia’s involvement reads like the plot of a thriller movie. His companies were part of the 10 stocks manipulated by Ketan Parekh in the securities scam of 2000-01. When the crash led to an investigation, he illegally inflated his share capital by 50% to deliver stock to Kolkata brokers, then fled to the US to avoid prosecution, only to defraud companies there to the tune of US$130mn (million). After the US authorities closed in on him, he returned to India and was arrested in 2006. I had documented his antics at length in the Indian Express newspaper.
The story this time is equally unreal. Quite correctly, Dinesh Dalmia claims that there isn’t a single document in his name, or transaction that is directly associated with him and he has signed no paper. Indeed, a forensic audit by six lenders has also found only a tenuous connection to him. And yet, a first information report (FIR) filed by Vivriti Capital Limited (Vivriti) on 6 April 2024 in Chennai has him at the top of the list of those accused of criminal breach of trust, conspiracy, cheating and forgery. How did this happen? Before we get to that, here are some facts about the key company and the network of companies and persons he assembled in this fraud.
Vivriti’s complaint is against a company called Right Health Platter Private Limited (RHP), incorporated in January 2020, just before the COVID pandemic. Soon enough, a network of related entities, all incorporated between 2020 and 2023 was set up with common directors, including one with a similar sounding name—Right Health Products Private Limited. This fits Dinesh Dalmia’s past modus operandi: create multiple companies with similar names.
Vivriti’s FIR names Dinesh Dalmia, Gopal Padia, Ramnath Arumugam, Pankaj Dalmia and Yekulu Venkata Subbiah, Murali Babu as connected to the group of companies that seemed to have worked together to dupe Indian lenders. They have been directors, investors or key management persons in RHP. Some of them have told me that they were manipulated by Dinesh Dalmia.
According to Vivriti, in March 2022, Dinesh Dalmia, Gopal Padia and Ramnath Arumugam initially approached it for a Rs5.5 crore loan on behalf of RHP. They were told that Pankaj Dalmia was a director of RHP and also partner in the KPM Fortune Advisors LLP. Dinesh Dalmia identified himself as an adviser to Pankaj Dalmia and chief operating officer (COO) of RHP right until June 2023. It was he who provided all corporate information to Vivriti, says the FIR. The other three were directors of RHP. Importantly, Vivriti claims that Mr Dalmia called himself Dinesh Kumar at that time, which is why Vivriti apparently did not make the connection to his notorious past.
Gopal Padia, a Singapore-based businessman, who owned a Singapore company called Avemore Pte Ltd, was a significant shareholder and director of RHP. He claimed to be a customer of RHP and imported its products. Much of this turned out to be false.
RHP had claimed that it was in the dairy business with facilities in Tamil Nadu and Maharashtra. Mr Padia allegedly told Vivriti that his company was in the process of investing significantly in RHP to shore up the dairy export business. He also provided sureties for the money borrowed from Vivriti and had committed not to sell his shares without informing lenders.
In August 2023, RHP defaulted on its loans. Vivriti then claims to have discovered that Gopal Padia had resigned from RHP and sold his shareholding without informing the lenders, and that RHP had transferred large sums of money in 2023 to Singapore-based entities linked to him. His assurance that receivables from certain foreign customers would be deposited in an escrow account allegedly turned out to be fake.
Astoundingly, Vivriti’s FIR suggests that it woke up to the fraud only on receiving an email from Dinesh Dalmia (or Kumar) after RHP began to default. On 22 August 2023, Dinesh Dalmia emailed Vivriti, “highlighting the wrongdoings in RHP with respect to the misappropriation of company's funds by Mr Gopal Padia and siphoning of company's funds to his group companies.” This email spoke about transfer of funds to Mr Padia’s Singapore companies and how minority shareholders of RHP have filed a complaint against Mr Padia with the national company law tribunal (NCLT). A complaint has also been filed by RHP against Mr Padia in Singapore, it said. In short, Vivriti discovered that RHP and been routing funds through its related/group companies based on the fabricated purchase orders, discounting them from Vivriti Capital, and transferring the monies to its related entities.
August 2023 is the time when eight other lenders woke up to the fraud perpetrated by Dinesh Kumar/Dalmia. Lenders, who extended loans, bill discounting and other facilities to RHP, include: Axis Bank, HDFC Bank, SBI Global Factor Limited, Fincare Small Finance Bank, Maglix Labs Private Limited, IndusInd Bank and Bank of Maharashtra. I also have an email addressed to IIFL Finance Ltd.
By September-October 2023, three lenders had declared RHP a fraud account and six of them got together to form a joint lenders forum (JLF) led by Axis Bank. They appointed VCAN and Company (VCAN) of Gujarat to conduct a forensic audit into RHP. Curiously enough, IndusInd and Bank of Maharashtra did not participate in the audit and share documents. IIFL Finance is also not included but, apparently, provided an unsecured loan of Rs10 lakh at 22% interest.
Before we delve into the forensic audit and the network of linked entities and layers of shell companies that operated, here are some key connections to Dinesh Dalmia. Mr Dalmia told me that Gopal Padia is his school friend. Pankaj Dalmia is not related to him but told me that knew Dinesh Dalmia’s family, both in Kolkata and in Chennai. He thinks he was picked due to his surname to be a scapegoat. Pankaj Dalmia also says that most of the big borrowings and transfer of funds, facilities and overseas transfers occurred after he had resigned from RHP and a limited liability partnership called KMP Fortune Advisors on 29 March 2023. In fact, he has created flowcharts of how funds were diverted from the key lenders through a network of entities, based on the forensic audit report of VCAN. Interestingly, Pankaj Dalmia says he has not met Gopal Padia. Three separate sources told me that an online portal called The Right Moo with claims of free-range organic dairy products is linked to RHP and Dinesh Dalmia.
The VCAN audit traced two sets of RHP-related entities. First, are those directly related to RHP where Gopal Padia, Pankaj Dalmia and Ramnath Arumugam are common directors. These include: KMP Fortune Advisors LLP, Raadin Health Food Private Limited, Wegan House Private Limited and Right Health Product Private Limited. Others that were used for routing money include: Kamadhenu Beverages Pvt Ltd, Exemplar Dealcom PvtLtd, three private entities with the names Arrowline Food N Beverages, Arrowline Organic Products and Arrowline Dairy Products and scores of others. Most were incorporated between 2020 and 2022 and had financial dealings between them.
The forensic audit laid bare an intricate network of companies, incorporated to layer transactions and execute cross-border money transfers, to siphon funds and defraud lenders. For instance, Rs 55.60 crore was transferred from HDFC Bank account to Eurotrade, Springbok and Grove Trading in Singapore which ‘appear related and under the control of Gopal Padia’. The audit says that the overseas transfers happened in a hurry and are bunched together, rather than regular business transactions.
VCAN also confirmed remittances by RHP to Gopal Padia’s Singapore entities, viz., Grove Trading Ptd, Euro Trade Management Services, Springbok Pte, etc. The report also finds that Gopal Padia, at times, went under the name Gopal Krishna – which is part of his name—Gopal Krishna Padia. At the same time, it reports emails from Grove and Springbok to the lenders claiming that RHP belongs to ‘Dinesh Dalmia’ and refer to him as a ‘known history sheeter’ and denying any dealings with RHP.
I messaged Gopal Padia for his view. He said “this is another game played by Dinesh Dalmia by victimising me.” He says he is travelling and will “get in touch” soon.
Meanwhile Axis Bank inspected RHP’s premises in November 2023 at MIDC, Baramati near Pune and found signs of a ‘fly-by-night’ operation with fraudulent intent. There were no stocks, invoices, operations, officials or staff. Fixed assets were rented and unused; power & fuel supplies had stopped and the company operated from rented premises. This inspection, rather late in the day, finally convinced lenders that they had been taken for a royal ride by a master fraudster. That is has happened over and over again is a remarkable story in itself.
It is utterly disgusting to note that a criminal/fraudster/conman and his coterie are gaming the banking system. What are our Agencies like CBI/ED/ Serious Fraud Office/SEBI doing? Are they all sleeping?
If what I hear from realiable sources is true, HDFC Bank, Drip Capial inc these two are the major lenders who lost a shit load of money (hdfc + drip 100 crores). Other lenders are Vivriti Capital Private Limited, Indusind Bank, Bank of Maharashtra Adiya, Birla Finance, UGRO Capital, Axis Bank, Livfin, Fince Care Small Bank, Moglix (a) Credlix, ECGC ,Orego, Bizango, Ninja kart & SBI . You have missed out so many other lender's names. Please look into the charges created against the company in ROC portal. Appreciations from Singapore...
The SEBI had directed the Company to return Investors Money-The Bankers have filed Recovery Proceedings. The CMD perhaps in Ahmedabad and Greater Noida is carrying Business Activities in the name of Benami Entities-Family Members.
It appears you have escaped to alert about Karishma Floriculture Ltd CMD a declared absconder by SEBI to protect Investors Jointly with multiple Insiders.
Hats off to madam Sucheta Dalal for bringing out financial frauds right from 1992 onwards Harshad Mehta Scam . She never gets tired of her investigative journalism and has been doing a wonderful job of keeping a close watch on the way the financial system works as a breeding ground for fraudsters to loot tax payers and depositors money . It is really shocking to read this story of fraud by a fraudster who has been caught and penalised . Frauds do happen but the frequency with which they occur and the modus operandi with which frauds occur give a doubt that the banks and their own management and regulators do not learn any lesson and take adequate steps to prevent such repeated occurrences of frauds .It only smacks of poor governance , insensitiveness to the suffering of people and laxity in the punishment process . It is high time a very serious view is taken on the banks systems and procedures , supervisory lapses and accountability failures
DSQ Software had accounts with SBI OB Chennai way back in 1990. They were involved in submission of fake invoice and discounted the same. This was later on found by the Bank and they were asked to close their accounts. IB begged DD and bagged their a/c without checking why they were sent out of SBI. IB landed in the same mess and they were after DD for recovering the money. I am not sure how much they recovered from him since by that time I was away from India. He was also involved in circulation of duplicate share certificate. He was languishing in Kolkatta jail for long time for several crimes. Submission of fake and fudged bills for discounting is his core strength. Once a thief always a thief.
Mind boggling intricacy ! I am not sure whether the investigative arm of finance ministry of Govt has enough "crooks" to unearth or prevent such frauds of people like Dinesh Dalmia !!
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August 2023 is the time when eight other lenders woke up to the fraud perpetrated by Dinesh Kumar/Dalmia. Lenders, who extended loans, bill discounting and other facilities to RHP, include: Axis Bank, HDFC Bank, SBI Global Factor Limited, Fincare Small Finance Bank, Maglix Labs Private Limited, IndusInd Bank and Bank of Maharashtra. I also have an email addressed to IIFL Finance Ltd.
