ED raids company in multi-crore financial scheme, seizes assets

During search, restraining orders were placed on bank accounts and demat accounts

The Directorate of Enforcement (ED) conducted search operations under the provisions of the Prevention of Money Laundering Act (PMLA), 2002, on March 8, at eight official and residential premises in Nashik and Thane (Maharashtra). The operation targeted M/s KBC Multitrade Pvt Ltd and its Promoters/Directors. Additionally, searches were carried out on March 11, at a bank locker belonging to Sanjay Panchariya, maintained with Anand Nagari Sahakari Patsanstha Maryadit.

During the extensive search action, documents related to 20 properties valued at Rs 62 crore were seized. Furthermore, restraint orders were placed under section 17(1A) on bank account balances totalling Rs 16.6 crore, demat account balances worth Rs 44.61 lakh, and post office savings amounting to R5.56 lakh. Additionally, gold and diamond jewellery worth Rs 30.75 lakh were seized.

Restraint orders were also issued under section 17(1A) of PMLA 2002 on four lockers believed to contain proceeds of the crime. "The ED initiated the investigation based on multiple FIRs registered by Maharashtra Police in Parbani, Nashik, and other districts across Maharashtra against M/s KBC Multitrade Private Ltd and its promoters, Bapu Chhabu Chavan, Bhausaheb Chhabu Chavan, and Arti Bhausaheb Chavan. Allegations included duping the public of more than Rs 200 Crore through a Multilevel Marketing (MLM) scheme," the agency said in its statement.

According to ED investigation, it was revealed that the general public was subscribed as members on payment of fees under various packages/ schemes propagated by M/s KBC Multitrade Private Ltd. and M/s KBC Club and Resorts Pvt Ltd, with promises of binary and matrix commissions, awards & rewards and product gifts.

"The commission was incumbent upon all members to enroll more members, as a portion of the subscription amounts so collected was distributed among the members at the top of the pyramid. The members got incentivised to invest, lured with commissions, even when there was no actual underlying business activity of the company," the ED said.

During the investigation, it was further revealed that the directors/ promoters of M/s KBC Multitrade Private Ltd, Bapu Chhabu Chavan, Bhausaheb Chhabu Chavan and Arti Bhausaheb Chavan and other co-accused used the membership fees collected from the public to procure immovable assets, gold jewellery, and invest in shares, etc. These immovable assets were held both under their own names and under the names of their relatives acting as proxies.

The case was filed by multiple police stations in Maharashtra, alleging the defrauding of numerous investors in rural areas. The primary suspects, Bhausaheb Chavan and his wife Arti Chavan, were reportedly on the run in Singapore. Several complaints were lodged with the Nasik police, accusing the couple of luring individuals with foreign trips and high returns. Unfortunately, in 2014, when the authorities first became aware of the case, several individuals tragically took their own lives.

Rs 62 cr
Value of property that was seized