Mahadev illegal betting app case: ED probe reveals dummy cos' accounts used to route funds to stock market

It has been revealed after the arrest of Suraj Chokhani, the Indian connection to the fugitive promoters of the Mahadev app, that through a betting website, ‘skyexchange’, Chokhani allegedly diverted Rs 423 crore (as on February 29) through companies under his directorship to stock portfolios. The ED suspects most of these were small and mid-cap stocks.

Mumbai: Investigation into the multi-crore Mahadev Online Book illegal betting application scam has revealed that the bank entries of dummy companies were used to invest in the stock market. The Enforcement Directorate (ED) on Friday said it had frozen shares worth Rs 1,100 crore held in demat accounts linked to the accused in the case.

It has been revealed after the arrest of Suraj Chokhani, the Indian connection to the fugitive promoters of the Mahadev app, that through a betting website, ‘skyexchange’, Chokhani allegedly diverted Rs 423 crore (as on February 29) through companies under his directorship to stock portfolios. The ED suspects most of these were small and mid-cap stocks.

The ED findings have come at a time when markets regulator Sebi’s chief Madhabi Puri Buch on Monday raised concerns over stretched valuations of small and midcap stocks, which are generally favoured by retail investors and have continued to enjoy their patronage through monthly purchase mandates to mutual funds built around such investment themes.

Chokani has been identified as the main associate of Hari Shankar Tibrewal, who the ED suspects to have allegedly laundered secret proceeds of crime under the guise of share investments. According to the ED, the duo had converted the cash received by the promoters through hawala channel to bank entries using services of professional entry operators.

“. As on 29.02.2024, the Indian companies under control of associates of Hari Shankar Tibrewal held around securities worth Rs 580 crore in stock portfolios. That the foreign entities also invested in India via the FPI route and as on 29.02.2024 they were found to be holding securities worth Rs 606 crore in stock portfolios,” the ED had said in a statement on Friday.

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“The investigation has revealed that for this purpose of obtaining bank balance in bank accounts, transactions in the name of unlisted stocks were undertaken by professional entry operators,” the ED had told in its earlier court filings while seeking Chokhani’s remand.

The probe has revealed Chokhani who was director in eight private companies — Ability Garnes, Brilliant Investment Consultant, Discovery Buildcon, Forest Vincom, Sawambhumi Vanijya, Dream Achievers Consultancy, Ability Smart Tech and Ability Ventures — used these companies to purchase shares.

“. Amit Sarogi in his statements recorded disclosed that he has a company named Pearl Dealers, which he had utilised for providing bank entries against cash to entities controlled by Chokhani … Ability Games and Discovery Buildcon had received payments from Pearl Dealers in this manner only. The investigation has revealed that these bank entries were immediately utilised for share purchases,” the court document accessed by ET read.

Earlier on Monday, the special judge, Raipur (Chhattisgarh), rejected ED’s application seeking further custody of Chokhani. Chokhani along with another accused Girish Talreja were arrested on March 3 in the case and were remanded in ED custody till Monday.

Advocate Vijay Aggarwal and Ayush Jinal appearing for Suraj Chokhani on Monday filed an application opposing the remand application on the grounds that his client Chokhani has been in the custody of ED since February 28.

Counsel appearing for the ED on the other hand vehemently opposed the arguments and submitted that further custody is required to confront them.

The court after hearing the argument remanded Chokani to judicial custody till March 23.

ED’s probe had revealed that the Mahadev betting app is an alleged umbrella syndicate arranging online platforms for enabling illegal betting websites to enrol new users, create User IDs and laundering of money through a layered web of benami bank accounts.

( Originally published on Mar 13, 2024 )