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Income tax Dept. likely to probe source of funds: Citibank fraud
January, 10th 2011

The Income Tax Department may conduct a probe of its own into the Rs 400 crore fraud exposed at Citibank's Gurgaon branch to ascertain if black money found its way into the ponzi scheme designed by Relationship Manager Shivraj Puri .

"The department may look into the matter to find out if unaccounted money was routed to the stock market or elsewhere with the help of the accused," sources said.

However, the Income Tax Department is yet to initiate action on the fraud, which at present only covers the investment made by about 20 corporate entities and two dozen high net-worth individuals (HNIs).

The entities whose funds were diverted by Puri into the accounts of his relatives include Hero Corporate Services (Rs 13.75 crore), OKS Sapan Tech (Rs 2 crore) and Satyam Auto (Rs 25 crore).

Furthermore, Mayar Infratech (Rs 24 crore), Spaid (Rs 62 crore), Karopat Pad (Rs 8 crore), Sunil Kant and Sons (Rs 3 crore), Aero Infratec (Rs 25 crore), Hero Exports (Rs 97 crore), Rekha Munjal (Rs 5 crore), Munjal Investments (Rs 2.5 crore) and Munab Braej (Rs 71 crore) fell prey to the scam.

Besides the entities named in the report, the police said they were looking into the records of other entities that claim to have lost money in the fraud uncovered at Citibank's Gurgaon branch late last month.

So far, only one HNI client -- Helion Advisors Pvt Ltd Managing Director Sanjeev Aggarwal, who lost about Rs 33 crore -- has filed an FIR on the fraud, in which he accused the top officials of Citibank NA, including country head, of being the perpetrators.

Investigations into the irregularities at Citibank came to light in the wake of a complaint that the bank was offering abnormal returns on an investment scheme for investors. It was found that Puri had collected the money on the basis of a fake SEBI circular claiming the scheme had the market regulator's approval.

Securities and Exchange Board of India (SEBI) later wrote to the bank saying no such scheme was approved by it.

The police also alleged that Puri used to give fake receipts and bank statements to his clients to mislead them. The police report filed before a city court here said Puri used to divert the money invested by the entities into demat accounts held by his relatives in brokerage firms Religare and Bonanza.

The initial FIR on the fraud was filed by Citibank Assistant Vice-President Binu Somen, following which Puri surrendered on December 30. Besides Puri, the Associate Vice-President of Hero Corporate Services, Sanjay Gupta, was also arrested for his alleged involvement in the scam.

Gupta allegedly misappropriated Rs 250 crore belonging to the Hero Group entities and promoters, which was collected on the pretext of legitimate investment.

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