Andhra Pradesh: Margadarsi chit fund chairman and MD conspired with branch managers to divert money, say probe officials

Money collected from subscribers was used for personal use and cases were registered based on audit report, says Inspector-General of Registration and Stamps V. Ramakrishna

The Margadarsi Chit Fund Private Limited has diverted a huge amount of money collected from its subscribers into private banks, equity instruments, and utilized it for personal use, the officials probing the alleged irregularities committed by the firm have said.

In a complaint lodged with the police, Vijayawada Assistant Registrar of Chits V.S.S.V. Krishna Rao (Registration and Stamps Department) said that the chit fund company was being operated from Hyderabad by its chairman Cherukuri Ramoji Rao, and managing director Cherukuri Sailaja.

During the searches conducted at different branches of the firm, the investigation officers found many violations of the Chit Fund Act. “Mr. Ramoji Rao and Ms. Sailaja conspired with the foreman of the Labbipeta branch of the firm in Vijayawada, and others. The money collected from subscribers was diverted for personal use, in violation of the rules,” said Mr. Krishna Rao

Inspector-General of Registration and Stamps V. Ramakrishna, in the audit report, said that it was found that a huge amount of the subscribers’ money was used for personal gain and violations of Andhra Pradesh Protection of Depositors of Financial Establishments Act, 1999 and Chit Funds Act, 1982, were noticed.

“Based on the audit report, cases have been registered against Mr. Ramoji Rao, Ms. Sailaja and several foremen of Margadarsi Chit Fund Private Limited on charges of Section 120 b (criminal breach of trust), Section 420 (cheating) and other sections,” Mr. Ramakrishna told The Hindu on March 14 (Tuesday).

Crime Investigation Department (CID) Additional Director-General N. Sanjay, who is investigating the alleged fraud by the private chit fund company, said that more searches would be conducted on the branches of the firm.

“In some cases, the chit fund companies are not returning the amount even after the chit was closed. They are asking for more documents and signatures of some sureties. In such cases, the deposits are being misused and the money running into several crores is not shown in any account,” Mr. Ramakrishna explained.