MUMBAI: In perhaps the biggest-ever investment cheating case in the city, the economic offences wing (EOW) took over the probe in PanCard Clubs (PCL) case where more than 50 lakh investors were allegedly duped of approximately Rs 7,035 crore.

Earlier, markets regulator Securities and Exchange Board of India (Sebi) had asked PCL, a timeshare company, to not sell its properties. It had also appointed retired Judge R M Lodha for selling PAL's properties and to use the sale proceeds to refund investors who had put in their money in the company's schemes.

An EOW officer said the agency has registered a case of cheating under the Indian Penal Code and also invoked sections of the Maharashtra Protection of Interest of Depositors (MPID) Act against PCL and its six directors.
"Their head office at Prabhadevi is now shut," said a police officer. It was Narendra Vataukar (42), a Dadar resident, who lodged a police complaint against PCL on December 10.

"PCL had come up with schemes for hotel stays. They would enrol members and ask them to invest. It would offer holiday packages at these hotels," said an officer.

Several investors who were promised higher returns did not avail of the holiday packages. Meanwhile, an investor complained about this to Sebi, which in turn began an inquiry into the matter.

The regulator found that the company ran a collective investment scheme (CIS) for which Sebi's approval was required. The directors, though, did not have any permission to run this scheme.

Its probe revealed that merely 1% of the investors had used this facility.

Earlier, Sebi had put restrictions on the firm and asked it to shut down its business, saying it cannot accept new deposits and must return investors' funds within three months+ . Sebi also ordered the firm to not sell any of its properties. PCL challenged this order in the Securities Appellate Tribunal (SAT). SAT, though, upheld the Sebi order.

The market regulator has already attached 34 properties of PCL and frozen over 250 bank accounts. The properties include land parcels, resorts, buildings and office spaces across the country.

"It was an investor who approached Dadar police station and lodged a cheating complaint of Rs 40,000. That apart, 82 more investors approached EOW with similar complaints against PCL. Sebi officials have told EOW that there are 51 lakh investors and PCL collected Rs 7,035 crore as investment. We have just taken over the probe from the police station and will start collecting documents related to the case and recording of victims' statements," said an officer. Most of PCL's investors are from middle-class families and spread across the country. The attachment of properties began after the company failed to comply with Sebi's direction to refund over Rs 7,000 crore to investors raised through illegal CIS.

• Times of India
• 13/12/2017