The Enforcement Directorate (ED) on Tuesday said that it conducted searches on October 29 at multiple locations in Mumbai in connection with its ongoing investigation against Varanium Cloud Ltd. and its promoter Harshavardhan Sabale and other associated entities.
The searches were conducted based on information allegedly indicating widespread tampering with financial records, circular money movements, and suspected laundering of the proceeds of crime.
According to the agency, Varanium Cloud Ltd. The associated companies raised about Rs 40 lakh crore through an IPO in September 2022, claiming that it would be used to set up cutting-edge data centers and digital education centers in small towns.
The company presented itself as a fast-growing technology company in the areas of digital media, blockchain technology and EdTech, even citing the names of prominent business groups and media outlets to promote the IPO, thus gaining public trust, the ED said.
However, one of the officials said the promised projects were never implemented, and the money was diverted through false transactions and circular movements to inflate trading volume and market value.
The official added that subsequent trading patterns showed an artificial price escalation followed by a heavy dumping of shares, consistent with a “pump and dump” scheme, where the company’s shares were deliberately inflated through misleading claims and later dumped at high prices, deceiving the public and causing losses to genuine investors.
Over 400 check books linked to these bank accounts and over 200 SIM cards found in over 100 dual-SIM mobile phones, most of them issued in the names of people from Mumbai, were found during the search, the ED said.
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These accounts were used to hide the money and direct it through more than 150 shell and fictitious companies, to hide the source of the illicit funds. Other electronic devices like laptops, hard drives etc containing incriminating evidence were also recovered from the search proceedings, the ED said.
(tags for translation) ED raids on fraud using IPO funds
