Did K'taka Cooperative Bank Fraudsters Really Dupe Investors to Build Their Wealth?

Bengaluru, July 19 (NationPress) The probe by the Enforcement Directorate (ED) into the Shushruti Co-operative Society fraud case in Bengaluru has unveiled a scheme of deceiving investors and misappropriating funds to acquire assets by the primary suspects V. Srinivasa Murthy, his spouse Dharini Devi, and their daughter Mokshatara.

As per an official announcement from the ED, Bengaluru Zonal Office, on Saturday, "The ED executed search operations on July 17 under the Prevention of Money Laundering Act (PMLA), 2002 at 15 different locations throughout Bengaluru and Ramanagara Districts, which included the office of Shushruti Souharda Sahakara Bank Niyamitha and the residences of its chairman N Srinivasa Murthy along with other implicated individuals."

During these searches, the ED retrieved incriminating documents and details regarding properties amassed from the proceeds of crime linked to the offenses of money laundering.

The ED commenced its investigation into money laundering based on multiple FIRs filed by the Karnataka Police, which alleged that the bank failed to pay interest or return the principal amounts to its clients for their Fixed Deposits or Savings Accounts.

It was claimed that the Chairman and Directors of Shushruti Souharda Sahakara Bank Niyamitha, in collaboration with bank employees, had misappropriated customer deposits, defrauding them.

The investigation uncovered that N. Srinivasa Murthy, his wife Dharini Devi, and their daughter Mokshatara, who held significant positions in the bank, were pivotal in the misallocation of funds.

The ED's inquiry further disclosed that Srinivasa Murthy established various financial entities, such as Shruti Souharda Credit Co-operative Society and Shree Lakshmi Mahila Co-Op Society (managed by Rathnamma, a close relative of Srinivasa Murthy), and solicited deposits from numerous investors with the intent to defraud.

Moreover, it was found that loans were approved in the names of their close associates, often disregarding proper processes and sometimes without collateral. These loan accounts eventually became NPA, and properties were registered in the names of Srinivasa Murthy and others using these funds.

The investigation also revealed that Mokshatara would escort Shushruti Souharda Sahakara Bank Niyamitha employees to the offices of SROs to purchase properties in their names while simultaneously acquiring General Power of Attorney in her own name.

Ongoing investigations continue as stated by the ED.

It is worth noting that earlier in 2022, the Bengaluru Central Crime Branch (CCB) filed a case against the Shushruti Co-operative Society. Following its probe, several individuals were arrested.

The society was founded by N. Shrinivasa Murthy, who subsequently appointed several family members as directors and members. A case was registered after it was discovered that the society had granted loans to insiders and failed to reimburse depositors.

Following the CCB investigation, the ED initiated its own inquiry. Acting on the FIR lodged by the CCB, the ED filed an ECIR (Enforcement Case Information Report) and commenced actions.

This case involves the alleged cheating of over Rs 100 crore from more than 15,000 depositors, who were enticed into investing with promises of high returns, sources disclosed.

Subsequently, the raised funds were channeled through unsecured loans to associates, with most of these loans becoming non-performing assets (NPAs). The laundered money was utilized for property purchases, showcasing clear violations of the Prevention of Money Laundering Act (PMLA).

According to sources, the proceeds of crime (POC) in this case are estimated to exceed Rs 100 crore.

During the ongoing search operations conducted by the ED, over 20 high-value properties—previously unrecognized by the Karnataka Police under the Karnataka Protection of Interest of Depositors in Financial Establishments Act (KPIDE)—have been uncovered.