After initiating a probe almost two years ago, the Central Bureau of Investigation (CBI) finally arrested milk-seller turned businessman Nirmal Singh Bhangoo and three other company officials on Friday for their alleged involvement in Rs 45,000-crore Ponzi scam.
It took several months for the CBI to arrest the Pearls group CMD Bhangoo as it had to thoroughly investigate the documents related to his two companies -- Pearls Agrotech Corporation Ltd (PACL) and Pearls Golden Forests Ltd (PGF).
Back then, market regulator Securities and Exchange Board of India (SEBI) had ordered PACL to return the money to millions of investors after finding its investment scheme illegal. The company had lured depositors by promising returns on investments in agricultural land.
But PACL argued that it was not an investment scheme as it sold land to customers through the scheme, Reuters reported.
"PACL founder Mr Bhangoo and three other company officials were arrested on Friday as part of the ongoing investigation into allegations of criminal conspiracy and cheating," said R K Gaur, a spokesman for the CBI.
Under the scheme, nearly Rs 45,000 crore was allegedly collected from about 55 million customers across the country, Gaur said.
Pearls Group had been raising the money from investors since 1996 through its large agent network consisting of 30 lakh people across India, sources told The Economic Times.
CBI has recovered documents related to 14,348 properties owned by Pearls Group all over the country and the properties are estimated to be worth nearly Rs 2 lakh crore.
Many unregulated firms have long been exploiting the loopholes in the regulations to launch investment schemes to raise crores of rupees from small investors, which prompted the regulators to increase "scrutiny" of such schemes over the past two years.
Similar is the case with the Sahara Group chief Subrata Roy who has been behind bars since March 2014, following the group's failure to comply with a court order to return the money to investors it had raised through an illegal bond programme. Last year, the Supreme Court had also ordered the group to refund nearly Rs 36,000 crore to bond investors in nine instalments in the next 18 months.
