Concern over increasing frauds by financial firms

Monday, July 14 1997

Concern over increasing frauds by financial firms

NEW DELHI, July 13: A city court has expressed grave concern over increasing number of cheating cases in which innocent investors were being `duped' by some private financial institutions, posing a serious threat to the economic reforms and developmental plans.

Coming down heavily on such financial irregularities, the additional sessions judge, R C chopra in his order this week said ``lust for money and desire to become super rich overnight is the root cause of such frauds.''

``It is high time that all concerned come down heavily on such money launderers so that the other like minded are deterred from planning similar conspiracies,'' Chopra said while rejecting the bail plea of Raj Kumar Shukla, the director of PLS group of finance companies which allegedly cheated hundreds of people of crores of rupees.

``The conduct of finance companies in corporate sector in current decade has totally shaken the confidence of common investors and has given a lethal blow to the development and economic programmes of the government,'' Chopra observed.

The police has so far registered two FIRs against - SPL Technicals ltd, Bristol Finance Ltd and PLS Mutual Benefit Ltd - owned by Shukla after receiving complaints from some 450 people. Police officials entrusted with the investigation said that more complaints about cheating were pouring in and the alleged fraud could be of a ``huge dimension''.

``The companies lured the investors by offering interest rate as high as 48 per cent on fixed deposits and issued post-dated cheques to them with the promise that these will be encashed on maturity,'' they said.

Police said the fraud came to light when the cheques were dishonoured by the banks and some 200 complaints were received by the police at first instance involving an amount of Rs three crore on the basis of which the first FIR was registered against these companies.

As investigation progressed, more and more complaints poured in and a second FIR for alleged fraud of Rs two crore was registered on the basis of some 250 more complaints, the police officials said.