ED Attaches Rs 2.9 Crore Properties in Hyderabad Bank Fraud Case
The Directorate of Enforcement (ED), through its Hyderabad zonal office, has taken decisive action by provisionally attaching four immovable properties valued at approximately Rs 2.9 crore. This move comes under the stringent provisions of the Prevention of Money Laundering Act (PMLA), as part of an ongoing investigation into a significant bank fraud case allegedly orchestrated by one Subbaiah Korrapati.
Details of the Attached Properties
The attached assets, which are held in the names of associates linked to Subbaiah Korrapati, comprise a diverse mix of real estate. These include agricultural land, residential plots, and a commercial property, all located in and around Hyderabad. The provisional attachment is a critical step in the ED's efforts to prevent the dissipation of these assets, which are suspected to be proceeds of crime.
Background of the Investigation
The ED's probe was initiated based on a First Information Report (FIR) filed by the Central Bureau of Investigation (CBI) in 2020. According to the FIR, Subbaiah Korrapati is accused of fraudulently obtaining credit facilities amounting to Rs 10 crore from the Syndicate Bank, Chandanagar branch. This was allegedly achieved by submitting forged sub-contract agreements and non-existent work orders, thereby misleading the bank authorities.
Chargesheet and Allegations
In 2023, the Anti-Corruption Bureau (ACB) filed a chargesheet before the XXI ACMM-cum-special JMFC for trial of CBI cases in Hyderabad. The chargesheet outlines serious allegations against Subbaiah Korrapati, including:
- Conspiring with others to submit forged property documents as collateral to secure credit facilities totaling Rs 12.30 crore.
- Defaulting on loan repayments, thereby causing a wrongful loss of Rs 12.30 crore to the bank and a corresponding wrongful gain to himself.
The ED's investigation further revealed that the loans were availed based on properties that were either non-existent or not converted, registered at highly inflated values to deceive the bank.
Misuse of Loan Proceeds
Investigators uncovered that Subbaiah Korrapati did not utilize the loan amounts for their stated business purposes. Instead, he engaged in a complex scheme to divert, layer, and siphon off the funds. Key methods identified include:
- Transferring money to co-accused associates and entities through bogus sub-contracts.
- Using fake raw material bills to create a facade of legitimate transactions.
- Engaging in round-tripping of funds to obscure the money trail.
- Making cash withdrawals to further launder the illicit proceeds.
Additional Fraudulent Activities
The probe also exposed that Subbaiah Korrapati misused bank guarantees under the NSIC raw material assistance scheme. By submitting forged pro-forma invoices, he routed funds back to his own bank accounts, thereby exacerbating the financial fraud. The investigation confirmed that the proceeds of crime were utilized for various purposes, including:
- Repayment of other loans to maintain a false financial standing.
- Securing new projects to perpetuate the fraudulent activities.
- Funding personal and business expenditures, thereby enriching himself at the bank's expense.
This case highlights the ED's ongoing efforts to combat financial crimes and money laundering in India, particularly in high-stakes bank fraud scenarios. The attachment of properties serves as a warning to those involved in such illicit activities, emphasizing the legal consequences under PMLA.
