The Enforcement Directorate (ED)’s Lucknow zonal office on Saturday intensified its crackdown on alleged large-scale bank fraud and money laundering by conducting simultaneous searches at 10 locations across Uttar Pradesh, Delhi and Punjab in connection with an alleged ₹450-crore loan diversion case involving M/s Santosh Overseas Ltd. (SOL), senior ED officials in Lucknow said while sharing a press note.
Event Context
The searches, carried out under Section 17 of the Prevention of Money Laundering Act (PMLA), 2002, covered premises linked to the company’s promoters, their family members, associated companies, accommodation entry operators, facilitators and the statutory auditor. The action forms part of an ongoing money laundering investigation into the alleged diversion of bank funds borrowed from a consortium of banks.
During the searches, ED officials seized ₹10.5 lakh in cash and recovered records relating to assets worth nearly ₹75 crore in the names of the promoters’ family members and associated entities. The agency also seized several digital devices, financial records and documents that it believes contain evidence of fund diversion, layering and laundering.
The probe further revealed alleged round-tripping of funds through multiple firms controlled by the promoters and their family members. Such transactions, the ED believes, were designed to layer and integrate the proceeds of crime into the legitimate financial system.
The searches mark another significant enforcement action by the ED’s Lucknow zonal office in Uttar Pradesh, where the agency has stepped up investigations into bank fraud, financial crimes and money laundering cases over the past few months.
Officials said the search operation focused on individuals and entities suspected of facilitating the laundering process, including accommodation entry providers and professionals allegedly involved in structuring financial transactions.
The statutory auditor connected with the company also came under the scanner during the operation, with investigators examining records to ascertain the role of professionals in the alleged diversion of funds.
The ED is analysing the seized digital devices and financial documents to trace the complete money trail, identify additional beneficiaries and determine whether more assets acquired from the alleged proceeds of crime can be attached under the PMLA.
Player Focus
Officials said further investigation is in progress and additional action may follow based on the evidence collected during the searches. The agency is also examining the role of other individuals and entities that may have assisted in creating shell companies, generating accommodation entries and facilitating the movement of the allegedly diverted bank funds.
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The investigation was initiated after the Central Bureau of Investigation (CBI) registered an FIR on a complaint lodged by IDBI Bank on behalf of a consortium of lending banks. According to the ED, Santosh Overseas Ltd allegedly diverted and siphoned off loans obtained from the consortium, causing an estimated wrongful loss of around ₹450 crore to the banks.
According to the ED, the investigation has uncovered an elaborate network of shell companies and accommodation entry operators allegedly used by the promoters to conceal and launder the proceeds of crime.
The agency said the funds were moved through bogus purchase and sale transactions backed by fake invoices, while money was circulated among multiple entities without any genuine commercial activity.
Investigators have also found evidence suggesting that several shell companies were incorporated using forged or misused identity documents exclusively for routing funds and generating accommodation entries.
