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The Rose Valley chit fund company has suffered yet another blow as a court in Cuttack has allowed the state
government to confiscate properties worth around Rs 6.5 crore owned by the company. The confiscation order was
issued on March 31 and the economic offences wing (EOW) of the state crime branch received the copy last week. A
senior EOW official has stated that the confiscated money will be equitably distributed among the duped investors.
With the latest attachment, the government has so far confiscated assets worth Rs 101 crore of the chit fund company
in the state. The Rose Valley Group is accused of cheating investors of about Rs 17,000 crore in the country, with
nearly Rs 450 crore being from Odisha alone. At least 25 cheating cases were registered against the company at
different places in Odisha. The company is being investigated by EOW, CBI, and ED for criminal culpability and
money laundering aspects of the Rose Valley scam.
The EOW, which had registered a case against the company and its functionaries on May 28, 2013, filed five charge-
sheets in court against its directors, namely Goutam Kundu and Sibamoya Dutta, and regional managers - Bikramjit
Bhowmik and Badal Kumar Kar.
The Rose Valley Group was founded in 1997 and headquartered in Kolkata. It was involved in a wide range of
businesses, including real estate, media, hospitality, and films. However, the company's chit fund business was the
most lucrative but also the most fraudulent. The company lured investors with promises of high returns of up to 24%
p.a., a return much higher than what was being offered by banks and other financial institutions. The company's
aggressive marketing strategy targeted low-income individuals, particularly in rural areas, who were lured by the
promise of quick and easy returns.
Upon further investigated, it was discovered that the company was not registered with the Securities and Exchange
Board of India (SEBI) and was not authorized to collect public deposits. The company had been running a Ponzi
scheme, where the new investors' money was being used to pay off the old investors. The company's owner, Gautam
Kundu, and his associates had siphoned off funds from the company and used them for their personal expenses,
including buying properties, luxury cars, and expensive artwork.
The scam came to light in 2013 when investors started filing complaints against the company. The Central Bureau of
Investigation (CBI) and the Enforcement Directorate (ED) took up the case and conducted raids at the company's
offices and residences of its directors. The company also endured investigations by the Income Tax Department, the
Reserve Bank of India, and the Ministry of Corporate Affairs.
In 2015, the government had passed the Odisha Protection of Interests of Depositors (in Financial Establishments) Act
(OPID), aimed to protect the interests of depositors and provide for the speedy attachment and confiscation of assets
of fraudulent financial establishments. The designated OPID court issued the first attachment order in 2015 and the
second one in 2018, putting the combined value of the assets to the tune of about Rs 95 crore.
The company's owner, Gautam Kundu, was arrested in 2015, and the Enforcement Directorate (ED) attached
properties worth Rs 2,300 crore in 2017. The ED also filed a charge sheet against Kundu and others under the
Prevention of Money Laundering Act (PMLA) for allegedly cheating investors. The Securities and Exchange Board of
India (SEBI) had also directed the company to refund money to investors.
Chit fund scams are a growing concern in India, with many people falling prey to the schemes. The government has
taken several steps to curb such scams, including introducing legislation to regulate chit funds and setting up a special
investigation team to investigate the scams. However, despite these efforts, chit fund scams continue to surface,
duping unsuspecting investors.
The confiscation of properties worth Rs 6.5 crore owned by the Rose Valley chit fund company is another step
towards justice for the duped investors. However, there is still a long way to go before all the investors are adequately
compensated for their losses. The government must take strict action against those responsible for such scams and
create more awareness among people to prevent them from falling prey to such schemes.
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