CHENNAI -- The Enforcement Directorate (ED) has arrested sand mining baron J Sekhar Reddy on charges of money laundering, three months after the CBI held him for exchanging crores of demonetised currencies.
"We arrested Reddy and his two associates K Srinivasulu and Premkumar under the Prevention of Money Laundering Act (PMLA) here on Monday night for converting ₹34-crore old notes into new notes that were seized by the Income Tax Department in mid-December," ED Joint Director SVV Prasad told IANS.
Based on the FIR filed by Central Bureau of Investigation (CBI) after the seizure of old and new currencies worth several crores in December, the ED filed a case against Reddy and Sreenivasulu under the PMLA.
The arrested persons were produced before a Magistrate at his residence here and remanded to judicial custody till March 28.
After his earlier arrest by the CBI, Reddy was released on conditional bail.
Based on the CBI FIR, the ED registered a case on December 20 against Reddy and Sreenivasulu.
The CBI had filed the case after the Income Tax Department raided their residential and office premises in Chennai and Vellore.
That is when ₹131 crore of cash was seized, including ₹34 crore in new ₹2,000 currency, 177 kg of gold and documents showing property worth several crores.
Based on the evidences gathered and documents seized from Reddy and his associates, Income Tax officials raided the residences of then Tamil Nadu Chief Secretary P Rama Mohana Rao and seized incriminating documents, cash and gold jewellery.
They also raided Rao's office at the Secretariat and the residential and business premises of his son Vivek Papisetty as well as other family members.
"Though Reddy admitted that the seized cash was unaccounted and belonged to his SRS mining firm, he did not divulge its source. He, however, claimed that 177 kg gold bars seized were his and that he procured them through Premkumar," pointed out Prasad from Reddy's disclosures during the investigation.
During interrogation, Premakumar told the ED that he supplied gold bars of 1kg to Reddy and received demonetised currencies through Srinivasulu in exchange.
"Premkumar also confessed to the ED that 30kg of gold bars seized by the tax sleuths from his house also belonged to Reddy only," he said.
Srinvasulu too admitted to the ED that he received money from Reddy's mining firm SRS Mining and used to convert a part of it into gold bars through Premkumar.
"The three accused kept the remaining cash at various premises before the IT Department searched and seized from them, but Reddy has not told us the modus operandi of converting old notes into new currencies," Prasad said.
The central government demonetised the old ₹500 and ₹1,000 notes on November 8 to eliminate black money, counterfeit notes and terror funding, and asked the public to exchange them for new notes till December 30, 2016.
Industrialist Reddy was a member of the Tirumala Tirupathi Devesthanam (TTD) Board at Tirupathi in the neighbouring Andhra Pradesh state.
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