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ED Raids IREO and M3M Groups for Alleged Money Laundering and Fund Diversion

On June 5, the Enforcement Directorate (ED) carried out search operations at multiple locations in Delhi and Gurugram belonging to the IREO Group and M3M Group. The raids were conducted as part of an investigation into allegations of diverting, siphoning off, or misappropriating funds, according to a statement issued by the investigation agency.

During the search operations, the ED seized luxury cars worth approximately Rs 60 crore, including prestigious brands such as Ferrari, Lamborghini, and Bentley. Additionally, jewelry valued at Rs 5.75 crore was also confiscated. The ED stated that the searches were conducted on June 1 at seven different locations. However, the owners, controllers, and promoters of the M3M Group, namely Basant Bansal, Roop Kumar Bansal, Pankaj Bansal, and other key individuals, allegedly evaded investigation during the raids, as alleged by the ED.

The search operations were carried out under the provisions of the Prevention of Money Laundering Act, 2002 (PMLA). The ED had initiated an investigation into the IREO Group following multiple First Information Reports (FIRs) registered against the company for diverting, siphoning off, or misappropriating funds belonging to investors or customers. During the course of its investigation, the ED discovered that substantial amounts of money, running into hundreds of crores, were also siphoned off through the M3M Group.

According to the ED's findings, one of the transactions involved the M3M Group receiving approximately Rs 400 crore from the IREO Group through several shell companies operating in multiple layers. The transaction was recorded in the books of the IREO Group as payments toward development rights, while the land itself was owned by the M3M Group. The market value of the land was estimated to be around Rs 4 crore. Initially, the M3M Group sold the development rights of the land to five unrelated shell companies for a payment of Rs 10 crore, as stated by the ED. However, investigations revealed that these shell companies were, in fact, operated by the M3M Group. Subsequently, the five shell companies immediately sold the development rights of the same land to the IREO Group for approximately Rs 400 crore. The amount received by the five shell companies was then transferred back to the M3M Group through multiple shell companies and layers.

The ED alleges that all the shell companies involved in the transactions were owned and operated by the M3M Group under the directions of its promoters, Basant Bansal, Roop Kumar Bansal, and their family members. This diversion of funds amounted to around Rs 400 crore belonging to investors or customers, which remained with the M3M Group and was subsequently used for other investments or to pay off liabilities. On the other hand, the IREO Group allegedly made no efforts to develop the land and started writing off the investments each year, according to the ED's statement.

During the search operation conducted under Section 17 of the PMLA, 2002, the ED seized 17 high-end luxury vehicles, including brands such as Ferrari, Lamborghini, Land Rover, Rolls Royce, Bentley, and Mercedes Maybach, with a total acquisition value of approximately Rs 60 crore. Jewelry and bullion worth Rs 5.75 crore, along with Rs 15 lakh in cash, were also confiscated. Additionally, various incriminating documents, digital evidence, and books of accounts were seized. The ED stated that further investigations are ongoing.

IREO Group, in response to the ED's actions, issued a statement denying the search operation and any allegations of fund diversion or misappropriation of funds. The company clarified that no search operation took place on June 1, 2023, under the Prevention of Money Laundering Act (PMLA) at any of its locations in Delhi or Gurugram. It vehemently denied any siphoning off or misappropriation of funds by IREO (P) Ltd.

IREO Group further refuted the claim of seizing high-end luxury vehicles, jewelry, cash, or any incriminating documents. The company emphasized that all transactions involving alleged shell companies were conducted in accordance with the law and were valued by government-approved valuators. It also stated that no customer money was involved in the alleged transactions.

On the other hand, the M3M Group declined to comment on the matter.

The ED's investigation into the IREO and M3M Groups highlights the agency's efforts to crack down on alleged financial irregularities and money laundering activities in the real estate sector. The search operations and subsequent allegations of fund diversion raise concerns about corporate governance and the misuse of funds in these companies.

As the investigation progresses, it remains to be seen how the ED will substantiate its claims and whether additional actions will be taken against the IREO and M3M Groups. The outcomes of this case will have implications not only for the companies involved but also for the broader real estate industry in India, as it could impact investor confidence and regulatory scrutiny of financial practices within the sector.

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