ED arrests two in ₹1,417-crore 'export profits' fraud that trapped nearly 36,000 investors

The Enforcement Directorate has arrested two men in connection with an alleged ₹1,417.86-crore investment fraud that investigators say duped nearly 36,000 investors with promises of high returns from agricultural exports.

S. Naveen Kumar and S. Muthuselvam were arrested on September 29 under Section 19 of the Prevention of Money Laundering Act. A special PMLA court has remanded them to 15 days' judicial custody, the agency said in a statement on Thursday.

The investigation began with an FIR registered by the District Crime Branch in Erode under the Indian Penal Code and the Tamil Nadu Protection of Interests of Depositors Act. According to the ED, the accused and their associates floated investment schemes named "UNI", "FNP", "FAP" and "UNR" under the banners of Unique Exports, East Valley Agro Firms and linked entities, promising investors profits said to come from agricultural exports.

Financial analysis, however, found that the firms carried out virtually no substantial export business. Instead, the ED says, around ₹1,417.86 crore was collected from about 35,759 investors, with nearly ₹719 crore deposited in bank accounts linked to Unique Exports. The money was allegedly routed through more than 100 bank accounts held in the names of the firms, family members and close associates.

Naveen Kumar, the proprietor of Unique Exports, is described by the agency as the alleged mastermind who devised the schemes and personally controlled the banking operations and the movement of investors' money. Banking records, the ED said, showed ₹390.90 crore recorded as salary payments even though only four people worked in the concern. Another ₹79.56 crore was booked as expenditure on onions and other commodities — without any actual purchases.

Muthuselvam allegedly helped operate the schemes, recruit investors and channel funds. Against an investment of about ₹42.10 lakh, he is said to have received ₹12.72 crore in returns, commissions and referral benefits.

The ED had searched nine premises linked to Naveen Kumar and his associates on June 16 and 17 before making the arrests.