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Aug 7, 2009

Rs 75 Crore Fraud

The Coimbatore police have arrested the head of a group which defrauded banks of Rs 75 crore by presenting bills in the name of fictitious companies for discounting. Inspector-general of police (IGP West) Pramod Kumar told a press conference that the police arrested 36-year old Srinivasan on Saturday and two others. A search was on for three more of his accomplices. Explaining the group’s modus operandi, Pramod Kumar said Srinivasan used to identify sick mills burdened by huge bank debts and take over their management with a promise to the owners that he would take care of their debts. He also promised them fanciful sums of money, but failed to keep his word after taking over the mill, the IG said.

Srinivasan and other accused started nearly 20 fictitious companies in the names of his friends and employees, and prepared bills in favour of those units from the sick mills already taken over by him. These bills were presented to a bank for discounting, and Rs 75 crore was siphoned off. Bill discounting is a process where future receivables are converted to cash immediately at a discount. His turnover with the bank was around Rs 250 crore. The money siphoned off was diverted into the accounts of other fictitious companies and withdrawn later, the IG said.


The accused had opened several bank accounts with forged signatures to facilitate these transactions. The police were acting on a complaint preferred by Karthikeyan with the district crime branch against Srinivasan and five others. Already, there are two cases against Srinivasan at the Karumathampatti police station. According to police, Srinivasan led a lavish life and invested the ill-gotten money he made in the film industry. He even made attempts to purchase a helicopter and take over some sick banks, Pramod Kumar said.

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