Bengaluru, Nov 11 : Karnataka's former BJP Minister and mining baron Gali Janardhana Reddy was arrested and jailed for allegedly shielding two accused persons in a multi-crore Ponzi scheme, a senior police official said on Sunday.
"Based on the evidences and statements, Reddy has been arrested and charged with criminal conspiracy and under various other Sections of the Indian Penal Code (IPC)," Additional Commissioner of Police (Crime) Alok Kumar told reporters here.
Later, Additional City Metropolitan Magistrate Jagdish sent Reddy to a 14-day judicial custody till November 24 after the police produced him at the Magistrate's residence in the city.
The Central Crime Branch police took Reddy to state-run Victoria Hospital in the city for the mandatory medical check-up before producing him at the Magistrate's residence.
The CCB charged Reddy with shielding a man and his son, both accused in a Rs 954-crore Ponzi scheme, from being investigated by the Enforcement Directorate (ED) for alleged money laundering in violation of the Foreign Exchange Management Act (FEMA).
"The accused duo have revealed during their interrogation that Reddy had allegedly bribed an ED official Rs 1 crore for withholding the probe into the Ponzi scam," said Kumar.
Reddy's arrest comes a day after he drove to the CCB office on Saturday evening in response to its summons in the Ponzi case.
"Reddy has been lodged in the city central jail.
We will apply for bail in the same court on Monday for his release," his lawyer Chandrashekar told reporters here.
Reddy was quizzed on Saturday by CCB officials led by Kumar, Deputy Commissioner of Police S.
Girish and Assistant Commissioner of Police Venkatesh Prasanna.
Reddy, 51, a former BJP Minister in the state (2008-11), however, denied his involvement in the case.
"I have no role in the Ponzi scheme.
The police have no evidence to prove my involvement in it. They (police) are misleading the media and the public," said Reddy in a video clip released to local news channels before his interrogation on Saturday.
The ED on Thursday charged the duo -- Syed Ahmed Fareed and his son Syed Afaq Ahmed with Ambidant Marketing Ltd with running a potential Ponzi scheme offering huge interest to investors in the name of 'Islamic banking'.
"Investigation revealed that Ambidant has been operating a potential Ponzi scheme and duping thousands of investors in the name of Islamic banking and 'Halal' investment," said ED in a statement here.
Since inception on December 20, 2016, the company received a whopping Rs 954 crore as investments under Haj/Umrah and Ultimate plans.
In a Ponzi scheme, an investment firm fraudulently collects huge money from depositors promising high interest rate but uses it to pay heavy interest on deposits raised earlier from another set of investors.
"In a Ponzi scheme, investors are made to believe that they earn high interest on their deposits from profits the company makes through lucrative business than from their own deposits, which are recycled," said an ED official.
Reacting to Reddy's arrest and imprisonment, former Karnataka Chief Minister Siddaramaiah said that nobody was above the law.
"Legal action has to be taken against anyone who commits a crime.
Reddy is no exception," Siddaramaiah told reporters at Chikkamagalur in the state's southwest region and quoted a local proverb that translates into "he who eats salt has to drink water to refresh".
--IANS
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Source: IANS
