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Betting App Scam: ED Uncovers Rs 4,500 Crore Laundered Through Pharma Shell Companies
The scam involved routing funds through multiple dummy bank accounts and entities across India. These accounts, linked to businesses in sectors such as logistics, import-export, and online services, acted as intermediaries. Funds were passed through four to five transaction layers before landing in the accounts of these bogus firms.
- By Newsdesk
- New Delhi
- Dec 20, 2024
In a major breakthrough, the Enforcement Directorate (ED) has uncovered an alleged financial fraud involving the Fairplay betting app, revealing that over Rs 4,500 crore was laundered through a sophisticated network of shell pharmaceutical companies. These entities were reportedly used to layer illicit funds and facilitate unauthorized overseas remittances while evading law enforcement scrutiny.
The scam involved routing funds through multiple dummy bank accounts and entities across India. These accounts, linked to businesses in sectors such as logistics, import-export, and online services, acted as intermediaries. Funds were passed through four to five transaction layers before landing in the accounts of these bogus firms.
The investigation revealed that these funds were then funneled to entry operators who channeled them into additional shell pharmaceutical companies. After two to three further transaction layers, the money reached dummy pharma firms that served as the final stop before facilitating illegal international transfers.
More than 90 such dummy pharmaceutical companies have been identified, none of which had any physical presence or operational infrastructure. These firms were merely fronts, created to mask the illicit transfer of funds under the guise of legitimate business activities.
The ED’s probe also uncovered around 500 sham and mule bank accounts opened in 2023, with many of the associated shell companies registered between 2022 and 2024. Funds from the betting operations were funneled through these entities before being sent abroad as seemingly lawful transactions.
A Mumbai-based pharmaceutical company was found to have received over Rs 4,000 crore from fictitious entities through fabricated invoices and bills. Many of these fraudulent documents were reportedly shared via WhatsApp by operators linked to both Fairplay associates in Dubai and the pharmaceutical sector. Directors of these shell firms prepared counterfeit financial reports, often using forged letterheads.
Further investigations revealed that this Mumbai company was used as a conduit to park and layer funds originating from Fairplay’s betting activities. These funds were then routed to offshore accounts in Hong Kong and Dubai, controlled by individuals based in Dubai and their Indian associates.
A series of raids by the ED at 19 locations linked to the operation resulted in the freezing of over 500 bank accounts, along with several demat accounts. Assets worth approximately Rs 72 crore were seized, including cash totaling Rs 24 lakh, luxury watches, bank locker keys, and crucial property documents.
One accused admitted during questioning that his company had no legitimate operations and that he owned multiple dummy firms registered abroad, which were used to mask illicit transactions under the pretext of pharmaceutical exports. Another accused, formerly employed in the pharmaceutical sector, disclosed his role in purchasing the Mumbai-based company in 2020 and serving as an independent director in several shell firms.
The ED's ongoing investigation highlights the scale of the operation and its intricate methods, underscoring the challenges faced in combating financial crimes in India.