Exposed: Rs 40 Crore IPO Scam Operation Uncovered by ED in Mumbai with 400 Fake Bank Accounts

The ED has identified numerous connected individuals and entities currently under investigation.

New Delhi:

On Tuesday, officials reported that the Enforcement Directorate conducted multiple raids in Mumbai as part of an investigation into a company that defrauded investors after falsely promising to establish data and digital learning centers in small towns.

The ED's Headquarters Investigation Unit from New Delhi executed search operations on October 29 targeting Varanium Cloud Ltd, its promoter Harshavardhan Sabale, and other associated entities.

Investigators claim that Varanium Cloud raised approximately Rs 40 crore through their September 2022 IPO by promising to develop edge data centers and digital learning facilities in smaller urban areas.

The company portrayed itself as a rapidly growing technology enterprise specializing in digital media, blockchain, and educational technology, even referencing prominent business groups and media outlets to enhance IPO credibility and gain public confidence.

The recent search operation conducted at multiple Mumbai locations on October 29 was executed under the Prevention of Money Laundering Act (PMLA), 2002.

According to the ED statement, these searches were initiated based on reliable information indicating widespread manipulation of financial records, circular fund movements, and suspected laundering of Proceeds of Crime.

The agency reported that Varanium Cloud Ltd never implemented the promised projects, instead diverting funds through fraudulent transactions and circular movements to artificially inflate turnover and market value.

Subsequent trading analysis revealed artificial price manipulation followed by significant share dumping, consistent with a "pump and dump" scheme, where the company deliberately inflated stock values through misleading claims before selling at elevated prices, deceiving the public and causing financial harm to genuine investors.

Initial examination of confiscated materials reveals an extensive network of mule bank accounts operating from Mumbai, established using forged KYC documents and dummy SIM cards.

During the search, authorities recovered over 400 checkbooks connected to these mule bank accounts and more than 200 SIM cards contained in over 100 dual SIM mobile phones, predominantly registered to individuals from Mumbai.

These accounts were utilized for layering and routing funds through more than 150 shell and dummy companies to conceal the origin of illicit money. Additional electronic devices including laptops and hard drives containing incriminating evidence were also seized during the search proceedings.

The findings expose a sophisticated operation running "Drawer companies" from small office spaces, systematically employing fake identities, multiple mule bank accounts, and proxy communication channels to defraud the public and launder their hard-earned money.

The ED has identified several other connected individuals and entities who are currently under investigation.