NEW DELHI, (Reuters) – India’s federal investigator yesterday arrested the founder of PACL Ltd over allegations the property company cheated investors of $6.8 billion, in what local media is calling the country’s biggest financial scandal.
The arrest of Nirmal Singh Bhangoo comes 17 months after markets regulator the Securities and Exchange Board of India (SEBI) ordered PACL to return money to millions of investors, saying the company was running an illegal investment scheme.
The scheme promised depositors returns on investments in agricultural land, the regulator said.
PACL has argued it was selling land to customers and not investment schemes, and so was not subject to SEBI’s regulations.
Reuters did not get any response to phone calls to PACL’s head office in New Delhi on Friday.
PACL founder Bhangoo and three other company officials were arrested yesterday as part of the ongoing investigation into allegations of criminal conspiracy and cheating, said R.K. Gaur, a spokesman for India’s Central Bureau of Investigation.
