Pune: ED Cracks Down on VIPS Group, Seizes Rs. 18.54 Crore in FEMA Violation Probe

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Pune, 2nd June 2023: The Directorate of Enforcement (ED) conducted searches at multiple locations in Pune and Ahmednagar on May 25, 2023, as part of an investigation into Foreign Exchange Management Act (FEMA) violations. The searches were carried out in connection with the VIPS Group of Companies and M/s Global Affiliate Business, managed and controlled by Vinod Khute and his relatives.

The ED initiated the investigation under FEMA, 1999 against Vinod Khute and others, who is currently residing in Dubai and is believed to be the mastermind behind various illegal trade activities, crypto exchange, and wallet services operated through the VIPS Group of Companies. It has been alleged that the proceeds from these activities were being siphoned off to various foreign countries through Hawala channels.

During the investigation, it was discovered that M/s Global Affiliate Business, an affiliate marketing program that sells products through an E-Commerce Shopping Portal, was operating an illegal and unauthorized multi-level marketing scheme. The scheme involved crediting commissions to members’ accounts or wallets based on their investments or expenses on the application.

It has been estimated that funds amounting to Rs. 125 crore were collected from various investors through this scheme. Additionally, M/s Global Affiliate Business was found to be marketing the business of M/s Kana Capital, which is engaged in brokerage services for forex, crypto, and stocks trading. The directors of VIPS Group of Companies, in collaboration with M/s Kana Capital, also conducted training programs for clients of M/s Global Affiliate Business, promoting investment in VIPSWALLET and VIPSFINSTOCK for the purchase and sale of crypto and stocks, as well as encouraging them to engage in illegal and unauthorized multi-level marketing schemes.

Another venture linked to Vinod Khute, M/s D Dhanashree Multi State Co-op Credit Society Limited, based in Pune, was also uncovered during the investigation. It was found that this venture was offering fake schemes promising high monthly interest rates of 2 to 4 percent to lure investors.
The investigation revealed that investments worth crores of rupees were collected from various clients and investors, including cash transactions.

The proceeds collected by M/s Global Affiliate Business were allegedly transferred out of the country through Hawala channels and to various shell companies and firms. The investigation has so far disclosed that over Rs 125 crore were collected from investors through banking channels and cash, under the pretext of earning interest or commission income.

As a result of the ongoing investigation, the ED has frozen a sum of Rs 17.22 crore in the form of bank balances, under the provisions of FEMA, 1999. The searches conducted by the ED have led to the seizure and freezing of cash and bank balances totaling Rs 18.54 crore.

The investigation is still underway, and further actions will be taken based on the findings. The ED remains committed to combating financial irregularities and ensuring the enforcement of relevant laws and regulations to safeguard the interests of investors.


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