ICAI Reprimands CA Guilty of Professional Misconduct Accused of Multiple Financial Frauds, under Investigation by SEBI, EOW and others

The applicant accused Is a Chartered Accountant and has in depth knowledge of financial transactions and as such he clandestinely siphoned off the amount in a very clever manner” said EOW
ICAI - Economic Offence Wing - SEBI Investigation - Professional Misconduct - EOW - SEBI - TAXSCAN

The Disciplinary Board of Institute of Chartered Accountants of India ( ICAI ) has reprimanded the Chartered Accountant ( CA ) guilty of professional misconduct. The CA who is accused of multiple financial frauds is under the investigation of Securities and Exchange Board of India ( SEBI ) Economic Offence Wing ( EOW ) and other departments.

The Respondent-CA acting as the Managing Director of M/s Comfort Securities Limited (a Merchant Banker) and M/s Comfort Intech Ltd. (an NBFC Company), is accused of defrauding the Complainant’s Company using a falsified Axis Bank cheque return memo.

Allegations suggested that the Respondent illegally obtained 51% of the Complainant’s Company’s promoter shares, valued at Rs. 33.60 Crores from an IPO, as well as Rs. 32 Crores worth of assets in Nacharam, Hyderabad. An FIR was lodged against the Respondent with the Economic Offences Wing, Mumbai, on January 21, 2014, regarding this matter.

Moreover, the Respondent-CA is accused of unlawfully acquiring M/s Liquors India Limited, Nacharam, Hyderabad, and embezzling Rs. 7.50 Crores through coercion. It is claimed that the CA forged documents to deceive the Reserve Bank of India ( RBI ) and transferred large sums of money to his Dubai-based group company, resulting in the RBI revoking the NBFC license of M/s Comfort Intech Limited.

Additionally, SEBI has prohibited several companies associated with the Complainant from engaging in stock trading due to allegations of fraud amounting to Rs. 172.21 Crores. SEBI has initiated legal action against the Respondent, involving agencies such as the Enforcement Directorate, Income Tax Department, and Financial Intelligence Unit. Multiple cases of fraud and attempts to quash FIRs are pending against the Respondent, his family members, and affiliated companies in Mumbai and Hyderabad courts.

The board reviewed the reports submitted by the complainant to the EOW. Also, noted the submissions of the Mumbai EOW before the Mumbai Sessions court, vide letters. The submissions are as follows:

“The applicant accused Is a Chartered Accountant and has in depth knowledge of financial transactions and as such he clandestinely siphoned off the amount in a very clever manner. He has created a web of transactions to camouflage his wrongful gain. He diverted money through different companies either controlled by him directly or indirectly. He committed criminal breach of trust by utilizing blank signed cheques and other documents entrusted to him by the Complainant in good faith It’s not simply a case of settling the account but has a wide ramification because he has transferred monies through companies based in other states like west Bengal, Gujrat, Tamil Nadu and Andhra Pradesh”.

Considering the records submitted by the complainant including the charge sheet, letters of EOW and Axis bank, the Disciplinary Board noted that both the Complainant and the Respondent had filed complaints or writ petitions against each other in separate courts. However, the Board’s focus was on assessing the conduct of the Respondent as a Chartered Accountant.

After examining the evidence, the Board concluded that the Complainant had provided sufficient documentary evidence indicating that the Respondent’s behaviour in the given situation was inappropriate. Consequently, the Board found the Respondent guilty of the alleged charge, as his actions had tarnished the reputation of the profession.

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