New Delhi: The Enforcement Directorate (ED) has initiated the process to recover almost Rs 500 crore from the Hyderabad-based gold trader Heera Group and its managing director Nowhera Shaik, who duped nearly 13,000 investors with a Ponzi scheme that promised 36 percent annual returns.
The Supreme Court Monday directed the central agency to auction off properties surrendered by Shaik so far, after she failed to raise Rs 580 crore to settle investor claims since her bail in January 2021.
On 18 October, therefore, the apex court scrapped her bail and initially gave her 14 days to surrender. But the court pushed this deadline by three months, asking Shaik to furnish details of all her properties which could be auctioned.
Hearing Shaik’s challenge to the cancellation of her bail Monday, a two-judge bench of Justices J.B. Pardiwala and R. Mahadevan ordered the ED to begin the auction process.
Promise of abnormally high returns
The ED’s case stems from a first information report filed by the Telangana Police, which had booked Shaik and her company for collecting hundreds of crores from investors with the promise of a phenomenal 36 percent annual return.
In May 2019, the ED arrested Shaik, filed a prosecution complaint and attached properties worth Rs 400 crore.
The apex court granted her bail in January 2021 on the condition that she would settle all investor claims. Though the bail was made absolute in August 2021, the top court cancelled it this October since Shaikh failed to comply.
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The restitution process
During a court-mandated probe to establish ownership of the properties Shaik had surrendered–a criterion necessary for auction–the ED found only two were in the clear. Their auction process would be completed in the next three months, a senior ED officer told ThePrint.
The officer, however, noted that the value of these properties would not cover the “scale of the fraud,” which could be more than Rs 500 crore. But, he said, the restitution process would be expedited as the top court has ordered Shaik to cough up other properties too.
The apex court noted in its order Monday that the properties Naina Towers and Heera Foodex were “free from all encumbrances”. The court further asked Shaik to deposit Rs 25 crore within this time and directed the ED to initiate auction proceedings for other properties, details of which Shaik must furnish within two weeks.
The judges asked the agency to submit the status of the auction on the next day of the hearing due in a month.
ED officials said more than 13,000 individuals lost their money by investing in the Heera Group as was evident in a list compiled by the Serious Fraud Investigation Office (SFIO). Shaik came under the SFIO scanner for misusing its name to promote her investor business.
(Edited by Tikli Basu)
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