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Hawala, fake tenants, a trust — how Dawood aide Iqbal Mirchi held on to Rs 225-cr properties

With ED now going after these properties, a complex web of transactions has come to the fore on how late Iqbal Mirchi allegedly laundered his wealth.

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New Delhi: The Enforcement Directorate (ED) last week arrested two persons — Haroun Aleem Yusuf and Ranjeet Singh Bindra — in connection with a money laundering case against late Iqbal Mirchi, a close aide of underworld don Dawood Ibrahim.

The case pertains to some Mumbai properties — Rabia Mansion, Mariam Lodge and Sea View in Worli — worth Rs 225 crore that Mirchi allegedly purchased with his ill-gotten wealth.

With ED now going after these properties, a complex web of transactions has come to the fore on how Mirchi allegedly laundered his wealth by first purchasing these properties in the name of a company, of which he was beneficial owner, planted fake tenants there and then entered into deals with companies to sell them.

The ED also claimed that Millennium Developers — firm run by Nationalist Congress Party (NCP) leader and former aviation minister Praful Patel — transferred two floors in Mumbai’s Ceejay House to Mirchi’s wife Hazra Memon in 2007 “towards the beneficial interest of Mirchi in the land” on which it was built, putting Patel in the spot.

Patel has, however, denied any deal with Mirchi, and said it was not Millennium Developers but one M.K. Mohammed, who had encroached upon the property but later entered into a compromise and then sold it to Hazra Iqbal Memon legally in 1990. 

With ED now sending summons to Mirchi’s wife and two sons to join the probe, and making submission in a special court to seek custody of Yusuf and Bindra for further investigation, ThePrint looks at what the agency has unearthed in the case so far.


Also read: ED raids firm linked to Iqbal Mirchi money laundering probe


The beginning

The ED has claimed that Mirchi collected huge amounts of money through smuggling of drugs and arms, running extortion racket and other illegal acts, and then invested that wealth in properties across India.

The ED has sought details of past cases of Mirchi from the Maharashtra Police, which was then used as a base to initiate an investigation under the Prevention of Money Laundering Act (PMLA) against him.

On 30 August this year, the Maharashtra Police informed the ED that Mirchi has over eight cases, including under Arms Act, murder and narcotics (all registered between 1992-1999) against him.

“During preliminary investigation, it was found that the money generated from the illegal acts of Mirchi, has been laundered, and layered and invested in many properties in various locations in Maharashtra, various parts of India and also abroad by projecting it as untainted property. An investigation under PMLA was then initiated,” said an ED officer.


Also read: ED arrests Chidambaram in INX Media case under money laundering act


Mirchi purchased the properties, but not in his name

During investigation, the ED found that the properties allegedly purchased by Mirchi were either in the name of his relatives or the companies controlled by him and his family.

According to ED officials, the three Worli properties mentioned above, which belonged to one Sir Mohammad Yusuf Trust, were purchased by Mirchi in September 1986 for Rs 6.5 lakh through his company M/s Rockside Enterprises.

These three Worli properties, measuring 1,537 square metres, were then tenanted at the time of sale to M/s Rockside Enterprises. According to ED, various tenants had been occupying these premises since 1986.

During investigation, the ED also found that the possession of the three properties was actually handed over to Mirchi by Sir Mohd Yusuf Trust in 1993 and complete payments were made. But the ownership of these properties was not transferred to Mirchi and the property directly or indirectly remained in the name of the trust on paper, said an ED source.

“A search conducted during the investigation revealed that the properties were actually purchased by Mirchi and full payment was made to the trust, but he did not take its ownership,” said the source.

This could have been done to save the properties from being attached by the enforcement agency in case there is an investigation. “Also, since it was a trust property, it could not have been sold for commercial use, so on paper it was just tenanted,” added the source.

Mirchi’s plan worked. As he was being investigated for various criminal cases at the time, a proclamation against him was issued and his various properties were attached under SAFEMA (Smugglers and Foreign Exchange Manipulators Act, 1976). The order was, however, later quashed as the three properties were in the name of the trust.

“In 2005, the confiscation under SAFEMA of these three properties was quashed by the CMM Court, Mumbai, on the ground that the said properties belong to Sir Mohd Yusuf Trust,” said a second ED officer.

Web of fake tenants

Since the said properties were tenanted to M/s Rockside Enterprises on paper to show that they were being rented out, a battery of fake tenants were allegedly planted.

According to the ED, the tenants that were shown to be staying at the said properties were Mirchi’s relatives and close associates.

“From the perusal of list of tenants for the period 1981 to 2010 and from various statements recorded under PMLA, it is found that the initial tenants were replaced by Mirchi’s relatives, close associates and by 2005, almost all the tenants were Mirchi’s nominees,” said the second ED officer.

The investigating agency also claimed that these tenants were planted by Humayun Merchant, a close friend of Mirchi in connivance with Yusuf, who was the chairman of the trust.

“These tenants were dummy tenants created and planted by Humayun on the instructions of Iqbal Mirchi,” said the first ED officer.

“It was also noticed that even one tenancy of STC i.e State Transport Corporation, a government organisation, was also shown as surrendered and new tenancy was created in the name of Jyot Fashion, a company of one Jayesh B. Soni. Thus, it appears that letters and records have been forged to create and plant these persons as tenants and to surrender their tenancy at a later date,” he added.


Also read: ED attaches Bhushan Steel’s assets worth Rs 4,000 crore in connection with money laundering case


Meetings held in London to sell properties to developers

In 2005, when the confiscation of the said properties were quashed by the court, Mirchi through Humayun Merchant, who is also his Power of Attorney holder, allegedly approached one developer — Joy Home Creation for a collaboration.

“Humayun Merchant assured the developer that these properties are free from the attachment of government and that all the tenants are his own people,” said a third ED officer ThePrint spoke to.

“Later, Humayun also arranged a meeting of Jayant B Soni, Director of Joy Home Creation Pvt Limited with Iqbal Mirchi in London,” he added.

During the said meeting, various modalities about the project were discussed. After Mirchi’s approval, an agreement was entered into between the trust and Joy Homes Constructions Private Ltd.

Initially, five tenancy rights were transferred in the name of nominee companies of developer Joy Homes.

According to ED, in 2007, Joy Homes and Humayun Merchant entered into an agreement whereby Joy Homes was to pay Rs 11 crore to Humayun and Rs 4.25 crore to the trust.

In October 2007, a demand draft of Rs 4 crore was also made in the name of the trust. However, the same was later cancelled by Joy Homes. Thus, the trust, which is the so-called owner of the land, had received merely Rs 25 lakh for the said property and handed over rights only for this small amount.

“This showed that the real ownership of the property was with Mirchi and that the trust was a mere accomplice of Mirchi. However, as the property prices appreciated and Joy did not make payment of Rs 11 crore as promised, Iqbal threatened Jayant B Soni (owner of Joy Home Creations) to exit the said property,” the third ED officer claimed.

Fake accounts of tenants created to receive payment

In 2010, one company — M/s Sunblink Real Estate Pvt Limited — entered the said project and a deal was struck that all tenancy rights will be surrendered in favour of Sunblink for an amount of Rs 225 crore.

The deal had three players — Humayun Merchant (for Mirchi), Joy Home Creation Pvt Limited (who had five tenancy rights) and Sunblink Real Estate.

As per the agreement, Joy Homes was to get an amount of Rs 50 crore, the trust Rs 4.25 crore and rest (Rs 170.75 crore) was to be paid to Merchant for the tenants represented by him.

The investigation further revealed that the cheques issued by Sunblink in favour of the tenants were encashed by opening bank accounts in Chennai in similar names.

Moreover, these accounts remained operative only for a brief period until the cheques were cleared and after that became non-functional, the ED claimed.

“This further proves that these tenants were fake and these accounts were just opened by Mirchi in connivance with Humayun to receive the money,” the first ED officer said.

The ED has also recovered a letter written by Sunblink to Merchant on 21 November 2010, mentioning that a payment of Rs 43 crore was remaining as on 21 November.

“It is apparent that a payment of Rs 127 crore was already made to Humayun by this date. Further, Sunblink also acquired the tenancy rights of all the tenants. Therefore, it may be reasonably believed that the remaining payments would have also been received by Humayun on behalf of Mirchi,” the officer added.


Also read: ED arrests Ratul Puri in money laundering case linked to AgustaWestland chopper scam


A five-star hotel, hawala payments

Further investigation by ED revealed that payments to Merchant were not just made by cheques, but also through hawala in foreign currency.

Though a letter recovered by the ED suggests that a payment of Rs 127 crore was made to Merchant, bank records accessed during investigation showed a payment of only Rs 60 crore.

It was later found that there were several transactions amounting to Dirham 90 million were also done through hawala channels.

“Statement of one of the witnesses revealed that a payment of Dirham 90 million was also made through hawala in UAE in cash for purchase of a 5-star hotel in Dubai, which too was a part of this deal,” the third ED officer said.

This property was purchased in 2010 by Iqbal Mirchi.

Role of Sir Mohammad Yusuf Trust

According to ED, Yusuf, chairman of the Sir Mohammad Yusuf Trust, played a “crucial role” in the illegal dealings of Mirchi.

“During the search of his trust office premises, three tenancy surrender letters were seized, which found to be forged as all these letters contains three different signatures of the same person,” the second ED officer said.

“It is also found from the seized records that the trust has already received complete payments from Iqbal Mirchi for the said properties, a fact they always concealed,” the officer added.

He said when Yusuf was confronted with a copy of the receipt of complete payment from Mirchi to the trust for the sale of the three properties and a letter wherein it was stated that the trust had given possession of these three buildings to Mirchi in 1991, he declined to comment on the same.

A broker, a fake confirming party

It is at this point that Bindra came into the picture.

According to ED, Bindra was the broker who negotiated the deal between Mirchi, Merchant and Sunblink for sale of the said three properties.

The ED claimed that Bindra got the deal for a brokerage amount of Rs 40-50 crore as commission from Sunblink.

The same amount, the ED said, was received by him through one Rinku Deshpande, who was planted as a representative of all the tenants.

“She was a fake confirming party. She is a family friend of Mirchi,” the second ED officer said.

During the investigation, searches were made at the residence of Deshpande on 30 September this year and her statement was recorded too.

The ED claimed that Deshpande accepted to have received Rs 25-30 crore from Sunblink on behalf of Bindra and stated that the same was later transferred back to Bindra through market operators.

“All this money was routed back to Iqbal Mirchi through different people. In this case Deshpande, who claimed to be representative of all the tenants, took money from M/s Sunblink Real Estate, which eventually went back to Humanyun and then Mirchi,” the officer explained.

“We have summoned the accountant of the trust, the original owner of these properties, Mirchi’s sons, who were also part of the meetings where these deals were being negotiated,” he added.

The ED has also found that Sunblink was also given a loan of Rs 2,186 crore on the said three properties that they had acquired.

“We have sought the custody of Bindra to ascertain the utilisation of funds of Rs 2,186 crore received as loan on the proceeds of crime (the three Worli properties) by Sunblink Real Estate. Further investigation is on,” the officer said.


Also read: Enforcement Directorate conducts fresh raids related to IL&FS case in Mumbai


 

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1 COMMENT

  1. Unearthing hawala money assets is an excellent job by ED. But again it relates only to leaders of opposition and minority. Why not Thakres, Mundes, Gadkris and host of others?

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