New Delhi: Back in November 2022, Sukhvinder Singh Kharour, chief executive officer and founder of Uttar Pradesh-based VueNow Group, had a hefty deal to his credit. His group company, VueNow Infotech Pvt Ltd (VIPL), had signed an MoU with the state government to set up data centres in each district at an investment of Rs 13,500 crore.
The same month, Uttar Pradesh minister Nand Gopal Gupta was reported to have said that more than 6 lakh jobs would likely be created in the state through the intended investments of companies during the Uttar Pradesh Global Investors Summit scheduled for February 2023. These companies included VueNow.
Later, during the summit, Kharour was spotted speaking in the presence of several senior state government officials, reposing faith in the policies of UP.
Reposing all faith in the the policies and support system of @UPgovt, Sukhwinder Singh, CEO, Vuenow Group, while speaking at #UPGIS23, said "Team UP does what it says."#UPInvestorsSummit pic.twitter.com/cETyACEwVz
— UP Investors Summit (@InvestInUp) February 11, 2023
A little over two years later, the Enforcement Directorate (ED) Friday arrested Kharour and his wife Dimple from the Indira Gandhi International Airport in New Delhi as they were “trying to fly out of India to escape” being investigated for an alleged ponzi scheme and money laundering activities.
The duo was arrested under provisions of the Prevention of Money Laundering Act, 2002, in connection with a money laundering investigation against VIPL’s sister concern VueNow Marketing Services Ltd (VMSL) and related entities and persons, the ED stated Saturday.
The ED’s case stems from a tip-off received last year about VIPL and its sister concerns allegedly violating provisions of the Foreign Exchange Management Act (FEMA), agency sources told ThePrint.
Over the course of its probe, the ED, the sources added, found that promoters and directors of these firms were running a scheme in which they lured people into investing in cloud particles or servers, for which they offered guaranteed rental returns of 48 percent per annum. In simpler terms, these promoters and directors allegedly told the investors they would rent out these cloud particles to clients, and the rental income would go to them (the investors).
But there were no clients, ED sources said. Instead, new investors were brought in to pay the old investors, using the bank accounts of sister firms Zebyte Rental Planet Pvt Ltd (ZRPPL) and Zebyte Infotech Pvt Ltd (ZIPL).
While the PMLA probe does not stem from a complaint by an investor, the ED has claimed to have established that money passed on as rent from clients to investors was actually gotten from new investors and no real rental income was generated.
According to ED sources, the particle sold in the name of MyCloudParticle by VueNow Group cost Rs 41,253 per cloud particle, which is 1 TB of storage.
On Saturday, the ED said the multi-level scheme masterminded by Kharour had generated funds of Rs 3,558 crore.
“Specific intelligence was gathered by the ED that Sukhvinder Singh Kharour and Dimple Kharour were trying to fly out of India to escape from investigation. However, due to an active Look out Circular against them, they were detained at the IGI Airport and later arrested under Section 19 of the PMLA,” an agency spokesperson said Saturday.
The arrest comes days after the arrest of Kharour’s alleged aide Arif Nisar, who the ED says holds 75 percent stake in ZIPL. Nisar is identified as a journalist with over 25 years of experience by the VueNow Group on its website.
“The Proceeds of Crime (POC) amounting to Rs 3,558 crore generated out of criminal activities were utilised for other than business purposes and further diverted by M/s VMSL and group companies in giving high commissions to the channel partners, purchase of various luxurious vehicles, gold and diamonds, routing of funds to the tune of hundreds of crores through shell entities and investment in properties,” the ED spokesperson said.
When contacted, advocate Nakul Kapoor, the legal counsel of the Kharours, said he hoped the truth would come out in due time through the courts.
“There was nothing illegal about these companies nor the plans that my clients were arrested in. The matter is before the court now and we are hopeful of justice,” he told ThePrint.
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‘No real business’
The ED, on the basis of the tip-off last year, carried out searches over the past few months at premises linked to VIPL, VMSL, ZIPL and ZRPPL and those of persons under suspicion.
During the probe, the ED found a total storage capacity of only 553 TB at a company premise in Noida with 1,119 computer servers which were not connected to any power source, and only 1.9 TB of the total storage capacity was exhausted, agency sources told ThePrint.
“The 1.9 TB data was used for their test and trial purposes. Neither were the servers connected to any power source,” an ED official said.
“The module was a classic ponzi scheme where there were no real business or commercial activities that could generate return for the investors. The money paid to old investors was put into the module by new investors routed through different sister companies,” he added, explaining that as part of the module, VIPL used to purchase servers, followed by VMSL selling the data storage to different investors, and ZIPL and ZRPPL being the marketing companies for lease-back policy.
The ED sources claimed that it was VIPL, the parent company, that was paying funds to ZIPL and ZRPPL, and not its end customers as was portrayed to investors, and the same was passed on to the investors as rent.
The ED probe has so far revealed, said the sources, that VMSL, at its maximum strength, had a server capacity of 2701 TB in all its data centres, but managed to sell more than 5 lakh TB of storage to investors.
“The ED investigation revealed that Sukhvinder Singh Kharour, the CEO and founder of Vuenow Group, is the ‘mastermind’ of the scam who, in connivance with close associates, orchestrated the ‘Cloud Particle Scam’ where hard earned money of general public (investors) has been siphoned off by the accused for their personal gains. The underlying business of cloud particle, based on sale and lease back model (SLB model), was found substantively non-existent and grossly overstated to cheat the investors,” said the ED spokesperson.
‘Misleading videos, seminars’
Sources in the ED said the firm employed several strategies to lure people into buying their cloud particles.
These strategies involved opening up lavish offices in states such as Haryana and Punjab, data centres in Himachal Pradesh and Uttar Pradesh, and propagating their purported MoU with several states, the sources explained.
They said people invited to the seminars were told how the booming Indian economy would lead to prominent firms needing data localised in India. Seminars were also conducted overseas in countries like Bulgaria to create a sense of the growth of the group and its business.
In December last year, while the group was already facing a probe, it claimed to have opened two data centres in Uttar Pradesh’s Malihabad and Ambedkarnagar as part of its announced “plan” to build a network of 750 data centres across the state.
However, sources in the ED said that none of these data centres is working on the ground.
“They have put out videos misleading people about their due rent, saying it would be credited soon. They are trying all possible ways to continue to mislead innocent investors,” the ED official said.
In the probe carried out so far, the ED has found that the Kharour couple held a nearly complete stake in the VueNow group of companies, such as VIPL and VMSL, and these companies transferred around Rs 21 crore to Sukhvinder’s accounts. Nearly Rs 40 crore was transferred to the personal accounts of Dimple and the companies she controlled, said the sources.
A Look Out Circular was opened against Sukhwinder on 20 February when a special court in Jalandhar rejected their anticipatory bail. The ED had an LOC opened against Dimple in November last year when it was first informed about her plan to travel to Dubai.
The Jalandhar Special PMLA court has sent Sukhwinder Singh Kharour to ED custody till 10 March while Dimple has been sent to agency’s custody till 5 March.
(Edited by Nida Fatima Siddiqui)