Mumbai: The Enforcement Directorate's probe into the Fairplay betting app has uncovered an alleged financial scam, revealing that the platform amassed more than Rs 4,500 crore. According to the investigation, these funds were funneled through an intricate network of shell pharmaceutical companies. which were strategically used to layer illicit money, facilitating illegal outward remittances while bypassing detection by law enforcement. and enabling illicit outward remittances.
Documents linked to the investigation accessed by the Free Press Journal shed light on the elaborate mechanisms used to launder money. The investigation found that the funds, allegedly amounting to Rs 4,500 crore were routed through multiple layers of dummy bank accounts and entities spread across India. These included firms in sectors like import-export, logistics, home services, and commercial online services. The funds passed through four to five financial transaction layers before accumulating in the accounts of these dummy proprietorships.
These funds then moved to entry operators, who channeled the money into a series of shell and bogus pharmaceutical companies. After another two to three layers through these dummy pharma entities, the money reached its final destination - dummy pharmaceutical companies that facilitated the illegal transfer of funds overseas.
The ED has pinpointed the last set of dummy pharma companies involved in this money trail. These entities played a crucial role in transferring over Rs 4,500 crore of betting funds to international accounts, marking the end of the laundering process.
More than 90 such dummy pharmaceutical companies were identified in this alleged scheme, none of which had a physical presence, offices, factories, or manufacturing capabilities. These companies were merely facades, established to launder illicit funds under the guise of legitimate business activities. They were part of a broader money laundering network, acting as fronts for international transfers.
The ED's investigation showed that around 500 sham and mule bank accounts linked to these companies were opened in 2023, with most entities registered between 2022 and 2024. Funds from streaming and online betting operations were directed into these shell pharma companies after passing through various layers before being remitted abroad as legitimate transactions.
During the investigation, it was found that a Mumbai-based pharma company had received over Rs 4,000 crore from various fictitious firms, supported by fabricated bills and invoices. These were often communicated via WhatsApp by operators connected to both the pharmaceutical industry and Fairplay associates in Dubai. Following the operators' directives, directors of these shell companies created counterfeit bills and invoices, leading to fraudulent audit reports on forged letterheads.
Further investigation revealed that this Mumbai firm was used to launder money from numerous bogus firms, which had no real business transactions with it; the funds were merely layered and parked, originating from the Fairplay betting app.
These funds were eventually routed to offshore entities in Hong Kong and Dubai, controlled by individuals in Dubai and their Indian associates, who are now under ED scrutiny. The ED conducted searches at the premises of these Indian associates a few months ago.
During questioning, one of the accused linked to the case allegedly stated that his company had no legitimate business operations. He also reportedly admitted to owning multiple dummy companies registered outside India, which were used to layer funds under the pretext of exporting and importing pharmaceutical intermediates.
The second accused, a former pharmaceutical sector employee, was allegedly associated with other absconding individuals. He admitted that in 2020, he purchased the Mumbai-based company and was subsequently appointed as an independent director in various shell companies connected to the operation.
A few months ago, the ED raided 19 locations linked to these pharmaceutical companies associated with Fairplay, resulting in freezing over 500 allegedly fraudulent bank accounts. along with several demat accounts. In addition, the ED seized significant assets, including approximately Rs 72 crore connected to sham bank accounts and shell companies within the pharmaceutical sector. Other valuable items seized included bank locker keys, luxury wristwatches, and cash totaling around Rs 24 lakh. Critical property documents and financial records, which detailed illicit transactions orchestrated by Fairplay, were also recovered.
