Mumbai: The Enforcement Directorate (ED) has filed a supplementary prosecution complaint under the Prevention of Money Laundering Act (PMLA), 2002, against Ahmedabad-based trader Ritesh Kumar Surendrakumar Shah, in connection with the ongoing Malegaon money laundering case. The special PMLA court is expected to take cognizance of the complaint soon.
Shah, currently in judicial custody, has been described by the ED as a habitual economic offender and a close associate of the case’s alleged mastermind Mehmood Abdul Samad Bhagad, also known as Challenger King, who is currently absconding.
According to the agency’s complaint, Shah played a pivotal role in laundering proceeds of crime and integrating them into the legitimate financial system . He is accused of conspiring with Bhagad and continuing illicit operations even after the ED launched its probe in the Malegaon case.
The ED's prosecution complaint (PC), submitted to the PMLA court, outlines a large-scale and elaborate money laundering racket operated through a sophisticated and intricate pan-India network. The syndicate was allegedly masterminded by absconding accused Mehmood Abdul Samad Bhagad, alias 'Challenger King,' along with his associate Ritesh Shah and five others who were previously arrested by the ED.
The agency's prosecution complaint reveals that, acting on the instructions of Mehmood Abdul Samad Bhagad alias 'Challenger King' Shah played a key role in creating multiple shell entities using identity documents of economically vulnerable and unrelated individuals. He subsequently opened bank accounts in the names of these entities, which were then used to launder illicit funds through a complex network of mule accounts. This included 14 accounts at NAMCO Bank and five accounts with the Bank of Maharashtra.
A forensic audit conducted by the ED revealed that hundreds of crores in tainted funds were funneled through these accounts, with over Rs 28 crore withdrawn in cash from just two firms Haresh Trading Co. and Hardik Enterprises during a span of two months between October and November 2024.The agency stated that these firms floated by Shah were instrumental in layering fund transfers,
The ED's investigation has also unearthed crucial links between the money laundering syndicate led by Bhagad and Shah and a wide array of cybercrimes across the country. Accounts linked to Shah’s entities were flagged by the National Cybercrime Reporting Portal (NCRP) and under scrutiny by cybercrime units across India.
The ED believes that the funds were sourced from various fraudulent online activities, including investment scams, digital arrest frauds, illegal online gaming and betting, and forex trading scams. These proceeds were layered through multiple mule accounts, projected as legitimate income, and in some cases, remitted abroad under the guise of bogus software imports and consultancy service. The investigation uncovered that a portion of the proceeds of crime amounting to Rs 714 crore was sent overseas under the guise of bogus software imports by two shell entities Ferbion International and Blaze International. These foreign outward remittances were routed through multiple accounts, allegedly to integrate illicit gains into the legitimate economy.
Shah has a history of financial fraud. In 2019, he was arrested by Gujarat’s State GST authorities. In 2024, the Directorate General of GST Intelligence (DGGI), Ahmedabad, booked him for fraudulently claiming Rs 108.28 crore in input tax credit using fake invoices.
Scrutiny of documents, records, digital devices, and statements recorded under various provisions of the PMLA has revealed that Ritesh Shah, was deeply involved in multiple illegal businesses. These include arranging entry transactions such as bank credits in exchange for cash and vice-versa, issuing bogus invoices, facilitating donations in cash on behalf of several regional political parties and NGOs, and dealing in cryptocurrency purchases and sales through cash transactions. The investigation further uncovered hawala operations both within India and abroad, extensive banking transactions through shell entities, and the orchestration of mule accounts to facilitate the Malegaon money laundering racket.
According to the ED sources, intelligence inputs indicate that the main accused, Mehmood Abdul Samad Bhagad, alias ‘Challenger King’, has amassed several immovable properties in Surat, including multiple flats in the Al-Noor Residency complex, registered in his name as well as that of his family members.The Anti-Terrorism Squad (ATS) has issued a Red Corner Notice against him.
The ED scrutinised thousands of bank accounts, conducted widespread searches in Maharashtra and Gujarat, and targeted hawala operators in Ahmedabad and Mumbai. The raids led to the seizure of Rs 15 crore in cash and the freezing of more than 90 bank accounts with balances exceeding Rs 6 crore.
