Seraj Ahmed Mohammad Harun Memon (Left), Nagani Akram Mohammad Shafi (Center) and Vasim Vali Momad Bhesaniya @ Sanju (Right) | File photo
Mumbai: The Malegaon money laundering case has identified a classic example of money laundering, where the Enforcement Directorate(ED) uncovered a highly organized money laundering scheme involving the exploitation of Agricultural Produce Market Committee (APMC) accounts, revealing how these accounts were exploited to siphon off over Rs 198 crores. The investigation reveals how these accounts, typically used for agricultural trade, were allegedly misused to launder illicit funds generated from cyber fraud and online betting apps.
According to the ED’s prosecution complaint (PC), the accused capitalized on the vulnerabilities within the APMC system by setting up a network of shell APMC entities. Over three to four months, they withdrew Rs 198 crore in cash, disguising these transactions as legitimate agricultural trade.
The PC stated that Seraj Ahmed, the key accused in the case who is now in judicial custody, allegedly opened 19 shell APMC firms and corresponding bank accounts at Malegaon Nashik Merchant Cooperative Bank (NAMCO) and Bank of Maharashtra by luring victims with promises of jobs and financial gains at Malegaon APMC. The accounts opened by using the documents of these victims received deposits worth Rs158 crore from illicit sources of online gaming and betting apps.
ED alleged that Ahmed withdrew Rs 14.84 crore and transferred it to a hawala operator in Mumbai, Milankumar Patel, following instructions from the absconding mastermind, Mehmood Abdul Samad Bhagad, alias “Challenger King.”
Further investigation traced an additional link of Rs 94.03 crore routed through six Ahmedabad and Surat-based APMC dummy firms via RTGS and banking channels. These firms, also registered under APMC, exploited the sector’s customary large cash transactions to withdraw substantial sums without detection. This enabled the routing, diversion, and layering of hundreds of crores under the guise of agricultural trading. The fraudulent activities were concealed through fake company accounts, set up under APMC by the accused, allowing them to execute large-scale financial movements while evading suspicion.
The ED’s prosecution complaint (PC) revealed that six Ahmedabad-based dummy APMC firms — Vibhuti Trading, Pragati Traders, M K Enterprise, Astha Trading Company, Hardik Enterprise, and Haresh Trading Co — not only received Rs 94.03 crore from the Malegaon-based NAMCO and Bank of Maharashtra, but also approximately Rs 365.47 crore in total deposits from various illicit sources. Of this, around Rs 365.44 crore was debited, with a total cash withdrawal amounting to Rs 198 crore, which forms part of the total debit. This indicates that a significant portion of the debits was dedicated to cash withdrawals, primarily routed through Ahmedabad, further illustrating the scale of financial manipulation and money laundering within these operations.
The ED has recovered CCTV footage from Axis Bank branches in Naranpura, Chandlodiya, and Ranip in Ahmedabad, as well as from Surat, showing two other accused, Nagani Akram and Wasim Valimomad, making large cash withdrawals. The footage, corroborated by bank statements, revealed that a massive sum of Rs 1,98,41,60,000 was withdrawn in cash from these Axis Bank accounts in less than four months. Testimonies from bank managers indicated that these individuals frequently visited the branches to conduct transactions and withdraw cash amounts totaling hundreds of crores from the six accounts of various entities. According to reliable sources, these withdrawals were directly linked to instructions from Mehmood Bhagad, alias “Challenger King.” and his accomplice Jimmy. These individuals were identified as the true beneficiaries of the siphoned funds.
Further, the ED found that the withdrawn amounts were sent to hawala operators for distribution under Bhagad’s instructions. The ED recovered a list from Wasim Valimomad Bhesaniya, alias “Sanju,” which detailed cash deliveries to these operators, along with a token note, which was used to identify the recipients of the cash. This crucial evidence underscores the highly organized nature of the illicit financial operations, with Bhagad at the helm, orchestrating the fund transfers to ensure they remained undetected.
According to senior ED official sources, APMC accounts, integral to agricultural trade, are routinely involved in large-scale cash transactions. Sources reveal that the mastermind behind the money laundering operation was keenly aware of the inherent difficulty in tracing the purpose and end-use of funds. APMCs often handle high-value transactions due to the nature of their operations, including the trading of agricultural commodities. However, the absence of strict oversight and regulatory mechanisms makes them vulnerable to misuse. APMC transactions often involve multiple layers of intermediaries, such as commission agents and traders, further complicating the traceability of funds.
Banks typically fail to scrutinize large withdrawals from APMC accounts, as these transactions are perceived as routine for agricultural businesses, with several entries that are difficult to track. Additionally, APMCs are often exempt from stringent tax and reporting requirements to promote agricultural trade, a loophole that can be exploited for heavy withdrawals. This characteristic was manipulated to blend illicit funds with legitimate agricultural earnings, said the officials. The investigation revealed that the lack of proper monitoring of high-value transactions allowed the perpetrators to conduct suspicious activities without raising immediate alarms.
