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Indian head of collapsed savings scheme in court

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(Globalpost/GlobalPost)

The head of an Indian savings company suspected of running a giant Ponzi scheme that could have defrauded up to 100,000 people appeared before a court in Kolkata on Thursday.

Saradha group chairman Sudipta Sen and his two close aides have been "charged with criminal breaches of trust, conspiracy and cheating", local police chief Rajeev Kumar told AFP.

Hundreds of placard-carrying protesters who lost their savings with Saradha staged an angry demonstration and attempted to enter the courtroom, as several policemen used batons to push them back.

Retired government employee Tulsi Charan Mondal told AFP he had invested his life savings amounting to 300,000 rupees ($5,540) with Sen's company

"Now I have lost hope of getting my money back. I have no alternative but to end my life," 72-year-old Mondal said, his eyes welling up.

The collapse of the savings schemes which offered massive returns of 40 percent and more has triggered protests in West Bengal state in eastern India and three investors have committed suicide.

A Ponzi scheme is a fraudulent investment operation that pays out returns to investors based on inflows of money put in by other savers, and is liable to collapse if receipts dry up.

Sen fled to the mountainous northwestern region of Kashmir, where police arrested him on Monday after a cross country chase that reportedly took them across four states.

The businessman and his aides "were remanded to 14 days in police custody", government lawyer Asoke Banerjee told AFP after Thursday's hearing.

West Bengal chief minister Mamata Banerjee on Wednesday announced a five-billion rupee fund to compensate investors and said that she would increase taxes on cigarettes by 10 percent to raise money.

She also promised to introduce a new law to crack down on financial firms engaging in fraudulent practices.

Indian media reports say more than 100,000 depositors were hit by the group's collapse.

The Saradha group, headquartered in Kolkata, was believed to have been worth around $3.3 billion from money collected from its depositors, according to Indian media reports.

The group had also diversified into sectors such as construction, tourism, hospitality, agriculture and media.

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http://www.globalpost.com/dispatch/news/afp/130425/indian-head-collapsed-savings-scheme-court