View source for Company:Saradha Group financial scandal

{{short description|Financial scandal in India}}
{{Use Indian English|date=December 2014}}
{{Infobox company
| name = SaradhaGroup
| logo = [[File:Saradha logo.png|250px]]
| type = Privately owned
| genre = Deposit mobilising company
| fate = Allegations that this consortium of companies is a Ponzi scheme
| predecessor = 
| successor = 
| foundation = 
| founder = Unclear
| defunct = April 2013
| location = [[Place:Kolkata|Kolkata]], West Bengal, {{wipe|India}}
| area_served = 
| key_people = Sudipto Sen, Chairman and MD<br />Debjani Mukherjee, Director<br />Kunal Ghosh
| industry = Financial services, infrastructure management, automobiles, manufacturing
| products = 
| services = 
| market cap = 
| revenue = 
| operating_income = 
| net_income = 
| aum = 
| assets = 
| equity = 
| owner = 
| num_employees = 16,000+
| parent = 
| divisions = Saradha Realty<br />Saradha Exports<br />Global automobiles<br /> Saradha media group
| subsid = 
| homepage = 
| footnotes = 
| intl = 
}}

The '''Saradha Group financial scandal''' was a major political scandal caused by the collapse of a Ponzi scheme run by Saradha Group, a consortium of over 200 private companies that was believed to be running collective investment schemes popularly but incorrectly referred to as [[Finance:Chit fund|chit fund]]s<ref>{{cite news|url=http://www.telegraphindia.com/1130501/jsp/bengal/story_16847319.jsp#.UYES6sV4800|archive-url=https://archive.today/20130615172847/http://www.telegraphindia.com/1130501/jsp/bengal/story_16847319.jsp%23.UYES6sV4800|url-status=dead|archive-date=15 June 2013|title=Chitti chitti bang bang|date=30 April 2013|work=The Telegraph|access-date=1 May 2013|location=Mumbai}}</ref><ref>{{cite web|url=http://madlaw.in/what-exactly-happened-in-the-saradha-scam-understanding-chit-fund-mlm-corporate-deposits-and-collective-investment-schemes/|title=What exactly happened in the Saradha Scam? Understanding chit fund, MLM, corporate deposits and collective investment schemes|last=Agarwal|first=Abhyudaya|author2=Satyaditya Singh Dhakare |date=5 June 2013|publisher=Marketing and advertising law|access-date=13 June 2013}}</ref><ref>{{cite news|url=http://www.firstpost.com/business/heres-why-saradha-was-not-a-chit-fund-but-a-ponzi-scheme-739597.html|title=Here's why Saradha was not a chit fund but a Ponzi scheme|last=Kaul|first=Vivek|date=30 April 2013|work=Firstpost|access-date=3 May 2013}}</ref> in Eastern India.<ref>{{cite news|author=PTI |url=http://www.thehindu.com/business/Industry/more-saradha-entities-under-sebi-scanner/article4650522.ece |title=More Saradha entities under SEBI scanner |newspaper=The Hindu |access-date=25 April 2013|date=24 April 2013 }}</ref>

The group collected around {{INR}}200 to 300 billion ({{USD|4–6&nbsp;billion}}<ref name="H1">{{cite news|url=http://www.thehindu.com/opinion/editorial/cheat-funds-again/article4654467.ece |title=Cheat funds, again |newspaper=The Hindu |access-date=27 April 2013|date=26 April 2013 }}</ref>) from over 1.7 million depositors<ref>{{cite news|url=http://www.livemint.com/Specials/TQWJ1auPZMCYnZqC4tK7VN/Saradha-raised-deposits-from-17-million-people-probe-finds.html|title=Saradha raised deposits from 1.7 mn people, probe finds|last=Dutta|first=Romita|date=20 June 2013|work=LiveMint|access-date=19 August 2013}}</ref> before it collapsed in April 2013. In the aftermath of the scandal, the State Government of West Bengal where the Saradha Group and most of its investors were based instituted an inquiry commission to investigate the collapse.<ref>{{cite web|url=http://www.telegraphindia.com/1130422/jsp/frontpage/story_16814688.jsp#.UXfgV8V4800 |archive-url=https://archive.today/20130615192010/http://www.telegraphindia.com/1130422/jsp/frontpage/story_16814688.jsp%23.UXfgV8V4800 |url-status=dead |archive-date=15 June 2013 |title=Mamata announces SIT, inquiry into Saradha |work=The Telegraph|location=Kolkota| date=1 March 1999 |access-date=25 April 2013}}</ref> The State government also set up a fund of {{INRConvert|5|b|nolink=yes}} to ensure that low-income investors were not bankrupted.<ref>[http://www.business-standard.com/article/current-affairs/mamata-sets-up-fund-for-duped-saradha-investors-113042400602_1.html Mamata sets up fund for duped Saradha investors, Business Standard, 24 April 2013]</ref>

The central government through the Income Tax Department and Enforcement Directorate launched a multi-agency probe to investigate the Saradha scam and similar Ponzi schemes.<ref>{{cite web|url=http://newindianexpress.com/nation/60-firms-like-Saradha-Group-operating-in-Bengal/2013/04/26/article1562747.ece|title=60 firms like Saradha Group operating in Bengal|last=Dasgupta|first=Mithun|date=26 April 2013|work=The New Indian Express|access-date=29 April 2013}}</ref>
In May 2014, the Supreme Court of India, due to inter-state ramifications, possible international money laundering, serious regulatory failures and alleged political nexus, transferred all investigations into the Saradha scam and other Ponzi schemes to the Central Bureau of Investigation (CBI), India's federal investigative agency.<ref>{{cite news|title=SC jolt for Mamata: CBI to probe Saradha scam The CBI will also probe other Ponzi schemes in West Bengal, Odisha, Tripura, Jharkhand and Assam|url=http://www.business-standard.com/article/current-affairs/sc-jolt-for-mamata-cbi-to-probe-saradha-scam-114050900345_1.html|access-date=10 May 2014|newspaper=Business Standard|date=10 May 2014}}</ref><ref>{{cite news|title=Supreme Court orders just what Mamata didn't want|url=http://www.telegraphindia.com/1140510/jsp/frontpage/story_18327374.jsp|archive-url=https://archive.today/20140510120426/http://www.telegraphindia.com/1140510/jsp/frontpage/story_18327374.jsp|url-status=dead|archive-date=10 May 2014|access-date=10 May 2014|newspaper=Calcutta Telegraph|date=9 May 2014}}</ref> Many prominent personalities were arrested for their alleged involvement in the scam including two Members of Parliament (MP) - Kunal Ghosh and Srinjoy Bose from the Trinamool Congress, former West Bengal Director General of Police Rajat Majumdar, a top football club official Debabrata Sarkar, Sports and Transport minister in the Trinamool Congress government Madan Mitra.<ref name="WB Minister Madan Mitra arrested">{{cite news|title=WB Minister Madan Mitra arrested in Saradha scam|url=http://www.tribuneindia.com/news/nation/wb-minister-madan-mitra-arrested-in-saradha-scam/17345.html|access-date=15 December 2014}}</ref><ref>{{cite news|title=West Bengal minister Madan Mitra arrested by CBI|url=http://www.dnaindia.com/india/report-saradha-scam-west-bengal-minister-madan-mitra-arrested-by-cbi-slapped-with-charges-of-criminal-conspiracy-cheating-and-misappropriation-2043433|access-date=15 December 2014}}</ref>

The scam has often been compared to the [[Finance:Sanchayita chit fund scam|Sanchayita investment scam]], a multi crore rupees scam that occurred in West Bengal in the 1970s, complaints related to which led to the formation of the Prize Chits and Money Circulation Schemes (Banning) Act of 1978.<ref name="toi">{{cite news|last1=Mukherji|first1=Udit Prasanna|last2=Bandyopadhyay|first2=Krishnendu|title=Sanchayita haunts Saradha victims|url=https://timesofindia.indiatimes.com/city/kolkata/Sanchayita-haunts-Saradha-victims/articleshow/19656723.cms|access-date=26 October 2017|publisher=Times of India|date=21 April 2013}}</ref><ref>{{cite web|title=Kuriachan Chacko and Ors. Vs. State of Kerla JT2008(7)SC614|url=http://www.neerajaarora.com/money-circulation-scheme-or-money-cheating-scheme/|website=www.neerajaarora.com|publisher=Neeraj Arora|access-date=26 October 2017}}</ref>

==Background ==
India has a large, low-income, rural population with limited access to formal banking facilities.<ref>{{cite web|url=http://articles.economictimes.indiatimes.com/2013-04-23/news/38763419_1_financial-inclusion-mobile-banking-banking-system|title=Ponzi schemes show failure of formal banking|date=23 April 2013|work=The Economic Times|access-date=29 April 2013}}</ref> This leads to the absence of two major helplines for poorer people - that of placing their money safely in deposits and secondly of being able to borrow money for their needs which may be as simple as buying seeds for the next crop or their children's marriage. The second aim is achieved instead by a web of parallel, informal banking in the form of money lenders (pawn brokers) who have existed in India for a few centuries.<ref>{{cite news|last1=Singh|first1=Pragya|title=The gullible travels show|url=https://www.outlookindia.com/magazine/story/the-gullible-travels-show/282215|access-date=26 October 2017|publisher=Outlook}}</ref> At its centre are moneylenders, mostly unregulated, often also wealthy landlords or now politicians, used to charge exorbitant rates of interest. To curb this practice, several Moneylenders Acts were enacted by the State governments of India by the 1950s.<ref>{{cite book|last1=Gupta|first1=SC|last2=Shankar|first2=Girish|last3=Giridhar|first3=A|title=Report of the Technical Group Set up to Review Legislations on Money Lending|url=http://www.rbi.org.in/scripts/PublicationReportDetails.aspx?ID=513|year=2007|publisher=Reserve Bank of India}}</ref> However failure to replace the role of moneylenders gave rise to unscrupulous financial operators that operated Ponzi schemes.<ref>{{cite web|url=http://www.aljazeera.com/indepth/features/2013/04/2013427155533920295.html|title=Indian Ponzi scheme pushes many to penury|last=Chaki|first=Deborshi|date=28 April 2013|publisher=Al Jazeera|access-date=29 April 2013}}</ref> Some commentators place the blame for these kinds of Ponzi schemes on greed rather than exclusion from formal banking systems.<ref>{{cite news|url=http://www.firstpost.com/business/dear-kc-chakrabarty-heres-the-real-reason-why-people-invest-in-ponzi-shemes-748689.html|title=Dear KC Chakrabarty, here's the real reason why people invest in Ponzi shemes|last=Kaul|first=Vivek|date=3 May 2013|work=Firstpost|access-date=3 May 2013}}</ref><ref>{{cite news|url=http://articles.economictimes.indiatimes.com/2013-04-25/news/38817430_1_chit-fund-bank-accounts-sudipta-sen|title=Saradha fraud: Blame the RBI for the repressed formal financial sector|agency=ET Bureau|date=25 April 2013|work=The Economic Times|access-date=10 October 2013}}</ref><ref>{{cite news|url=http://www.livemint.com/Opinion/XE1wN141lmaC2bzSjTEnaO/Lemming-nation-the-Saradha-scam-is-a-wakeup-call-for-inves.html|title=Saradha scam: a wake-up call for investors|last=Khanna|first=Sudeep|date=8 May 2013|work=LiveMint|access-date=10 October 2013}}</ref>

However, this does not address the former issue of being able to save their money easily, keep it in safekeeping and invest it so that it grows. While post offices have tried to address this through postal savings banks, people are often lured by Ponzi schemes that promise much higher returns.<ref>{{cite news|last1=Dalal|first1=Sucheta|title=Pyramid schemes - daylight robbery|url=http://www.suchetadalal.com/?id=e90057ae-502a-1aea-4e034150291f&base=sections&f|access-date=26 October 2017|publisher=Sucheta Dala|date=23 June 2011}}</ref>

The relatively prosperous rural economy of West Bengal had previously relied on small savings schemes run by the Indian Postal Service. However, low rates of interest in the 1980s and 1990s encouraged the rise of several Ponzi schemes in speculative ventures such as Sanchayita Investments, Overland Investment Company, Verona Credit and Commercial Investment Company. Together, these scams eliminated close to {{INRConvert|10|b|nolink=yes}} in investor wealth.<ref>{{cite web|url=http://www.indianexpress.com/news/mamata-banerjee-vows-to-repay-depositors-of-saradha-groups-sudipta-sen/1108090/|title=Mamata Banerjee vows to repay depositors of Saradha group's Sudipta Sen|date=26 April 2013|work=The Indian Express|access-date=29 April 2013}}</ref><ref name="eoi1">{{cite web|url=http://articles.economictimes.indiatimes.com/2013-04-24/news/38790645_1_collective-investment-schemes-ponzi-tower-infotech/2|title=The fall of Saradha group revives old ghosts of ponzi schemes going bust|last=Ray|first=Atmadip|date=24 April 2013|work=The Economic Times|access-date=29 April 2013}}</ref>
Despite a history of Ponzi schemes, the continuing decline in interest rates, rapid financialisation of household savings, lack of financial literacy and investor awareness, political patronage, absence of adequate legal deterrence, and regulatory arbitrage encouraged the growth of similar companies.<ref>{{cite journal|date=11 May 2013|title=Once Again a Ponzi Lays Waste|journal=Economic and Political Weekly|volume=XLVIII|issue=19|url=http://www.epw.in/editorials/once-again-ponzi-lays-waste.html}}</ref> These companies either raised their funds through legitimate channels such as collective investment schemes, non-convertible debentures and preference shares, or illegitimately through hoax financial instruments such as teak bonds, potato bonds or fictitious ventures in agro-export, construction and manufacturing. {{As of|2013}}, 80% of multi-level marketing and finance schemes against which complaints have been received are based in West Bengal, giving the state the title of "Ponzi capital of India".<ref>{{cite web|url=http://www.hindustantimes.com/business-news/WorldEconomy/Is-Bengal-the-Ponzi-capital-of-India/Article1-1051771.aspx|archive-url=https://web.archive.org/web/20130430025547/http://www.hindustantimes.com/business-news/WorldEconomy/Is-Bengal-the-Ponzi-capital-of-India/Article1-1051771.aspx|url-status=dead|archive-date=30 April 2013|title=Is Bengal the Ponzi capital of India?|last=Sharma|first=Nagender|author2=Gaurav Chaudhury |date=28 April 2013|work=Hindustan Times|access-date=29 April 2013}}</ref> It is estimated that these Ponzi funds have amassed around {{INRConvert|10|t|nolink=yes}} from unsuspecting depositors in Eastern India.<ref>{{cite news|url=http://www.business-standard.com/article/current-affairs/60-firms-like-saradha-operating-in-bengal-113042500411_1.html|title=60 firms like Saradha operating in Bengal|date=25 April 2013|work=Business Standard|agency=Indo-Asian News Service|access-date=29 April 2013|location=Kolkata}}</ref>

==Modus operandi of Saradha==

===Key people===
Sudipto Sen was the chairman and managing director of the Saradha Group.<ref name=TGIndia1>{{cite news|url=http://www.telegraphindia.com/1130425/jsp/frontpage/story_16825378.jsp#.UX7JKsV4800|archive-url=https://archive.today/20130615192057/http://www.telegraphindia.com/1130425/jsp/frontpage/story_16825378.jsp%23.UX7JKsV4800|url-status=dead|archive-date=15 June 2013|title=United departure, separated arrival|date=25 April 2013|work=The Telegraph|access-date=29 April 2013}}</ref> Sen was described as a softly spoken, charming, and forceful orator. At the time of his arrest, he was in his mid-50s. In his youth, he was known as Shankaraditya Sen which he later changed to Sudipto Sen and may have had plastic surgery sometime in the 1990s,<ref name="NDTV2">{{cite news|url=http://www.ndtv.com/article/people/sudipta-sen-the-man-with-three-wives-and-five-houses-357659|title=Sudipta Sen: The man with 'three wives and five houses'|last=Bannerjee|first=Monideepa|date=23 April 2013|publisher=NDTV|access-date=29 April 2013}}</ref> after which he became associated with land development projects in South Kolkata. The land bank he formed in around 2000 became the catalyst for enticing early customers into his Ponzi scheme.<ref>{{cite news|url=http://zeenews.india.com/blog/cheat-fund-the-inside-story-of-sudipto-sen-and-saradha-group_6281.html|title='Cheat' fund: The inside story of Sudipto Sen & Saradha group|last=Dutta|first=Sushmita|date=27 April 2013|publisher=Zee News|access-date=29 April 2013}}</ref>

Debjani Mukherjee was one of the executive directors of Saradha Group who could sign cheques on behalf of the group.<ref name=TGIndia2>{{cite news|url=http://www.telegraphindia.com/1130427/jsp/bengal/story_16833336.jsp#.UX7O_MV4800|archive-url=https://archive.today/20130615172820/http://www.telegraphindia.com/1130427/jsp/bengal/story_16833336.jsp%23.UX7O_MV4800|url-status=dead|archive-date=15 June 2013|title=Excel sheet shows Debjani clout: Cops|date=26 April 2013|work=The Telegraph|access-date=29 April 2013|location=Kolkota}}</ref><ref>{{cite news|url=http://www.telegraphindia.com/1130425/jsp/bengal/story_16825039.jsp|archive-url=https://archive.today/20140219003748/http://www.telegraphindia.com/1130425/jsp/bengal/story_16825039.jsp|url-status=dead|archive-date=19 February 2014|title=Debjani cousin claims frame-up|date=25 April 2013|work=The Telegraph|access-date=19 February 2014|location=Kolkota}}</ref>  She was arrested together with Sudipto Sen.<ref>{{cite news|url=http://www.ndtv.com/article/cheat-sheet/chit-fund-scam-saradha-group-chairman-sudipta-sen-arrested-from-kashmir-357917|title=Chit fund scam: Saradha group chairman Sudipta Sen arrested from Kashmir|last=Ghosh|first=Shamik|date=23 April 2013|publisher=NDTV|access-date=29 April 2013}}</ref> At the time of her arrest Debjani was in her early 30s. She had studied at the St. John's Diocesan Girls' Higher Secondary School, and the Sivanath Sastri College.<ref name=TGIndia2 /> She trained as an air hostess. Mukherjee originally joined Saradha Group in 2010 as a receptionist, and rose rapidly to be the group's executive director.<ref>{{cite news|url=http://ibnlive.in.com/news/how-a-saradha-receptionist-became-executive-director-in-just-3-years/388061-3-231.html|archive-url=https://web.archive.org/web/20130520052516/http://ibnlive.in.com/news/how-a-saradha-receptionist-became-executive-director-in-just-3-years/388061-3-231.html|url-status=dead|archive-date=20 May 2013|title=How a Saradha receptionist became executive director in just 3 years|last=Gupta|first=Priyanka|date=27 April 2013|publisher=CNN-IBN|access-date=29 April 2013}}</ref> A story in India Today described her as a person with a reputation for generosity to her community.<ref>{{cite web|url=http://indiatoday.intoday.in/story/debjani-mukherjee-saradha-group-west-bengal-chit-fund-scam-sudipta-sen/1/267704.html|title=Who is Debjani Mukherjee?|date=26 April 2013|publisher=India Today|access-date=10 October 2013|location=Kolkata}}</ref>

===Financial operations===
[[File:Saradha year on year money collection graph.png|thumb|right|Money collected by Saradha Group of companies per year in billion INR. 95% of the fund was collected in the last three years of the scam. Source: 2014 SIT Report]]

The companies that were comprised by Saradha Group were incorporated in 2006. Its name is a cacography of Sarada Devi, the wife and spiritual counterpart of Ramakrishna Paramahamsa{{mdash}}a nineteenth-century [[Philosophy:Mysticism|mystic]] of [[Place:Bengal|Bengal]].<ref>{{cite news|url=http://www.thehindubusinessline.com/opinion/in-the-name-of-maa-sarada/article4654188.ece|title=In the name of Maa Sarada|last=Ray Choudhury|first=Ranabir|date=25 April 2013|work=The Hindu Business Line|access-date=29 April 2013}}</ref> This duplicitous association gave Saradha Group a veneer of respectability.<ref>{{cite news|url=http://www.business-standard.com/article/current-affairs/newsmaker-sudipta-sen-113042500932_1.html|title=Newsmaker: Sudipta Sen|last=Dutta|first=Ishita|date=29 April 2013|work=Business Standard|access-date=29 April 2013}}</ref> Like all Ponzi schemes, Saradha Group promised astronomical returns in fanciful but credible investments.<ref name="EPW1">{{cite journal|last=Chowdhury|first=Subhanil|date=4 May 2013|title=The Political Economy of Shadow Finance in West Bengal|journal=Economic and Political Weekly|volume=XLVIII|issue=18|url=http://www.epw.in/web-exclusives/political-economy-shadow-finance-west-bengal.html}}</ref> Its funds were sold on commission by agents recruited from local rural communities. Between 25 and 40% of the deposit was returned to these agents as commissions and lucrative gifts to quickly build up a wide [[Finance:Multi-level marketing|agent pyramid]].<ref>{{cite news|url=http://www.indianexpress.com/news/in-story-of-saradhas-crores-bengals-forgotten-hundreds/1108543/|title=In story of Saradha's crores, Bengal's forgotten hundreds|last=Das|first=Madhuparna|date=28 April 2013|work=The Indian Express|access-date=29 April 2013}}</ref> The group used a nexus of companies to [[Finance:Money laundering|launder money]] and evade regulators.<ref>{{cite news|url=http://articles.timesofindia.indiatimes.com/2013-04-28/india/38877552_1_chit-funds-collective-investment-schemes-sebi|archive-url=https://web.archive.org/web/20130501111735/http://articles.timesofindia.indiatimes.com/2013-04-28/india/38877552_1_chit-funds-collective-investment-schemes-sebi|url-status=dead|archive-date=1 May 2013|title=PM says unauthorized deposit collection has to be curbed|date=28 April 2013|access-date=29 April 2013|work=The Times of India|location=New Delhi}}</ref>

Initially, the frontline companies collected money from the public by issuing secured debentures and [[Finance:Corporate bond|redeemable preferential bonds]].<ref>{{cite news|url=http://articles.economictimes.indiatimes.com/2013-04-26/news/38843867_1_small-savings-sector-savings-financial-savings|title=Saradha chit fund scam: State government failed, but so has centre|last=Pande|first=Vinay|date=26 April 2013|work=The Economic Times|access-date=29 April 2013}}</ref> Under Indian Securities regulations and section 67 of the Indian Companies Act (1956), a company cannot raise capital from more than 50 people without issuing a proper [[Finance:Prospectus|prospectus]] and balance sheet. Its accounts must be audited and it must also have explicit permission to operate from the market regulator Securities and Exchange Board of India (SEBI).<ref>{{cite news|url=http://www.business-standard.com/article/companies/in-bengal-s-grey-money-market-saradha-is-just-one-113042600611_1.html|title=In Bengal's grey 'money market', Saradha is just one |last=Acharya|first=Namrata|date=26 April 2013|work=Business Standard|access-date=29 April 2013}}</ref>

SEBI first confronted Saradha Group in 2009. Saradha Group adapted by opening up to 200 new companies to create more cross-holdings. This created an extremely complex tiered corporate structure to confound SEBI by hampering their ability to consolidate blame.<ref>{{cite news|url=http://www.telegraphindia.com/1130423/jsp/frontpage/story_16817006.jsp#.UX6Qw8V4800|archive-url=https://archive.today/20130615191832/http://www.telegraphindia.com/1130423/jsp/frontpage/story_16817006.jsp%23.UX6Qw8V4800|url-status=dead|archive-date=15 June 2013|title=Saradha with 120 arms and blessings|last=Saha|first=Sambit|author2=Pranseh Sarkar |date=23 April 2013|work=The Telegraph|access-date=29 April 2013|location=Kolkota}}</ref> SEBI persisted in its investigation through 2010.<ref>{{cite news|url=http://articles.timesofindia.indiatimes.com/2013-04-29/kolkata/38903346_1_senior-sebi-official-economic-offences-investigation-cell-order|archive-url=https://archive.today/20130630205615/http://articles.timesofindia.indiatimes.com/2013-04-29/kolkata/38903346_1_senior-sebi-official-economic-offences-investigation-cell-order|url-status=dead|archive-date=30 June 2013|title=Sebi's Saradha order came 3 years after probe started|last=Konar|first=Debasis|date=29 April 2013|access-date=29 April 2013|work=The Times of India|location=Kolkata}}</ref> Saradha Group reacted by changing its methods of raising capital. In West Bengal, Jharkhand, Assam and Chhattisgarh, it began operating variations of collective investment schemes (CIS) involving tourism packages, forward travel and hotel booking timeshare credit transfer, real estate, infrastructure finance, and motorcycle manufacturing.<ref>{{cite web|url=http://www.ndtv.com/article/india/motorcycle-factory-cited-in-chit-fund-letter-bomb-that-ran-on-deceit-358495|title=Motorcycle factory, cited in chit-fund letter bomb, that ran on deceit|last=Pandey|first=Alok|date=24 April 2013|publisher=NDTV|access-date=29 April 2013|location=Kolkata}}</ref><ref>{{cite news|url=http://www.business-standard.com/article/current-affairs/after-saradha-next-target-should-be-rose-valley-sushil-modi-113042700329_1.html|title=After Saradha, next target should be Rose Valley: Sushil Modi|last=Basak|first=Probal|date=27 April 2013|work=Business Standard|access-date=29 April 2013|location=Kolkata}}</ref> Investors were rarely informed about the true nature of their investments. Instead, many were told they would get high returns after a fixed period.<ref>{{cite news|title=Saradha scam: Several inquiries are going on, WB governor says|agency=PTI|date=26 April 2013|work=The Times of India |location=Kolkata}}</ref> With other investors, the investment was fraudulently sold in the form of a ''chit fund''. Under the Chit Fund Act (1982), chit funds are regulated by state governments rather than SEBI.<ref>{{cite web|url=http://in.finance.yahoo.com/news/disassociate-saradha-chit-fund-sector-113015760.html|title=Disassociate Saradha from chit fund sector, says chit fund association|agency=IANS|date=29 April 2013|publisher=Yahoo Finance India|access-date=29 April 2013|location=New Delhi}}</ref>

SEBI warned the state government of West Bengal about Saradha Group's chit fund activities in 2011,<ref name="SEBIorder">{{cite web|url=http://www.sebi.gov.in/cms/sebi_data/attachdocs/1366731012533.pdf|title=SEBI Order (WTM/RKA/ERO-CIS/19/2013)|date=23 April 2013|publisher=SEBI|access-date=29 April 2013|location=Mumbai}}</ref> again prompting Saradha Group to change its methods. This time, it acquired and sold large numbers of shares of various listed companies then embezzled the proceeds of the sale through accounts which {{as of|September 2014|lc=yes}} have not been identified.<ref name=sebistumppedtoi>{{cite news|last=Khanna|first=Rohit|title=How Sudipta Sen's strategy stumped Sebi|url=http://articles.timesofindia.indiatimes.com/2013-04-30/kolkata/38929441_1_cook-hemanta-pradhan-30-companies-saradha-cmd|archive-url=https://web.archive.org/web/20130503063138/http://articles.timesofindia.indiatimes.com/2013-04-30/kolkata/38929441_1_cook-hemanta-pradhan-30-companies-saradha-cmd|url-status=dead|archive-date=3 May 2013|access-date=30 April 2013|newspaper=The Times of India|date=30 April 2013}}</ref> Meanwhile, Saradha Group started laundering a large portion of its funds to Dubai{{clarify|date=September 2014}},<ref>{{cite news|title=Sleuths track 'J… Ali' lead in Sen case|url=http://www.telegraphindia.com/1130429/jsp/frontpage/story_16839582.jsp|archive-url=https://archive.today/20140912232104/http://www.telegraphindia.com/1130429/jsp/frontpage/story_16839582.jsp|url-status=dead|archive-date=12 September 2014|access-date=12 September 2014|work=The Calcutta Telegraph|date=29 April 2013}}</ref> South Africa<ref>{{cite news|title=Fraud office catches West Asia whiff|url=http://www.telegraphindia.com/1140910/jsp/bengal/story_18819474.jsp|archive-url=https://archive.today/20140912232132/http://www.telegraphindia.com/1140910/jsp/bengal/story_18819474.jsp|url-status=dead|archive-date=12 September 2014|access-date=12 September 2014|work=The Calcutta Telegraph|date=9 September 2014}}</ref> and Singapore.<ref>{{cite news|last1=Das|first1=Madhuparna|title=Money trail leads to hawala channels, offshore accounts|url=http://indianexpress.com/article/india/india-others/money-trail-leads-to-hawala-channels-offshore-accounts/|access-date=12 September 2014|work=The Indian Express|date=12 September 2014}}</ref> By 2012, SEBI was able to classify the group's activities as collective investment schemes rather than chit funds{{mdash}}and demanded that it immediately stop operating its investment schemes until it received  permission to operate from SEBI.<ref name="SEBIorder"/> Saradha Group did not comply with this ruling and continued to operate until its collapse in April 2013.<ref>{{cite news|url=http://www.firstpost.com/ebook_download.php?id=105|title=Saradha group ch(ea)t fund: A money trail of fraud|publisher=FirstPost|access-date=29 April 2013}}</ref>

===Building brand and non-financial businesses===

Like previous Ponzi schemes such as [[Company:Anubhav Plantations|Anubhav teak plantations]], Japanlife, and Speakasia, Saradha Group invested heavily in the building of its brand.<ref>{{cite news|url=http://www.firstpost.com/business/saradha-and-ponzi-schemes-why-there-will-be-more-suckers-721941.html|title=Saradha a classic Ponzi schemes: Why there will be more suckers|last=Kaul|first=Vivek|date=24 April 2013|work=FirstPost|access-date=10 October 2013}}</ref> With enormous funds at its disposal, Saradha invested in high visibility sectors, such as the Bengali film industry,<ref>{{cite news|url=http://www.hindustantimes.com/India-news/Kolkata/Bengal-s-film-industry-dances-to-ponzi-fund-tune/Article1-1051137.aspx|archive-url=https://web.archive.org/web/20130427104658/http://www.hindustantimes.com/India-news/Kolkata/Bengal-s-film-industry-dances-to-ponzi-fund-tune/Article1-1051137.aspx|url-status=dead|archive-date=27 April 2013|title=Bengal's film industry dances to ponzi fund tune|last=Acharya|first=Anindita|date=27 April 2013|work=Hindustan Times|access-date=29 April 2013|location=Kolkata}}</ref> where it recruited actress and Trinamool Congress (TMC) Member of Parliament (MP) Satabdi Roy as its brand ambassador.<ref name="FPTMC">{{cite news|url=http://www.firstpost.com/politics/how-trinamool-burnt-its-fingers-in-the-saradha-chit-fund-scam-717842.html|title=How Trinamool burnt its fingers in the Saradha chit fund scam|last=Roy|first=Sandip|date=22 April 2013|work=Firstpost|access-date=29 April 2013|location=Kolkata}}</ref> Bollywood actor and TMC MP Mithun Chakraborty was brought in as the brand ambassador of Saradha Group's media platform.<ref name="Shocking: Bollywood actor, TMC MP Mithun Chakraborty's name surfaces in Saradha scam, gets ED summon">{{cite news|title=Shocking: Bollywood actor, TMC MP Mithun Chakraborty's name surfaces in Saradha scam, gets ED summon|url=http://news.oneindia.in/india/bollywood-actor-tmc-mp-mithun-chakraborty-name-surfaced-in-saradha-scam-ed-summons-1467952.html#infinite-scroll-2|access-date=18 June 2014}}</ref><ref name="ED summons Mithun Chakraborty tomorrow">{{cite news|title=ED summons Mithun Chakraborty tomorrow|url=http://www.business-standard.com/article/pti-stories/saradha-case-ed-summons-mithun-chakraborty-tomorrow-114061801112_1.html|access-date=18 June 2014}}</ref>

Saradha Group also enlisted Kunal Ghosh, another TMC MP, as the CEO of the media group.<ref name="FPTMC"/> Under Kunal Ghosh, the group acquired and established local television channels and newspapers, investing around {{INRConvert|9.88|b|nolink=yes}} in the media group.<ref>{{cite news|agency=TNN|title=Mamata benefited most from Saradha scam, suspended TMC MP Kunal Ghosh says|url=http://timesofindia.indiatimes.com/city/kolkata/Mamata-benefited-most-from-Saradha-scam-suspended-TMC-MP-Kunal-Ghosh-says/articleshow/41896651.cms|access-date=7 September 2014|publisher=Times of India|date=7 September 2014}}</ref> By 2013, it employed over 1,500 journalists and owned eight newspapers printed in five languages: ''Seven Sisters Post'' and ''Bengal Post'' (English dailies), ''Sakalbela'' and ''Kalom'' ([[Social:Bengali language|Bengali]] dailies), ''Prabhat Varta'' ([[Social:Hindi|Hindi]] daily),<ref>{{cite web|url=http://epaperszone.com/india/prabhat-varta|title=Prabhat Varta|access-date=10 May 2013}}</ref> ''Ajir Dainik Baturi'' ([[Social:Assamese language|Assamese]] daily),<ref>{{cite news|url=http://articles.timesofindia.indiatimes.com/2013-04-25/kolkata/38816097_1_rs-28-crore-55-lakh-assam-mla|archive-url=https://archive.today/20130615172838/http://articles.timesofindia.indiatimes.com/2013-04-25/kolkata/38816097_1_rs-28-crore-55-lakh-assam-mla|url-status=dead|archive-date=15 June 2013|title=Partnership purely editorial: Srinjoy|agency=TNN|date=25 April 2013|work=The Times of India|access-date=10 May 2013}}</ref> ''Azad Hind''<ref>{{cite news|url=http://telegraphindia.com/1130504/jsp/bengal/story_16857362.jsp#.UYTansV4800|archive-url=https://archive.today/20130615172800/http://telegraphindia.com/1130504/jsp/bengal/story_16857362.jsp%23.UYTansV4800|url-status=dead|archive-date=15 June 2013|title=Two newspapers stay afloat|last=Zaved|first=Jeshan|date=4 May 2013|work=The Telegraph|access-date=4 May 2013|location=Kolkata}}</ref> (Urdu daily) and ''Parama'' (Bengali weekly magazine). It also owned Bengali news channels Tara Newz and Channel 10, Bengali general entertainment channels Tara Muzic and Tara Bangla,<ref name="OUTLOOK1">{{cite news|url=http://www.outlookindia.com/article.aspx?285082|title=Then Came The Showstopper|last=Mitra|first=Dola|date=6 May 2013|publisher=Outlook India|access-date=29 April 2013}}</ref> Punjabi general entertainment channel Tara Punjabi,<ref>{{cite news|title=Three TV channels owned by Saradha Group to be auctioned|url=http://www.thehindubusinessline.com/news/states/three-tv-channels-owned-by-saradha-group-to-be-auctioned/article5574170.ece|access-date=7 September 2014|publisher=Hindu Businessline|date=13 January 2014}}</ref> an international channel aimed at the Indian diaspora, TV South East Asia<ref>{{cite news|last1=Chowdhury|first1=Rajib|title=Saradha: Footballer under ED scanner|url=http://www.asianage.com/india/saradha-footballer-under-ed-scanner-195|access-date=7 September 2014|publisher=The Asian Age|date=2 September 2014}}</ref> and one FM radio station.<ref>{{cite news|url=http://articles.economictimes.indiatimes.com/2013-04-29/news/38904594_1_bengali-new-srei-infrastructure-finance-trinamool-congress|title=Mamata Banerjee making all efforts to save Saradha Group's media companies|last=Ghosal|first=Shakuntala |author2=Tamal Sengupta |author3=Anuradha Himatsingka|date=29 April 2013|work=The Economic Times|access-date=10 May 2013|location=Kolkata}}</ref> Author Aparna Sen was made the editor of ''Parama''.<ref>{{cite web|last1=Trust|first1=Press|title=Saradha scam: Actor Aparna Sen questioned by ED|url=http://indianexpress.com/article/india/india-others/saradha-scam-aparna-sen-questioned-by-ed/|website=The Indian Express|access-date=7 September 2014|date=18 August 2014}}</ref><ref>{{cite web|title=Filmmaker Aparna Sen questioned in Saradha scam probe|url=http://indiatoday.intoday.in/story/saradha-scam-ed-aparna-sen-sudipto-sen-parama-saradha-group-piyali-sen-subhojit-sen/1/377578.html|website=India Today|access-date=7 September 2014}}</ref>

In 2011, Saradha Group bought Global Automobiles, a heavily indebted motorcycle company as a front for the latest version of its Ponzi scheme. Global Automobiles immediately stopped most production but kept 150 workers on its payroll who "pretended to work whenever truckloads and busloads of prospective depositors of Saradha Realty visited the plant for a first-hand check before investing".<ref>{{cite news|url=http://www.hindustantimes.com/India-news/Kolkata/Saradha-owner-faked-motorbike-factory-to-dupe-investors/Article1-1048907.aspx|archive-url=https://web.archive.org/web/20130423093309/http://www.hindustantimes.com/India-news/Kolkata/Saradha-owner-faked-motorbike-factory-to-dupe-investors/Article1-1048907.aspx|url-status=dead|archive-date=23 April 2013|title=Saradha chief used fake mobike plant to dupe investors|last=Bhattacharya|first=Snigdhendu|date=23 April 2013|work=Hindustan Times|access-date=29 April 2013|location=Kolkata}}</ref> It also bought similar shell companies like West Bengal Awadhoot Agro Private Ltd, located in North 24-Parganas, and Landmark Cement in Bankura to showcase them to agents and depositors and convince them that the Saradha Group had diversified interests.<ref>{{cite news|url=http://www.telegraphindia.com/1130509/jsp/bengal/story_16877487.jsp#.UYvDicV4800|archive-url=https://archive.today/20130615191953/http://www.telegraphindia.com/1130509/jsp/bengal/story_16877487.jsp%23.UYvDicV4800|url-status=dead|archive-date=15 June 2013|title=Sen's 'bluff', in a nutshell|date=8 May 2013|work=The Telegraph|access-date=9 May 2013|location=Kolkota}}</ref>

As part of its corporate social responsibility program, Saradha Group donated motorcycles to the Kolkata Police. On 19 July 2011, it persuaded Mamata Banerjee, the Chief Minister of West Bengal, to use its ambulances and motorcycles for the Jangalmahal area of West Midnapore.<ref>{{cite news|url=http://www.deccanchronicle.com/130428/news-current-affairs/article/chit-fund-scam-mamata-banerjee-donated-saradha-sops-faces|title=Chit fund scam: Mamata Banerjee donated Saradha sops, faces backlash|last=Basak|first=Sanjay|date=28 April 2013|work=Deccan Chronicle|access-date=29 April 2013}}</ref> To further etch itself in the socio-cultural milieu of Bengal, Saradha Group invested in football rivals and the best-known football clubs in Bengal: Mohun Bagan A.C. ({{INR}} 18&nbsp;million in 2010–11) and East Bengal F.C. ({{INR}} 35&nbsp;million since 2010).<ref>{{cite news|url=http://www.ndtv.com/article/india/chit-fund-scam-saradha-shadow-over-football-field-360299|title=Chit fund scam: Saradha shadow over football field|last=Benerjee|first=Moideepa|date=29 April 2013|publisher=NDTV|access-date=29 April 2013|location=Kolkata}}</ref><ref>{{cite news|url=http://www.livemint.com/Leisure/buZuU9ZcRaCeZUIQUhAaQP/Cutbacks-in-the-offing.html|title=Cutbacks in the offing|last=Islam|first=Aminul|work=LiveMint|access-date=13 June 2013}}</ref> The group also sponsored various [[Religion:Durga Puja|Durga Puja]] celebrations organised by local political leaders.<ref>{{cite news|url=http://www.hindustantimes.com/India-news/Kolkata/Saradha-bares-TMC-cracks/Article1-1050422.aspx|archive-url=https://web.archive.org/web/20130426135039/http://www.hindustantimes.com/India-news/Kolkata/Saradha-bares-TMC-cracks/Article1-1050422.aspx|url-status=dead|archive-date=26 April 2013|title=Scam hurts Trinamool image, Mamata faces dissent|last=Bhattacharya|first=Ravik|date=25 April 2013|work=Hindustan Times|access-date=29 April 2013|location=Kolkata}}</ref><ref>{{cite news|url=http://www.anandabazar.com/29cal5.html|title=Who would fund puja celebrations after Sudipto?|last=Basu|first=Riju|date=29 April 2013|work=Anandabazar Patrika|language=bn|access-date=29 April 2013|location=Kolkata}}</ref>

===Political patronage===
Allegedly several political leaders received financial support from Saradha Group, including MPs of TMC, the incumbent ruling party of West Bengal.<ref name="EPW1"/> MP Kunal Ghosh drew a salary of {{INRConvert|1.6|m|nolink=yes}} per month from Saradha Group, as an employee of the group. MP Srinjoy Bose was directly involved with the group's media operations.<ref>{{cite news|url=http://m.firstpost.com/politics/who-aretwo-tmc-mps-srinjoy-bosekunal-ghosh-726281.html|title=Who are the two TMC MPs Srinjoy Bose and Kunal Ghosh?|date=24 April 2013|work=First Post|access-date=29 April 2013}}</ref> Transport Minister Madan Mitra headed the employees' union of the group and publicly encouraged people to invest their savings with it.<ref>{{cite web|url=http://articles.economictimes.indiatimes.com/2013-04-25/news/38817102_1_trinamool-mps-srinjoy-bose-kunal-ghosh|title=Trinamool cannot wish away its links with Saradha group irrespective of what Mamata says|agency=ET Bureau|date=25 April 2013|work=The Economic Times|access-date=29 April 2013|location=Kolkata}}</ref> Sudipto Sen, the group's chairman and managing director, reportedly spent {{INRConvert|18.6|m|nolink=yes}} to buy paintings by Mamata Banerjee, whose government later issued a notification that public libraries should buy and display Saradha Group newspapers.<ref>{{cite news|url=http://www.business-standard.com/article/current-affairs/banking-on-lies-113042600846_1.html|title=Banking on lies|last=Acharya|first=Namrata|date=28 April 2013|work=Business Standard|access-date=9 May 2013|location=Kolkata}}</ref> The group bought the loss-making company Landmark Cement, which was co-owned by textiles minister Shyamapada Mukherjee.<ref>{{cite news|last1=Khanna|first1=Rohit|title=Saradha cloud over TMC MLA's co deal|url=http://timesofindia.indiatimes.com/city/kolkata/Saradha-cloud-over-TMC-MLAs-co-deal/articleshow/40205583.cms|access-date=16 August 2014|work=Times of India|date=14 August 2014}}</ref><ref>{{cite news|last1=Siddiqui|first1=Ahmed|title=CBI focus on Saradha VIPs|url=http://www.telegraphindia.com/1140815/jsp/frontpage/story_18724098.jsp|archive-url=https://archive.today/20140816085739/http://www.telegraphindia.com/1140815/jsp/frontpage/story_18724098.jsp|url-status=dead|archive-date=16 August 2014|access-date=16 August 2014|work=The Telegraph|date=15 August 2014}}</ref> The group also had financial dealings with Ganesh Dey, the confidential assistant of the finance minister of the erstwhile Left Front government, who was later expelled.<ref>{{cite news|url=http://www.telegraphindia.com/1130508/jsp/bengal/story_16872857.jsp#.UYvor8V4800|archive-url=https://archive.today/20130615172741/http://www.telegraphindia.com/1130508/jsp/bengal/story_16872857.jsp%23.UYvor8V4800|url-status=dead|archive-date=15 June 2013|title=His CPM master's confidential assistants|date=7 May 2013|work=The Telegraph|access-date=9 May 2013|location=Kolkota}}</ref>

Politicians outside West Bengal also benefited from Saradha Group.  Himanta Biswa Sarma, the Health and Education Minister of Assam, may have profited personally from the Ponzi scheme.<ref>{{cite web|url=http://www.timesnow.tv/Sudipta-Sen-sent-to-14-day-police-remand/articleshow/4426115.cms |title=Saradha chitfund: Sudipta Sen sent to 14-day police remand- TIMESNOW.tv – Latest Breaking News, Big News Stories, News Videos |publisher=Timesnow.Tv |access-date=26 April 2013}}</ref><ref>{{cite web|url=http://www.indiablooms.com/NewsDetailsPage/2013/newsDetails250413i.php |title=Assam for CBI probe into Saradha scam |publisher=Indiablooms.com |date=1 January 2004 |access-date=26 April 2013}}</ref> According to officials investigating the case, the actual amount paid could be almost double of what is being claimed.<ref>{{cite news|title='Actual money paid to ex-MP's wife by Sen may be much more'|url=http://timesofindia.indiatimes.com/City/Kolkata/Actual-money-paid-to-ex-MPs-wife-by-Sen-may-be-much-more/articleshow/34759961.cms|access-date=10 May 2014|newspaper=Times of India|date=7 May 2014}}</ref><ref>{{cite news|last=Bhabani|first=Soudhriti|title=Saradha chit fund chief Sudipta Sen's letter to CBI can singe big names|url=http://indiatoday.intoday.in/story/west-bengal-chit-fund-scam-sudipta-sen-saradha-group-debjani-mukherjee-tmc/1/267706.html|access-date=10 May 2014|newspaper=India Today|date=26 April 2013}}</ref> Some commentators state that this Ponzi scheme survived for so long because of its heavy political patronage.<ref name="Dailypioneer">{{cite news|url=http://www.dailypioneer.com/columnists/edit/sen-and-saradha-story-of-political-intrigue.html|title=Sen and Saradha: Story of political intrigue|last=Malik|first=Ashok|date=27 April 2013|work=Daily Pioneer|access-date=29 April 2013}}</ref><ref>{{cite news|url=http://businesstoday.intoday.in/story/saradha-group-chit-fund-scam/1/194622.html|title=Unsafe Deposit|last=Arun|first=MG|date=26 May 2013|work=Business Today|access-date=10 October 2013}}</ref>

==Collapse==
The earliest public warnings about the reckless and fraudulent CIS in West Bengal started in 2009 from MPs Somendra Nath Mitra and Abu Hasem Khan Choudhury and TMC leader Sadhan Pande.<ref>{{cite news|url=http://articles.timesofindia.indiatimes.com/2013-04-24/kolkata/38789399_1_trinamool-congress-chit-funds-kunal-ghosh|archive-url=https://web.archive.org/web/20130427025320/http://articles.timesofindia.indiatimes.com/2013-04-24/kolkata/38789399_1_trinamool-congress-chit-funds-kunal-ghosh|url-status=dead|archive-date=27 April 2013|title=West Bengal chit fund scam: Knives out for tainted Trinamool MPs|date=24 April 2013|access-date=29 April 2013|work=The Times of India|location=Kolkata}}</ref> Apart from the CBI investigation, no executive actions were taken at this time. On 7 December 2012, Reserve Bank of India (RBI) governor Duvvuri Subbarao said the West Bengal government should initiate ''suo motu'' action against companies that were indulging in financial malpractice.<ref>{{cite news|url=http://www.hindustantimes.com/India-news/Kolkata/Mamata-govt-feels-the-heat-after-the-chit-fund-meltdown/Article1-1048791.aspx|archive-url=https://web.archive.org/web/20130423090322/http://www.hindustantimes.com/India-news/Kolkata/Mamata-govt-feels-the-heat-after-the-chit-fund-meltdown/Article1-1048791.aspx|url-status=dead|archive-date=23 April 2013|title=Mamata govt feels the heat after the Ponzi scheme meltdown|last=Roy Chowdhury|first=Sumanta|date=23 April 2013|work=Hindustan Times|access-date=29 April 2013}}</ref> By that time, the Saradha Group Ponzi scheme was already beginning to unravel. In January 2013, the group's cash inflow was, for the first time, less than its cash payouts. This outcome is inevitable in a Ponzi scheme that is allowed to run full course. Sudipto Sen tried but failed to calm uneasy depositors and agents, and could not increase inflow of funds.<ref name="TOI1">{{cite news|url=http://articles.timesofindia.indiatimes.com/2013-04-23/kolkata/38761868_1_crore-chit-fund-agent-rs|archive-url=https://web.archive.org/web/20130426001024/http://articles.timesofindia.indiatimes.com/2013-04-23/kolkata/38761868_1_crore-chit-fund-agent-rs|url-status=dead|archive-date=26 April 2013|title=Saradha chit fund mess: Quick-rich dreams lie crushed|last=Bandopadhay|first=Krishnendu|work=The Times of India|access-date=29 April 2013}}</ref>

On 6 April 2013, Sen wrote an 18-page confessional letter to the CBI, in which he admitted that he had paid large sums of money to several politicians.<ref>{{cite news|url=http://www.deccanherald.com/content/328339/politicos-dock-over-saradha-scam.html|title=Politicos in dock over Saradha scam|agency=DHNS|date=24 April 2013|work=Deccan Herald|access-date=29 April 2013}}</ref> He also stated that TMC leader Kunal Ghosh had forced him to enter into loss-making media ventures and blackmailed him into selling one of his television channels at below market price.<ref>{{cite web|url=https://youtube.com/watch?v=cGrJqJnJhjE|title=Times Now Exclusive: Sudipto Sen's letter to CBI on 6th April|date=24 April 2013|publisher=Times Now - YouTube}}</ref> Sen fled after posting this letter on 10 April.<ref>{{cite news|agency=TNN|title=Sudipta Sen's driver says TMC MPs met Saradha boss before escape|url=http://timesofindia.indiatimes.com/india/Sudipta-Sens-driver-says-TMC-MPs-met-Saradha-boss-before-escape/articleshow/43283070.cms|access-date=24 September 2014|work=Times of India|date=24 Sep 2014}}</ref>

In his absence, the Ponzi scheme unravelled. On 17 April, around 600 collection agents claiming to be associated with Saradha Group assembled at the headquarters of TMC and demanded government intervention.<ref>{{cite news|agency=TNN|title=Ponzi protests stall traffic|url=http://timesofindia.indiatimes.com/city/kolkata/Ponzi-protests-stall-traffic/articleshow/19732382.cms|access-date=24 September 2014|work=Times of India|date=26 April 2013}}</ref> Despondency quickly spread across Bengal. A Times of India interviewee said, "'The entire Dakshin Barasat today looks like it was hit by a cyclone. Every home has a bankrupt depositor or a fugitive agent. People who were once friends became enemies. Happy households became miserable. Students stopped going to school. Traders lost interest in opening shutters. There is a sense of treachery that has replaced the warmth of a neighbourhood. Suddenly everything has become vicious."<ref name="TOI1"/> By this time, the Saradha Group financial scandal had colloquially become known as "Bonzi"{{mdash}}a portmanteau of the words Ponzi and Bengal.<ref>{{cite news|url=http://www.telegraphindia.com/1130421/jsp/frontpage/story_16809931.jsp#.UX7l-cV4800|archive-url=https://archive.today/20130615173058/http://www.telegraphindia.com/1130421/jsp/frontpage/story_16809931.jsp%23.UX7l-cV4800|url-status=dead|archive-date=15 June 2013|title=Bengal's Bonzi shell cracks up Panic strikes other schemes|last=Saha|first=Sambit|date=21 April 2013|work=The Telegraph|access-date=29 April 2013}}</ref>

On 18 April, an arrest warrant for Sudipto Sen was issued.<ref>{{cite news|url=http://www.telegraphindia.com/1130419/jsp/frontpage/story_16803225.jsp#.UX7ZDMV4800|archive-url=https://archive.today/20130615173009/http://www.telegraphindia.com/1130419/jsp/frontpage/story_16803225.jsp%23.UX7ZDMV4800|url-status=dead|archive-date=15 June 2013|title=Mamata clears arrest to nip chit contagion|date=19 April 2013|work=The Telegraph|access-date=29 April 2013}}</ref> By 20 April, the news of potentially the largest Ponzi scheme in India had become headline news in West Bengal, and then front-page news nationally.<ref>{{cite web|url=http://www.ponzitracker.com/main/2013/4/25/massive-36-billion-ponzi-scheme-uncovered-in-india.html|title=Massive $3.6 Billion Ponzi Scheme Uncovered in India|last=Maglich|first=Jordan|date=25 April 2013|publisher=Ponzitracker|access-date=5 May 2013}}</ref><ref>{{cite news|url=http://articles.timesofindia.indiatimes.com/2013-04-21/kolkata/38709439_1_chit-fund-depositors-ashok-mitra|archive-url=https://web.archive.org/web/20130424081621/http://articles.timesofindia.indiatimes.com/2013-04-21/kolkata/38709439_1_chit-fund-depositors-ashok-mitra|url-status=dead|archive-date=24 April 2013|title=Sanchayita haunts Saradha victims|date=21 April 2013|work=The Times of India|access-date=6 May 2013}}</ref><ref>{{cite news|url=http://www.indianexpress.com/news/soon-pil-in-hc-seeking-ban-on-chit-fund-operators/1105194/|title=Soon, PIL in HC seeking ban on chit fund operators|date=20 April 2013|work=The Indian Express|access-date=6 May 2013}}</ref> After evading the authorities for a week, Sudipto Sen, Debjani Mukherjee and Arvind Singh Chauhan were arrested in Sonmarg, [[Place:Kashmir|Kashmir]], on 23 April 2013.<ref name=TGIndia1/><ref>{{cite news|url=http://www.indianexpress.com/news/saradha-group-chairman-sudipto-sen-arrested/1106572/|title=Saradha Group chairman Sudipto Sen arrested in Jammu and Kashmir|date=24 April 2013|work=The Indian Express|publisher=PTI|access-date=6 May 2013|location=Kolkata}}</ref> On the same day, SEBI stated that both chain marketing and forward contracts are forms of CIS, and officially asked Saradha Group to immediately desist from raising any further capital and return all deposits within three months.<ref name="SEBIorder"/><ref>{{cite news|url=http://www.telegraphindia.com/1130424/jsp/frontpage/story_16820914.jsp#.UX7t_MV4800|archive-url=https://archive.today/20130615172803/http://www.telegraphindia.com/1130424/jsp/frontpage/story_16820914.jsp%23.UX7t_MV4800|url-status=dead|archive-date=15 June 2013|title='Boxed in', Sebi too late – Saradha given three months to refund investors|date=24 April 2013|work=The Telegraph|access-date=29 April 2013|location=Mumbai}}</ref>

==Aftermath and reactions==

===State government reaction===

====West Bengal====
On 22 April 2013 the Mamata Banerjee led West Bengal government announced that a four-member judicial inquiry commission headed by Shyamal Kumar Sen, retired Chief Justice of the Allahabad High Court, would probe the scam. The commission was named the Justice Shyamal Sen Commission of Enquiry (Saradha Group of Companies and other similar companies). West Bengal's Chief Minister Mamata Banerjee was reported to have said, "ja gechhey ta gechhey" (whatever has gone has gone).<ref>{{cite news|url=http://www.telegraphindia.com/1130423/jsp/frontpage/story_16817005.jsp#.UX7rvMV4800|archive-url=https://archive.today/20130615172808/http://www.telegraphindia.com/1130423/jsp/frontpage/story_16817005.jsp%23.UX7rvMV4800|url-status=dead|archive-date=15 June 2013|title=What the govt balance sheet shows The words and deeds|date=22 April 2013|work=The Telegraph|access-date=29 April 2013}}</ref> On 24 April 2013, Banerjee announced a controversial {{INRConvert|500|c|nolink=yes}} relief fund for the low income depositors of the Saradha Group, introducing a 10% additional tax on tobacco products to raise the money and in jest asked smokers "to light up a little more".<ref>{{cite news|url=http://www.telegraphindia.com/1130425/jsp/frontpage/story_16825376.jsp#.UX7vnMV4800|archive-url=https://archive.today/20130615172818/http://www.telegraphindia.com/1130425/jsp/frontpage/story_16825376.jsp%23.UX7vnMV4800|url-status=dead|archive-date=15 June 2013|title=DIDI'S SIN TAX Rs 500cr plan to refund poor victims|date=24 April 2013|work=The Telegraph|access-date=29 April 2013|location=Kolkota}}</ref><ref>{{cite news|url=http://www.telegraphindia.com/1130426/jsp/opinion/story_16826315.jsp#.UX8AY8V4802|archive-url=https://archive.today/20130615173013/http://www.telegraphindia.com/1130426/jsp/opinion/story_16826315.jsp%23.UX8AY8V4802|url-status=dead|archive-date=15 June 2013|title=Editorial|date=26 April 2013|work=The Telegraph|access-date=29 April 2013}}</ref> The propriety of the fund was later questioned by the Governor of RBI.<ref>{{cite news|url=http://www.telegraphindia.com/1130509/images/09zzrbibig.jpg|archive-url=https://archive.today/20130615192046/http://www.telegraphindia.com/1130509/images/09zzrbibig.jpg|url-status=dead|archive-date=15 June 2013|title=Is Sardha tax fair RBI Chief asks|date=8 May 2013|work=The Telegraph|access-date=9 May 2013}}</ref> The West Bengal government also set up a Special Investigation Team (SIT) u/s 36 of the CrPC, with officers drawn from the state's CID and Kolkata Police, to pool the criminal cases and investigate the Saradha Group.<ref>{{cite news|title=Tathagata Roy says sit is not doing good in sardha case. So why not cbi?|url=http://www.bharatnewschannels.com/abpanandatv-news-watchonline/tathagata-roy-says-sit-is-not-doing-good-in-sardha-case-so-why-not-cbi-video_3b75c17c4.html|access-date=28 April 2014|newspaper=BNC}}</ref> Mamata Banerjee led State Government staunchly opposed all investigations by federal investigative agencies CBI, ED and SFIO; conceding only after the Supreme Court ordered the federal agencies to take up the investigation.<ref>{{cite news|agency=PTI|title=BJP questions Mamata Banerjee's silence over CBI quizzing TMC leaders|url=http://articles.economictimes.indiatimes.com/2014-09-09/news/53730882_1_cbi-inquiry-tmc-mp-siddharth-nath-singh|access-date=13 September 2014|work=Economic Times|date=9 September 2014}}</ref>

The state government decided to repeal an existing Bill passed by the Left Front Government in 2009, which had not received the approval of the President of India.<ref>{{cite news|title=Confusion over new chit-fund bill|url=http://articles.timesofindia.indiatimes.com/2013-04-30/kolkata/38929038_1_new-bill-bill-tomorrow-financial-establishments-bill|archive-url=https://archive.today/20130615172824/http://articles.timesofindia.indiatimes.com/2013-04-30/kolkata/38929038_1_new-bill-bill-tomorrow-financial-establishments-bill|url-status=dead|archive-date=15 June 2013|access-date=30 April 2013|newspaper=The Times of India|date=30 April 2013}}</ref><ref>{{cite news|title=New bill on chit funds by Bengal govt sparks off debate|url=http://www.business-standard.com/article/economy-policy/new-bill-on-chit-funds-by-bengal-govt-sparks-off-debate-113042800495_1.html|access-date=30 April 2013|newspaper=Business Standard|date=28 April 2013}}</ref> On 30 April 2013 the new Bill—The West Bengal Protection of Interest of Depositors in Financial Establishments Bill (2013), was passed in a two-day special session of the West Bengal Legislative Assembly. The new law has provisions for retrospective effect, search and seizure, enhanced penalties, establishment of special courts and confiscation of property.<ref>{{cite news|title=West Bengal passes new Bill to protect investor interests|url=http://www.thehindubusinessline.com/news/states/west-bengal-passes-new-bill-to-protect-investor-interests/article4670519.ece|access-date=30 April 2013|newspaper=Business Line|date=30 April 2013}}</ref><ref>{{cite news|title=West Bengal to bring new bill on protecting investor interest|url=http://www.thehindu.com/news/national/other-states/west-bengal-to-bring-new-bill-on-protecting-investor-interest/article4666940.ece|access-date=30 April 2013|newspaper=The Hindu|date=29 April 2013}}</ref><ref>{{cite news|title=New Bill For Investor Protection To Have More Teeth|url=http://www.businessworld.in/en/storypage/-/bw/new-bill-for-investor-protection-to-have-more-teeth/875675.16627/page/0|access-date=30 April 2013|newspaper=Business World|date=29 April 2013}}</ref> As the Bill pertained to the Concurrent List of the Indian Constitution, on which a federal law was already in place, it required approval from the President. The Bill was sent to the Union Home Ministry, which sent it back to the West Bengal Assembly on 6 June 2013, stating that the Bill has penal provisions implemented with retrospective effect, thus contravening the [[Social:Basic structure doctrine|Basic structure doctrine]] of the Indian constitution and the established criminal law jurisprudence.<ref>{{cite news|title=Delhi lobs back Saradha bill|url=http://www.telegraphindia.com/1130607/jsp/frontpage/story_16981167.jsp|archive-url=https://archive.today/20140513232236/http://www.telegraphindia.com/1130607/jsp/frontpage/story_16981167.jsp|url-status=dead|archive-date=13 May 2014|access-date=10 May 2014|newspaper=Calcutta Telegraph|date=6 June 2013}}</ref> On 12 December 2013, the West Bengal Legislative Assembly passed an amended version of the original Bill, incorporating changes suggested by the financial services, and revenue and economic affairs departments in New Delhi. The new Bill was then sent for presidential approval.<ref>{{cite news|title=Saradha bill passed 2nd time|url=http://www.telegraphindia.com/1131213/jsp/bengal/story_17673797.jsp|archive-url=https://archive.today/20140513232141/http://www.telegraphindia.com/1131213/jsp/bengal/story_17673797.jsp|url-status=dead|archive-date=13 May 2014|access-date=10 May 2014|newspaper=Calcutta Telegraph|date=12 December 2013}}</ref>

On 8 May 2013, Banerjee said West Bengal was considering setting up a government-backed small savings fund to encourage small depositors to invest in it rather than in Ponzi schemes.<ref>{{cite news|url=http://indiatoday.intoday.in/story/mamata-banerjee-moots-social-security-scheme-chit-fund-scam/1/269959.html|title=Mamata Banerjee moots social security scheme after Saradha chit fund scam|agency=IANS|date=8 May 2013|work=India Today|access-date=9 May 2013|location=Kolkata}}</ref> Doubts whether a cash-starved state with high debt burden has the financial acumen or political will to independently administer such a fund.<ref>{{cite news|url=http://www.telegraphindia.com/1130509/jsp/bengal/story_16877625.jsp#.UYvdRcV4800|archive-url=https://archive.today/20130615173026/http://www.telegraphindia.com/1130509/jsp/bengal/story_16877625.jsp%23.UYvdRcV4800|url-status=dead|archive-date=15 June 2013|title=Here comes trusted Didi deposit scheme|date=8 May 2013|work=The Telegraph|access-date=9 May 2013|location=Kolkata}}</ref>

On 23 May 2013, Bannerjee indicated the West Bengal government's willingness to take over Saradha-owned television channels ''Tara News'' and ''Tara Muzic'', which had earlier been sent into administration by Calcutta High Court.<ref>{{cite news|url=http://www.telegraphindia.com/1130523/jsp/frontpage/story_16930019.jsp#.UZ5kBsVhByM|archive-url=https://archive.today/20130615173033/http://www.telegraphindia.com/1130523/jsp/frontpage/story_16930019.jsp%23.UZ5kBsVhByM|url-status=dead|archive-date=15 June 2013|title=Bengal to take over 2 TV channels of Saradha Group, but not liabilities|agency=PTI|date=23 May 2013|work=The Telegraph|access-date=23 May 2013|location=Kolkata}}</ref>

====Assam====
On 4 April 2013, the Assam Legislative Assembly unanimously passed the Assam Protection of Interests of Depositors (in Financial Establishments) (Amendment) Bill (2013) to enhance the protections available to depositors and to curb fraudulent financial schemes.<ref>{{cite web|url=http://news.guwahationline.in/Assembly-passes-Assam-Protection-of-Interests-of-Depositors-in-Financial-Establishments-Amendment-Bill-17571|title=Assembly passes Assam Protection of Interests of Depositors (in Financial Establishments) Amendment Bill|date=4 April 2013|access-date=6 May 2013|location=Guwahati}}</ref> Soon after the Saradha scam, Assam Government sent the Bill to the State Governor for his approval so it could be forwarded to President of India for his assent.<ref name="DP1">{{cite news|url=http://www.dailypioneer.com/nation/assam-bill-awaits-guv-nod-to-nip-saradha-like-scams-in-bud.html|title=Assam Bill awaits Guv nod to nip Saradha-like scams in bud|agency=IANS|date=6 May 2013|work=Dailly Pioneer|access-date=6 May 2013|location=Guwahati}}</ref>

On 22 April 2013, Assam Police sealed five offices of Saradha Group amid protests by depositors, agents and employees, and accusations that a minister, a former DGP and government officials had facilitated the group's business ventures in Assam.<ref>{{cite news|url=http://www.telegraphindia.com/1130424/jsp/frontpage/story_16820616.jsp#.UX7umMV4800|archive-url=https://archive.today/20130615172903/http://www.telegraphindia.com/1130424/jsp/frontpage/story_16820616.jsp%23.UX7umMV4800|url-status=dead|archive-date=15 June 2013|title=Company Offices Sealed in Assam|date=23 April 2013|work=The Telegraph|access-date=29 April 2013|location=Guwahati/Bongaigaon}}</ref> Unlike in West Bengal, where the probe is based on FIRs filed by defrauded depositors, the Assam Government ''suo motto'' registered 222 cases against Saradha Group and 127 other companies after widespread protests in Assam. In 17 cases, charge sheets have been filed against 42 people belonging to 15 companies. 303 people have been arrested for embezzling public money. The government seized nearly {{INRConvert|9.4|m|nolink=yes}} in cash from those arrested. 106 bank accounts with deposits of {{INRConvert|240|m|nolink=yes}} were frozen while a number of plots totalling more than 99 [[Bigha|bigha]]s and buildings have been identified; steps were taken for their attachment.<ref name="DP1"/> On 6 May 2013, Assam handed the investigation to CBI.<ref name="Telegraph9513">{{cite news|url=http://www.telegraphindia.com/1130509/jsp/frontpage/story_16877046.jsp#.UYvCQ8V4800|archive-url=https://archive.today/20130615172801/http://www.telegraphindia.com/1130509/jsp/frontpage/story_16877046.jsp%23.UYvCQ8V4800|url-status=dead|archive-date=15 June 2013|title=Tripura at CBI's door over deposits|date=9 May 2013|work=The Telegraph|access-date=9 May 2013|location=Agartala}}</ref>

====Odisha====
On the basis of complaints filed by over 6000 depositors mainly from districts adjoining Bengal, the Government of Odisha ordered the Crime Branch of Odisha Police to investigate the Saradha scam.<ref>{{cite news|title=State feels Saradha aftershocks|url=http://www.telegraphindia.com/1130430/jsp/odisha/story_16842147.jsp#.UYAfj6JHLxM|archive-url=https://archive.today/20130615172725/http://www.telegraphindia.com/1130430/jsp/odisha/story_16842147.jsp%23.UYAfj6JHLxM|url-status=dead|archive-date=15 June 2013|access-date=30 April 2013|newspaper=The Telegraph|date=30 April 2013}}</ref> The Economic Offence Wing (EOW) of the Crime Branch of Odisha Police registered criminal cases against Sudipto Sen and Saradha Group. On 3 May 2013, Odisha police seized documents and sealed the group's local offices.<ref>{{cite web|url=http://zeenews.india.com/news/odisha/odisha-police-registers-second-case-against-saradha-group_846976.html|title=Odisha Police registers second case against Saradha Group|date=7 May 2013|publisher=Zee News|access-date=6 May 2013|location=Bhuvaneshwar}}</ref><ref>{{cite news|url=http://www.dnaindia.com/india/1831404/report-odisha-police-registers-second-case-against-saradha-group|title=Odisha Police registers second case against Saradha Group|agency=PTI|date=6 May 2013|work=DNA India|access-date=6 May 2013|location=Bhuvneshwar}}</ref><ref>{{cite news|url=http://www.odishareporter.in/districts/khordha/chit-fund-saradhas-office-closed-in-the-state|title=Chit fund Saradha's office closed in the state|agency=PTI|date=5 May 2013|work=Odisha Reporter|access-date=6 May 2013}}</ref> During the transfer of the investigation to CBI in May 2014, EOW had registered up to 207 cases relating to 43 of the group's 44 companies and had arrested 440 people. Charge sheets for cheating and criminal conspiracy were filed in 120 cases under provisions of the Indian Penal Code, the Prize Chits and Money Circulation Schemes (Banning) Act, and the Odisha Protection of Interest of Depositors (in Financial Establishments) Act.<ref>{{cite news|last=Anand|first=Utkarsh|title=Orissa ponzi scam surpasses that of Bengal by Rs 2,140 cr|url=http://indianexpress.com/article/india/india-others/orissa-ponzi-scam-surpasses-that-of-bengal-by-rs-2140-cr/|access-date=10 May 2014|newspaper=Indian Express|date=15 April 2014}}</ref>

====Tripura====
On 9 May 2013, the Government of Tripura handed over all the cases involving deposit-collecting companies in the state to CBI and the Income Tax Department.<ref name="Telegraph9513"/>

===Central government reaction===
In March 2013, Central corporate affairs minister Sachin Pilot said in the Lok Sabha{{mdash}}the lower house of the Parliament of India{{mdash}}that his ministry has received complaints against West Bengal's Saradha Group and many other companies for their involvement in Ponzi or multi-layer-marketing schemes.<ref name="eoi1"/> No action was taken until after the fraud was uncovered, when many measures were announced. On 25 April 2013, India's Income Tax department and Ministry of Corporate Affairs started separate investigation into the Saradha affair and similar Ponzi funds masquerading as NBFCs or CISs.<ref>{{cite news|url=http://www.telegraphindia.com/1130425/jsp/frontpage/story_16825969.jsp#.UX7vkcV4800|archive-url=https://archive.today/20130615223914/http://www.telegraphindia.com/1130425/jsp/frontpage/story_16825969.jsp%23.UX7vkcV4800|url-status=dead|archive-date=15 June 2013|title=Corporate Affairs Ministry to probe Saradha group|agency=PTI|date=25 April 2013|work=The Telegraph|access-date=29 April 2013}}</ref> On the same day, the Enforcement Directorate (ED) registered a money laundering case under the provisions of the Prevention of Money Laundering Act (PMLA) at its Guwahati office because the Assam police has registered an FIR against Saradha Group to investigate depositors' allegations of financial irregularities.<ref>{{cite news|url=http://articles.economictimes.indiatimes.com/2013-04-25/news/38817381_1_chairman-sudipto-sen-saradha-group-enforcement-directorate|title=Saradha chit fund scam: ED registers money laundering case|date=25 April 2013|work=The Economic Times|access-date=29 April 2013|location=New Delhi}}</ref> On 1 May 2013, commenting on the regulatory loopholes, the Chairman of SEBI said, "there should be one single regulator for entire collective investment schemes".<ref>{{cite news|url=http://www.thehindu.com/news/national/working-hard-to-save-investors-from-ponzi-schemes-sebi/article4672931.ece|title=Working hard to save investors from Ponzi schemes: SEBI|agency=PTI|date=1 May 2013|work=The Hindu|access-date=1 May 2013|location=New Delhi}}</ref>

On 7 May 2013, the Central Government set up an inter-ministerial group with members of the corporate affairs ministry, SEBI, Reserve Bank of India and officers from the Income Tax Department. The group is intended to unify the regulations of investment schemes by NBFCs, banks and companies, which {{as of|2013}} were governed by different laws and regulations, leading to regulatory loopholes.<ref>{{cite news|url=http://www.moneycontrol.com/news/cnbc-tv18-comments/saradha-scam-probe-panel-setto-fix-loopholeslaws-_866496.html|title=Saradha scam: Probe panel set up to fix loopholes in laws|last=Bannerjee|first=Ronojoy|date=7 May 2013|publisher=CNBC-TV18|access-date=9 May 2013}}</ref> In light of the fraud, SEBI requested sweeping powers to investigate and prosecute fraudulent CISs.<ref>{{cite news|url=http://www.livemint.com/Money/5EInzuBGAyh4Km8CkgCgKM/Sebi-seeks-sweeping-powers.html|title=Sebi seeks sweeping powers|last=Lashkar|first=Anirudh|author2=Vyas Mohan |date=22 May 2013|work=Live Mint|access-date=22 May 2013|location=Mumbai}}</ref> In August 2013, the Central Government amended the SEBI Act and gave SEBI powers to search and seize without prior magisterial permission to investigate illegal money collection schemes.<ref>{{cite news|url=http://www.business-standard.com/article/markets/sebi-working-on-regulations-to-incorporate-new-powers-113081900921_1.html|title=Sebi working on norms to incorporate new powers|last=Modak|first=Samie|date=19 August 2013|work=Business Standard|access-date=19 August 2013}}</ref><ref>{{cite news|url=http://www.business-standard.com/article/markets/sebi-enacts-stricter-laws-on-cis-front-running-113081201156_1.html|title=Sebi enacts stricter laws on CIS, front running|date=12 August 2013|work=Business Standard|access-date=19 August 2013}}</ref>

===Political reactions and protests===
The crash of the Ponzi scheme and the publication of Sudipto Sen's letter led to a barrage of cross-party accusations. CPM accused TMC of associating with the 'chit fund', TMC alleged that Union Minister of Finance's wife Nalini Chidambaram had taken lawyers' fees from Saradha Group to incorporate its companies and should be investigated.<ref>{{cite web|author=PTI |url=http://articles.timesofindia.indiatimes.com/2013-04-25/india/38816292_1_saradha-group-nalini-chidambaram-kunal-ghosh |archive-url=https://web.archive.org/web/20130428083513/http://articles.timesofindia.indiatimes.com/2013-04-25/india/38816292_1_saradha-group-nalini-chidambaram-kunal-ghosh |url-status=dead |archive-date=28 April 2013 |work=The Times of India |title=Chit fund: TMC questions role of Chidambaram's wife in Saradha group |access-date=26 April 2013}}</ref> TMC blamed CPM for letting Ponzi funds grow in Bengal.<ref name="Letter">{{cite news|url=http://www.telegraphindia.com/1130425/jsp/frontpage/story_16825380.jsp#.UX7vmsV4800|archive-url=https://archive.today/20130615192134/http://www.telegraphindia.com/1130425/jsp/frontpage/story_16825380.jsp%23.UX7vmsV4800|url-status=dead|archive-date=15 June 2013|title=Many claims in letter – Sudipta Sen's missive to CBI|date=25 April 2013|work=The Telegraph|access-date=29 April 2013}}</ref>

The Saradha scandal became a major campaign issue amongst the political parties in West Bengal during the 2014 national election.<ref>{{cite news|last=Purohit|first=Devadeep|title=Open season on Saradha scandal Rahul's turn to target Mamata, earn wrath|url=http://www.telegraphindia.com/1140420/jsp/frontpage/story_18259251.jsp|archive-url=https://archive.today/20140428180946/http://www.telegraphindia.com/1140420/jsp/frontpage/story_18259251.jsp|url-status=dead|archive-date=28 April 2014|access-date=28 April 2014|newspaper=Calcutta Telegraph|date=20 April 2014}}</ref>  Allegations were made by all the political parties in the state. While the CPM, Congress and BJP again accused TMC of facilitating and profiting from the fraud, TMC said the companies were allowed to register during the government run by CPM in the state and Congress in the centre.<ref>{{cite news|last=Bannerjee|first=Rupak|title=CPM a Saradha beneficiary: Mamata|url=http://timesofindia.indiatimes.com/city/kolkata/CPM-a-Saradha-beneficiary-Mamata/articleshow/34307155.cms|access-date=28 April 2014|newspaper=Times of India|date=28 April 2014}}</ref> Mamata Bannerjee, Chief Minister of West Bengal and Chairperson of TMC, attacked P. Chidambaram, the finance minister of the central government, alleging a political vendetta in the timing{{mdash}}coinciding with the parliamentary elections{{mdash}}of a spurt in Enforcement Directorate investigation.<ref>{{cite news|agency=PTI|title=Saradha scam: Mamata targets Chidambaram over ED probe|url=http://www.deccanherald.com/content/401204/saradha-scam-mamata-targets-chidambaram.html|access-date=28 April 2014|newspaper=DEccan Herald|date=22 April 2014}}</ref> More political controversy occurred when Narendra Modi, the prime ministerial candidate, said Mamata Bannerjee may have directly benefited from the Ponzi scheme when her paintings were allegedly bought for {{INRConvert|1.8|c|nolink=yes}} by the Saradha Group.<ref>{{cite news|last=Roy|first=Sandip|title=Modi taunts Mamata over Saradha; Look after your wife, retorts TMC|url=http://www.firstpost.com/politics/modi-taunts-mamata-over-saradha-look-after-your-wife-retorts-tmc-1499583.html|access-date=28 April 2014|newspaper=Firstpost|date=28 April 2014}}</ref>  TMC replied to the allegations, threatened legal action for defamation and called Modi the "Butcher of Gujarat".<ref>{{cite news|title=Narendra Modi slams Mamata Banerjee over Saradha scam, TMC calls him "Butcher of Gujarat"|url=http://indianexpress.com/photos/picture-gallery-others/narendra-modi-slams-mamata-banerjee-over-saradha-scam-tmc-calls-him-butcher-of-gujarat/#modi2-14|access-date=28 April 2014|newspaper=Indian Express|date=28 April 2014}}</ref><ref>{{cite news|last=Bannerjee|first=Monidepa|title=Mamata Banerjee's party calls Narendra Modi 'butcher of Gujarat'|url=http://www.ndtv.com/elections/article/election-2014/mamata-banerjee-s-party-calls-narendra-modi-butcher-of-gujarat-514767?curl=1398702740|access-date=28 April 2014|newspaper=NDTV|date=27 April 2014}}</ref> On 11 September 2014, West Bengal law minister Chandrima Bhattacharya led around 100 TMC women supporters in a sit-in protest against CBI, alleging a biased and "politically motivated probe".<ref>{{cite news|last1=Das|first1=Madhuparna|title=As CBI's Saradha net closes in on her party, Mamata Banerjee flexes her cadre muscle|url=http://indianexpress.com/article/india/politics/as-cbis-saradha-net-closes-in-on-her-party-mamata-flexes-her-cadre-muscle/|access-date=13 September 2014|work=The Indian Express|date=12 September 2014}}</ref><ref>{{cite news|agency=TNN|title=TMC fields law minister to lead anti-CBI protests|url=http://timesofindia.indiatimes.com/City/Kolkata/TMC-fields-law-min-to-lead-anti-CBI-protests/articleshow/42291830.cms|access-date=13 September 2014|work=Times of India|date=12 September 2014}}</ref>

Street protests broke out across West Bengal, during some of which protesters ransacked offices of various Ponzi funds.<ref name="BS10">{{cite news|url=http://www.business-standard.com/article/companies/investors-ransack-saradha-s-bengal-offices-knock-at-cm-s-door-113042000428_1.html|title=Investors ransack Saradha's Bengal offices, knock at CM's door|last=Mishra|first=Digbijay|date=21 April 2013|access-date=29 April 2013|location=Kolkata}}</ref> The agents and depositors of several money mobilising funds in West Bengal organised themselves into the Chit Fund Sufferers Unity Forum (CFSUF) and demanded swift investigation and the reimbursement of deposits.<ref>{{cite web|agency=IANS|title=Politicians, academicians arrested over Saradha scam protest|url=https://in.news.yahoo.com/politicians-academicians-arrested-over-saradha-scam-protest-151004907.html|publisher=Yahoo|access-date=10 May 2014}}</ref> The Forum engaged in several, high-visibility, disruptive protests;<ref>{{cite web|title=Chitfund Sufferers' calls for 'Rail Roko' in Kolkata: 20000 expected to squat on Railway Lines|url=http://www.railnews.co.in/chitfund-sufferers-calls-for-rail-roko-in-kolkata-20000-expected-to-squat-on-railway-lines/|access-date=10 May 2014}}</ref> it was allegedly threatened and intimidated by TMC, the ruling political party.<ref>{{cite news|last=Chankraborty|first=Manotosh|title=Ponzi victims in Garia face 'TMC' wrath|url=http://timesofindia.indiatimes.com/city/kolkata/Ponzi-victims-in-Garia-face-TMC-wrath/articleshow/34554174.cms|access-date=10 May 2014|newspaper=Times of India|date=3 May 2014}}</ref><ref>{{cite news|title=Saradha Shock|url=http://www.thestatesman.net/news/52694-saradha-shock.html|access-date=10 May 2014|newspaper=The Statesman|date=3 May 2014}}</ref> 
 
According to media reports, around 210 agents, depositors and executives or directors of various money pooling companies have committed suicide in the aftermath of the Saradha Group's collapse.<ref>{{cite news|last=Bhattacharya|first=Ravik|title=CBI forms SIT to probe Saradha group, 17 other firms|url=http://www.hindustantimes.com/elections2014/state-of-the-states/on-last-day-of-poll-cbi-forms-team-to-probe-saradha-scam/article1-1218557.aspx|archive-url=https://web.archive.org/web/20140513040544/http://www.hindustantimes.com/elections2014/state-of-the-states/on-last-day-of-poll-cbi-forms-team-to-probe-saradha-scam/article1-1218557.aspx|url-status=dead|archive-date=13 May 2014|access-date=15 May 2014|newspaper=Hindustan Times|date=13 May 2014}}</ref><ref>{{cite news|last1=Das|first1=Madhuparna|title=Saradha net wider, tighter|url=http://indianexpress.com/article/india/india-others/saradha-net-wider-tighter/99/|access-date=24 September 2014|work=Indian Express|date=22 Sep 2014}}</ref>

===International reaction===
In September 2014, Bengali newspaper ''Anandabazar Patrika'', citing several domestic and foreign intelligence reports, published a series of articles reporting that Saradha Group through Ahmed Hassan Imran, a TMC MP and founder member of Student Islamic Movement of India,<ref>{{cite news|last1=Chanda|first1=Arup|title=Mystery Surrounds Pakistan Citizen's TMC MP Post|url=http://www.newindianexpress.com/nation/Mystery-Surrounds-Pakistan-Citizens-TMC-MP-Post/2014/09/22/article2442700.ece|access-date=24 September 2014|work=The New Indian Express|date=22 Sep 2014}}</ref> engaged Jamaat-e-Islami, a Bangladeshi extremist organisation, to move money out of India.<ref>{{cite news|author=Nairita|title=Saradha scam shocker: Mamata Banerjee's aide, TMC MP's link with terror group SIMI, Jamat exposed|url=http://news.oneindia.in/india/mamata-banerjee-close-aide-tmc-mp-connection-with-terror-outfit-simi-bangladesh-1520240.html|access-date=12 September 2014|work=One India|date=12 September 2014}}</ref><ref>{{cite news|title=Bangladesh moves India on Imran|url=http://bdnews24.com/bangladesh/2014/09/12/bangladesh-moves-india-on-imran|access-date=12 September 2014|work=BDNews24|date=12 September 2014}}</ref> Jamaat-e-Islami used its brokerage from the laundering operation to fuel its militant protests against the war crime trials of its founders<ref>{{cite news|title=Report: India's Saradha Group funded Jamaat violence|url=http://www.dhakatribune.com/crime/2014/sep/13/report-india%E2%80%99s-saradha-group-funded-jamaat-violence|access-date=12 September 2014|work=Dhaka Tribune|date=12 September 2014}}</ref> and destabilise the [[Social:Awami League|Awami League]] government in Bangladesh.<ref>{{cite news|last1=Chanda|first1=Arup|title=Saradha Money Fanned Bangla Flames|url=http://www.newindianexpress.com/nation/Saradha-Money-Fanned-Bangla-Flames/2014/08/24/article2395017.ece|access-date=13 September 2014|work=The New Indian Express|date=24 August 2014}}</ref>

In response to the expose, the Government of Bangladesh, led by Sheikh Hasina, ordered the formation of a commission to further investigate the matter.<ref>{{cite web|title=Saradha scam with Trinamool links may also have funded Bangla Islamists|url=http://firstbiz.firstpost.com/corporate/saradha-scam-with-trinamool-links-may-also-have-funded-bangla-islamists-97730.html|website=Firstbiz|access-date=13 September 2014}}</ref> Mamata Bannerjee summoned the Deputy High Commissioner of Bangladesh to lodge a protest for an alleged protocol violation for "selective leaks in media".<ref>{{cite news|last1=Bagchi|first1=Suvojit|title=Mamata summons Bangladesh Deputy High Commissioner|url=http://www.thehindu.com/news/cities/kolkata/mamata-banerjee-summons-bangladesh-deputy-high-commissioner/article6406234.ece|access-date=13 September 2014|work=The Hindu|date=13 September 2014}}</ref> During subsequent bilateral meetings, Bangladesh Foreign Minister Abul Hassan Mahmud Ali conveyed deep apprehensions about funding for terrorists flowing from India to Bangladesh to Ajit Doval, the Indian National Security Advisor (NSA).<ref>{{cite web|title=India Should Unmask Saradha Link to Jamaat|url=http://www.newindianexpress.com/editorials/India-Should-Unmask-Saradha-Link-to-Jamaat/2014/09/23/article2444261.ece|publisher=The New Indian Express|access-date=24 September 2014}}</ref><ref>{{cite news|title=Bangladesh rakes up Saradha money with India|url=http://www.hindustantimes.com/india-news/bangladesh-rakes-up-saradha-money-with-india/article1-1266293.aspx|archive-url=https://web.archive.org/web/20140920021843/http://www.hindustantimes.com/india-news/bangladesh-rakes-up-saradha-money-with-india/article1-1266293.aspx|url-status=dead|archive-date=20 September 2014|access-date=24 September 2014|work=Hindustan Times|date=20 Sep 2014}}</ref> Bangladeshi human rights activist Shahriar Kabir also raised concerns about Saradha funds being moved through an extremist organisation to terrorist organisations like Al Qaeda.<ref>{{cite news|last1=Azad|first1=Abid|title=Concern expressed over Saradha's Jamaat funding|url=http://www.dhakatribune.com/crime/2014/sep/14/concern-expressed-over-saradha%E2%80%99s-jamaat-funding|access-date=24 September 2014|work=Dhaka Tribune|date=14 Sep 2014}}</ref>

===Judicial reactions===
On 22 April 2013, separate Public Interest Litigations (PIL) were filed in Guwahati High Court by RTI activist Akhil Gogoi and in Calcutta High Court by advocate Basabi Roy Chowdhury and subsequently by advocate Rabi Sankar Chattopadhyay and Bikas Ranjan Bhattacharya, both seeking CBI investigation against the Saradha Group and other chit fund companies.<ref>{{cite news|url=http://www.thehindubusinessline.com/industry-and-economy/banking/road-blockades-across-bengal-two-pils-filed/article4644303.ece|title=Road blockades across Bengal; two PILs filed|date=22 April 2013|work=Business Line|access-date=29 April 2013|location=Kolkata}}</ref>
On 25 April, responding to the PIL, a division bench of Calcutta High Court comprising Chief Justice Arun Kumar Mishra and Justice Joymalya Bagchi said that because the ramifications of the scam included other states, a central agency would do justice to the investigation. The court gave state government one week to submit its investigation report to see whether the probe was being conducted in a fair manner.<ref>{{cite news|url=http://www.keralanext.com/news/2013/04/29/article106.asp|title=Saradha money scam: Calcutta High Court and Central govt stepping in|date=29 April 2013|publisher=Kerala Next|access-date=29 April 2013}}</ref> On 7 May 2013, Calcutta High Court appointed a three-member administrator group to run ''Tara News'' and ''Tara Muzic''.<ref>{{cite news|url=http://www.indianexpress.com/news/panel-lifeline-for-two-tv-channels-owned-by-saradha/1112504/#sthash.d77SGLSg.dpuf|title=Panel lifeline for two TV channels owned by Saradha|date=7 May 2013|work=The Indian Express|access-date=9 May 2013}}</ref> The High Court then allowed the SIT to continue with the investigation and ordered it to submit a timely progress report before the court.<ref>{{cite news|title=State probe for now into Saradha default|url=http://www.telegraphindia.com/1130620/jsp/bengal/story_17027926.jsp|archive-url=https://archive.today/20140428181006/http://www.telegraphindia.com/1130620/jsp/bengal/story_17027926.jsp|url-status=dead|archive-date=28 April 2014|access-date=28 April 2014|newspaper=Calcutta Telegraph|date=19 June 2013}}</ref> The petitioners were dissatisfied with the order and appealed to the Supreme Court of India in July 2013 via a Special Leave Petition (SLP).<ref>{{cite news|agency=PTI|title=SC notice to Centre, Bengal for CBI probe into Saradha scam|url=http://www.telegraphindia.com/1130718/jsp/frontpage/story_17130427.jsp|archive-url=https://archive.today/20140428181005/http://www.telegraphindia.com/1130718/jsp/frontpage/story_17130427.jsp|url-status=dead|archive-date=28 April 2014|access-date=28 April 2014|newspaper=Calcutta Telegraph|date=18 July 2013}}</ref>  Before the Supreme Court the Government of West Bengal stated that the investigation into the scam was being successfully conducted by the SIT.<ref>{{cite news|title=Saradha report 'sketchy' - SC: Where has depositors' money gone?|url=http://www.telegraphindia.com/1140305/jsp/bengal/story_18046308.jsp|archive-url=https://archive.today/20140428180959/http://www.telegraphindia.com/1140305/jsp/bengal/story_18046308.jsp|url-status=dead|archive-date=28 April 2014|access-date=28 April 2014|newspaper=Calcutta Telegraph|date=5 March 2014}}</ref>

The state governments of Orissa, Jharkhand and Tripura, which were respondent to the case, requested a CBI enquiry.<ref>{{cite news|title=Neighbour sneezes, Bengal sniffs SC tilts to Odisha CBI probe|url=http://www.telegraphindia.com/1140424/jsp/frontpage/story_18273267.jsp|archive-url=https://archive.today/20140428181006/http://www.telegraphindia.com/1140424/jsp/frontpage/story_18273267.jsp|url-status=dead|archive-date=28 April 2014|access-date=28 April 2014|newspaper=The Calcutta Telegraph|date=24 April 2014}}</ref>  The SC bench led by Justice T.S. Thakur and Justice C. Nagappan in April, 2014 said the Supreme Court may order a CBI probe into all money collection entities in India.<ref>{{cite news|last=Mishra|first=Ashutosh|title=Collection scam: SC hints at CBI probe|url=http://www.telegraphindia.com/1140424/jsp/frontpage/story_18272259.jsp|archive-url=https://archive.today/20140428181013/http://www.telegraphindia.com/1140424/jsp/frontpage/story_18272259.jsp|url-status=dead|archive-date=28 April 2014|access-date=28 April 2014|newspaper=The Calcutta Telegraph|date=24 April 2014}}</ref> On 9 May 2014, the same bench of the Supreme Court ordered CBI to investigate all Ponzi schemes, including Saradha, in Eastern India.<ref>{{cite web|title=Supreme Court asks CBI to probe Saradha chit fund scam|url=http://news.biharprabha.com/2014/05/supreme-court-asks-cbi-to-probe-saradha-chit-fund-scam/|work=IANS|publisher=news.biharprabha.com|access-date=9 May 2014}}</ref> The Court also clarified the concurrent attachment and auction of the assets of suspected Ponzi companies to reimburse depositors at the end of the judicial proceedings initiated by Enforcement Directorate authorised under federal laws and various state agencies authorised under state laws would also run parallel to the CBI investigation.<ref>{{cite news|title=CBI Probe not to Affect Asset Liquidation Move|url=http://www.newindianexpress.com/states/odisha/CBI-Probe-not-to-Affect-Asset-Liquidation-Move/2014/05/10/article2216516.ece|access-date=10 May 2014|newspaper=The New Indian Express|date=10 May 2014}}</ref>

===Economic effects===
[[File:Fall of small savings due to ponzi.png|thumb|right|Graph shows the fall of savings in government schemes with the rise of Ponzi funds (figures on y axis are in Crores INR)]]

Companies illegally moving deposits diverted an estimated sum of {{INRConvert|240|b|nolink=yes}} from small savings funds promoted by state government since 2010. Official data show a steady decline in small-savings deposits and a rise in withdrawals, which left a reduced amount from which the state government could borrow. This affected the overall macroeconomic situation of the state; instead of being used by government for public funding, the money went into Ponzi schemes that were either diverted to foreign locations or were put to use for private gains.<ref>{{cite news|url=http://www.telegraphindia.com/1130426/jsp/frontpage/story_16829615.jsp#.UX8AJMV4800|archive-url=https://archive.today/20130615172825/http://www.telegraphindia.com/1130426/jsp/frontpage/story_16829615.jsp%23.UX8AJMV4800|url-status=dead|archive-date=15 June 2013|title=Snore & drown savings bell&nbsp;... Zzzzzzzzzzzz&nbsp;... |last=Sarkar|first=Pranesh|date=25 April 2013|work=The Telegraph|access-date=29 April 2013|location=Kolkata}}</ref>

It was feared that legitimate non-banking financial companies and micro finance institutions would be stigmatised, leading to a vicious cycle of low depositor trust, higher interest rates, lower lending and a localised credit crisis.<ref>{{cite news|url=http://zeenews.india.com/business/news/companies/saradha-group-has-nothing-to-do-with-chit-fund-business-cfai_75158.html|title=Saradha Group has nothing to do with Chit Fund business: CFAI|date=29 April 2013|publisher=Zee News|access-date=29 April 2013|location=New Delhi}}</ref> Because most of the Saradha Group depositors came from the lowest economic strata, the loss of the investment would cause a further decrease in social mobility.<ref>{{cite news|url=https://www.bloomberg.com/news/2013-05-06/indian-ponzi-scheme-gets-a-political-bailout.html|title=Indian Ponzi Scheme Gets a Political Bailout|last=Chowdhury|first=Charandas|date=6 May 2013|work=Bloomberg|access-date=9 May 2013}}</ref> The scandal drew attention to similar illegal deposit mobilising companies, which are facing increased regulatory pressure.<ref>{{cite news|url=http://www.livemint.com/Industry/Z13LKAAQCWO5W5apSX3WYM/ICore-EServices-on-the-verge-of-collapse.html|title=ICore E-Services on the verge of collapse|last=Basu|first=Manish|date=6 May 2013|work=Livemint|access-date=9 May 2013}}</ref><ref>{{cite news|url=http://www.ndtv.com/article/india/after-saradha-group-s-collapse-focus-on-rural-bengal-s-get-rich-schemes-359826|title=After Saradha Group's collapse, focus on rural Bengal's 'get rich' schemes|last=Pandey|first=Alok|date=27 April 2013|publisher=NDTV|access-date=9 May 2013|location=Singur}}</ref> Many of these companies have been variations of time share travel schemes, of which there are few clear regulations.<ref>{{cite news|url=http://www.telegraphindia.com/1130521/jsp/frontpage/story_16921023.jsp#.UZuZDMVhByM|archive-url=https://archive.today/20130615172846/http://www.telegraphindia.com/1130521/jsp/frontpage/story_16921023.jsp%23.UZuZDMVhByM|url-status=dead|archive-date=15 June 2013|title=Sebi and Rose hurl thorns in ad valley|last=Ghosh|first=Pinak|date=20 May 2013|work=The Telegraph|access-date=21 May 2013|location=Kolkota}}</ref> These companies tried to register as cooperative societies to continue their financial operations.<ref>{{cite news|url=http://www.livemint.com/Industry/Veab8B9Gm8mqPvlhNVpPnM/Saradha-fallout-Bengal-firms-eye-cooperative-society-status.html|title=Saradha fallout: Bengal firms eye cooperative society status|last=Basu|first=Manish|date=20 May 2013|work=LiveMint|access-date=21 May 2013|location=Kolkata}}</ref>

==Criminal prosecution and ongoing investigations==

===Special Investigation Team (SIT), West Bengal Police===
FIR was filed against Sudipto Sen and Kunal Ghosh on 14 April 2013.<ref>{{cite news|url=http://www.telegraphindia.com/1130427/jsp/frontpage/story_16833653.jsp#.UX8C1cV4800|archive-url=https://archive.today/20130615192131/http://www.telegraphindia.com/1130427/jsp/frontpage/story_16833653.jsp%23.UX8C1cV4800|url-status=dead|archive-date=15 June 2013|title=Our proximity was our power|date=27 April 2013|work=The Telegraph|access-date=29 April 2013}}</ref> Around six officials from Saradha Group were arrested.<ref>{{Cite web|url=https://www.livemint.com/Industry/17xY5ipGyuLphDO2DbNwcK/Saradha-Group-chairman-Sudipta-Sen-arrested.html|title=Saradha Group chairman Sudipta Sen arrested in Kashmir|date=23 April 2013}}</ref><ref>{{cite news|url=http://www.hindustantimes.com/India-news/Kolkata/Ponzi-fire-spreads-to-other-firms/Article1-1051702.aspx|archive-url=https://web.archive.org/web/20130430000633/http://www.hindustantimes.com/India-news/Kolkata/Ponzi-fire-spreads-to-other-firms/Article1-1051702.aspx|url-status=dead|archive-date=30 April 2013|title=Ponzi fire spreads to other firms|date=28 April 2013|work=Hindustan Times|access-date=29 April 2013|location=Berhampore}}</ref> The investigation was headed by the detective department of Bidhannagar police. The investigation was widened to include other Ponzi funds.<ref>{{cite news|url=http://economictimes.indiatimes.com/news/politics-and-nation/saradha-chit-fund-scam-the-top-five-among-bengals-flourishing-financial-grey-market/articleshow/19773013.cms?curpg=3|title=Saradha chit fund scam: The top five among Bengal's flourishing financial grey market|last=Ray|first=Atmadip |author2=Anuradha Himatsingka |author3=Sutanuka Ghosal|date=29 April 2013|work=The Economic Times|access-date=29 April 2013}}</ref> Kunal Ghosh and other Ponzi fund officials from Saradha were repeatedly questioned by police to determine the true assets of the company and other facets of the fraud.<ref>{{cite news|url=http://www.telegraphindia.com/1130430/jsp/frontpage/story_16843470.jsp#.UX8DKsV4800|archive-url=https://archive.today/20130615172819/http://www.telegraphindia.com/1130430/jsp/frontpage/story_16843470.jsp%23.UX8DKsV4800|url-status=dead|archive-date=15 June 2013|title=Signal in Kunal quiz|date=30 April 2013|work=The Telegraph|access-date=29 April 2013}}</ref> Ghosh was arrested by SIT in November 2013 after he posted a list of 12 names on his Facebook page; these included at least four TMC MPs and West Bengal Chief Minister Mamata Banerjee.<ref>{{cite news|last=Bannerjee|first=Monideepa|title=Saradha scam: Trinamool MP Kunal Ghosh arrested, names Mamata Banerjee in Facebook post|url=http://www.ndtv.com/article/india/saradha-scam-trinamool-mp-kunal-ghosh-arrested-names-mamata-banerjee-in-facebook-post-450038|access-date=28 April 2014|newspaper=NDTV|date=24 November 2014}}</ref>

As per the initial SIT reports, Saradha Group had mobilised {{INRConvert|2459.59|c|nolink=yes}} through issuance of its policies.<ref>{{cite news|agency=PTI|title=West Bengal: Saradha scam worth Rs 2,460 crore, report says|url=http://timesofindia.indiatimes.com/india/West-Bengal-Saradha-scam-worth-Rs-2460-crore-report-says/articleshow/24453420.cms|access-date=28 April 2014|newspaper=Times of India|date=21 October 2013}}</ref> By April 2014, around 385 FIRs against Sardha Group, in which SIT filed 288 chargesheets, had been filed. 453 FIRs were filed against other money pooling companies and Ponzi funds, and 75 charge sheets were filed before the court.<ref>{{cite news|last=Mondal|first=Pronab|title=Happy birthday, SIT A year of largely living up to its 'name'|url=http://www.telegraphindia.com/1140421/jsp/frontpage/story_18261927.jsp|archive-url=https://archive.today/20140428181002/http://www.telegraphindia.com/1140421/jsp/frontpage/story_18261927.jsp|url-status=dead|archive-date=28 April 2014|access-date=28 April 2014|newspaper=Calcutta Telegraph|date=21 April 2014}}</ref><ref>{{cite news|title=State fried on Saradha omission|url=http://www.telegraphindia.com/1140327/jsp/frontpage/story_18123631.jsp|archive-url=https://archive.today/20140429064435/http://www.telegraphindia.com/1140327/jsp/frontpage/story_18123631.jsp|url-status=dead|archive-date=29 April 2014|access-date=28 April 2014|newspaper=Calcutta Telegraph|date=27 March 2014}}</ref><ref>{{cite news|title=Bengal system has crumbled under Saradha plot:SC|url=http://www.telegraphindia.com/1140410/jsp/bengal/story_18175157.jsp|archive-url=https://archive.today/20140429064417/http://www.telegraphindia.com/1140410/jsp/bengal/story_18175157.jsp|url-status=dead|archive-date=29 April 2014|access-date=28 April 2014|newspaper=Calcutta Telegraph|date=10 April 2014}}</ref>

Since 2 May 2013, after complaints from depositors, state government ordered SIT to broaden its investigation and conduct search and seizure at offices of MPS Greenery Developers Ltd and Prayag Infotech Hi-Rise Ltd, which were running unregistered collective investment schemes similar to Saradha Group.<ref>{{cite news|url=http://www.firstpost.com/business/wb-govt-shuts-down-mps-office-in-kolkata-another-saradha-in-making-752875.html|title=WB govt shuts down MPS office in Kolkata; Another chit fund scam in the making?|date=5 May 2013|work=First Post|access-date=6 May 2013}}</ref><ref>{{cite news|url=http://www.telegraphindia.com/1130503/jsp/frontpage/story_16853458.jsp#.UYesycV4800|archive-url=https://archive.today/20130615173051/http://www.telegraphindia.com/1130503/jsp/frontpage/story_16853458.jsp%23.UYesycV4800|url-status=dead|archive-date=15 June 2013|title=Where there is a will, not bill, there is a way – Cops seal two firms' offices|date=2 May 2013|work=The Telegraph|access-date=6 May 2013}}</ref> By 6 May 2013, police had arrested directors of Ponzi companies ATM Group<ref>{{cite news|url=http://www.telegraphindia.com/1130506/jsp/bengal/story_16864113.jsp#3|archive-url=https://archive.today/20130615173041/http://www.telegraphindia.com/1130506/jsp/bengal/story_16864113.jsp%233|url-status=dead|archive-date=15 June 2013|title=Director held|date=6 May 2013|work=The Telegraph|access-date=6 May 2013|location=Midnapore}}</ref> and Annex Infrastructure Pvt Ltd on charges of defrauding depositors.<ref>{{cite news|url=http://zeenews.india.com/news/west-bengal/bengal-based-chit-fund-owner-arrested_844660.html|title=Bengal-based chit fund owner arrested|date=25 April 2013|publisher=Zee News|access-date=6 May 2013|location=Barasat}}</ref> According to news-reports, at the time of handing the Saradha Group investigation to CBI, SIT had arrested 11 people, had traced 224 immovable properties, seized 54 vehicles and had filed charge sheet in almost 300 pending cases.<ref>{{cite news|last=Siddiqui|first=Imran|title=Political angle blips on CBI radar|url=http://www.telegraphindia.com/1140510/jsp/bengal/story_18327305.jsp|archive-url=https://archive.today/20140510120434/http://www.telegraphindia.com/1140510/jsp/bengal/story_18327305.jsp|url-status=dead|archive-date=10 May 2014|access-date=10 May 2014|newspaper=Calcutta Telegraph|date=9 May 2014}}</ref>

===Justice Shyamal Sen Commission===
By mid-August 2013, the Justice Shyamal Sen Commission finished its initial compilation of the list of claimants. Around 1.74 million depositors filed claims with the commission, of which 83% invested {{INRConvert|10000|nolink=yes}} or less.<ref>{{cite news|url=http://www.telegraphindia.com/1130819/jsp/frontpage/story_17246240.jsp|archive-url=https://archive.today/20130819192645/http://www.telegraphindia.com/1130819/jsp/frontpage/story_17246240.jsp|url-status=dead|archive-date=19 August 2013|title=Saradha vow faces tricky sums|last=Basu|first=Kinshuk|author2=Pranesh Sarkar |date=19 August 2013|work=The Telegraph|access-date=19 August 2013|location=Kolkata}}</ref> The Commission recommended that West Bengal state government sell the assets of Saradha Group and proportionally distribute the returns among defrauded investors.<ref>{{cite news|url=http://www.business-standard.com/article/current-affairs/sen-panel-to-recommend-selling-of-saradha-assets-113080500214_1.html|title=Sen panel to recommend selling of Saradha assets|last=Basak|first=Probal|author2=Namrata Acharya |date=5 August 2013|work=Business Standard|access-date=19 August 2013|location=Kolkata}}</ref> By April 2014, the commission had refunded 400,000 depositors who had invested less than {{INR}}10,000. Rs. 185 crore was refunded to the depositors.<ref>[https://www.hindustantimes.com/india/shyamal-sen-commission-wound-up-job-unfinished/story-07YLIk47hwg2S2WufOOQ6O.html Hindustan Times]</ref> The commission received claims from 500,000 depositors who were defrauded by Ponzi funds other than Saradha; the Commission did not refund any of these depositors. In April 2014, Calcutta High Court sought a report from the commission on the discriminatory standards being applied to the refunding of depositors.<ref>{{cite news|title=Saradha more equal than others Court seeks annual report|url=http://www.telegraphindia.com/1140422/jsp/frontpage/story_18265512.jsp|archive-url=https://archive.today/20140428180958/http://www.telegraphindia.com/1140422/jsp/frontpage/story_18265512.jsp|url-status=dead|archive-date=28 April 2014|access-date=28 April 2014|newspaper=Calcutta Telegraph|date=22 April 2014}}</ref>

===Central agencies===
On 30 April 2013 CBI started investigating into the Saradha Group scandal in Assam at the request of the state government.<ref>{{cite news|title=CBI starts investigation in Assam|date=30 April 2013|work=Bartaman|language=bn |location=Kolkata}}</ref><ref>{{cite news|title=Chit fund scam: CBI team to meet Assam Police in Guwahati|date=30 April 2013|publisher=ANI |location=Guwahati}}</ref> Chief Minister of Tripura said Tripura may also order a CBI probe into Saradha Group.<ref>{{cite news|url=http://indiatoday.intoday.in/story/tripura-may-order-cbi-probe-into-saradha-chit-fund-scam/1/268553.html|title=Tripura may order CBI probe into Saradha chit fund scam|date=30 April 2013|work=India Today|access-date=30 April 2013|location=Agartala}}</ref>

In West Bengal, because the criminal investigation had not initially been handed over to the CBI, the Enforcement Directorate (ED){{mdash}}a Central Government agency which primarily probes money laundering{{mdash}}led the investigation on behalf of the Central Government. In April 2014, ED arrested the absconding wife, son and daughter-in-law of Sudipta Sen, all of whom had been directors of various companies of Saradha Group. ED also questioned TMC MPs Ahmad Hassan and Arpita Ghosh about their financial transactions with Saradha Group.<ref>{{cite news|last=Chaudhury|first=Monalisa|title=ED contacts Trinamul MP|url=http://www.telegraphindia.com/1140423/jsp/frontpage/story_18269381.jsp|archive-url=https://archive.today/20140428181004/http://www.telegraphindia.com/1140423/jsp/frontpage/story_18269381.jsp|url-status=dead|archive-date=28 April 2014|access-date=28 April 2014|newspaper=Calcutta Telegraph|date=22 April 2014}}</ref> ED alleged that West Bengal police has not cooperated with it and obstructed its investigation.<ref>{{cite news|title=Saradha arrests: Non-cooperation charge may prove costly for state|url=http://timesofindia.indiatimes.com/city/kolkata/Saradha-arrests-Non-cooperation-charge-may-prove-costly-for-state/articleshow/33876460.cms|access-date=28 April 2014|newspaper=Times of India|date=18 April 2014}}</ref><ref>{{cite news|title=Bengal government putting obstacles in Saradha probe to save Trinamool|url=http://odishasuntimes.com/49120/bengal-government-putting-obstacles-saradha-probe-save-trinamool/|access-date=28 April 2014|newspaper=Odisha Sun Times|date=25 April 2014}}</ref><ref>{{cite news|agency=IANS|title=Mamata Banerjee government suppressing Saradha facts: Left Front|url=http://www.dnaindia.com/india/report-mamata-banerjee-government-suppressing-saradha-facts-left-front-1981761|access-date=28 April 2014|newspaper=DNA|date=24 April 2014}}</ref>

In May 2014, the Supreme Court transferred all investigations into 44 deposit-mobilising companies{{mdash}}including Saradha Group{{mdash}}suspected of running Ponzi schemes in the states of West Bengal, Odisha, Assam, Jharkhand and Tripura, to CBI.<ref>{{cite news|last=Dutta|first=Romita|title=Supreme Court directs CBI to probe Saradha, other deposit-taking firms|url=http://www.livemint.com/Companies/97h9veL4nrPoEVfrQxWSwN/Supreme-Court-orders-CBI-probe-in-Saradha-scam.html|access-date=10 May 2014|newspaper=Livemint|date=9 May 2014}}</ref><ref>{{cite news|last=Mohapatra|first=Dhananjay|title=SC orders CBI probe into Saradha chit fund scam|url=http://timesofindia.indiatimes.com/india/SC-orders-CBI-probe-into-Saradha-chit-fund-scam/articleshow/34868614.cms|access-date=10 May 2014|newspaper=Times of India|date=9 May 2014}}</ref> As per Supreme Court's order Bengal SIT handed over all arrested suspects including Sudipto Sen, Debjani Mukherjee and Kunal Ghosh over to CBI. CBI questioned several prominent personalities who were connected with Saradha Group; some{{mdash}}including TMC vice president and former Director General of Police (DGP) in West Bengal Rajat Majumdar,<ref>{{cite news|title=Congress Questions Mamata's Meeting with Saradha Scam Mastermind|url=http://www.newindianexpress.com/nation/Congress-Questions-Mamatas-Meeting-with-Saradha-Scam-Mastermind/2014/09/10/article2424359.ece|access-date=24 September 2014|work=The New Indian Express|date=10 Sep 2014}}</ref>  Assamese singer and filmmaker Sadananda Gogoi<ref>{{cite news|agency=TNN|title=CBI arrests Sadananda Gogoi in Saradha scam|url=http://timesofindia.indiatimes.com/india/CBI-arrests-Sadananda-Gogoi-in-Saradha-scam/articleshow/42392099.cms|access-date=24 September 2014|work=Times of India|date=13 Sep 2014}}</ref> and former advocate general of Odisha Ashok Mohanty.<ref>{{cite news|agency=PTI|title=Odisha's former advocate general Ashok Mohanty arrested in chit-fund scam|url=http://timesofindia.indiatimes.com/india/Odishas-former-advocate-general-Ashok-Mohanty-arrested-in-Saradha-chit-fund-scam/articleshow/43155814.cms|access-date=24 September 2014|work=Times of India|date=22 Sep 2014}}</ref> Former Assam DGP Shankar Barua who was a suspect in the Saradha scandal and whose house was searched by CBI, committed suicide.<ref>{{cite news|agency=PTI|title=Former Assam DGP, under scanner in Saradha scam, commits suicide|url=http://timesofindia.indiatimes.com/india/Former-Assam-DGP-under-scanner-in-Saradha-scam-found-dead/articleshow/42703997.cms|access-date=24 September 2014|work=Times of India|date=17 Sep 2014}}</ref><ref>{{cite web|last1=Trust|first1=Press|title=First Mamata minister Madan Mitra arrested in Saradha chit fund scam|url=http://indiatoday.intoday.in/story/mamata-minister-madan-mitra-saradha-chit-fund-scam-cbi-trinamool-congress/1/406588.html|website=India Today|publisher=India Today|access-date=16 December 2014}}</ref> On 21 November 2014 CBI arrested Srinjoy Bose, another TMC parliamentarian in connection with the scam.<ref>{{cite news|agency=TNN|title=Saradha scam: CBI arrests Trinamool Congress MP Srinjoy Bose|url=http://timesofindia.indiatimes.com/india/Saradha-scam-CBI-arrests-Trinamool-Congress-MP-Srinjoy-Bose/articleshow/45230685.cms|access-date=21 November 2014|work=Times of India|date=21 November 2014}}</ref> On 12 December 2014, CBI arrested West Bengal Transport minister Madan Mitra on the charges of criminal conspiracy, cheating, misappropriation and deriving undue financial benefits from the Saradha Group.<ref>{{cite web|last1=Trust|first1=Press|title=First Mamata minister Madan Mitra arrested in Saradha chit fund scam|url=http://indiatoday.intoday.in/story/mamata-minister-madan-mitra-saradha-chit-fund-scam-cbi-trinamool-congress/1/406588.html|website=India Today|publisher=Indian Today|access-date=16 December 2014}}</ref>

In February 2019, the CBI interrogated Kolkata Police Commissioner Rajeev Kumar for 39 hours over five days in Shillong.<ref>{{cite news|agency=TNN|title=The Shillong session: When Rajeev Kumar was quizzed for 39 hours over 5 days|url=http://timesofindia.indiatimes.com/articleshow/71119345.cms|access-date=5 March 2021|work=Times of India|date=14 September 2019}}</ref> This followed a political controversy when the CBI team who had gone to question him had been detained in Kolkata.<ref>{{Cite web|url=https://thewire.in/politics/cbis-attempted-arrest-of-kolkata-police-commissioner-was-an-attack-on-federalism|title=CBI's Attempted Arrest of Kolkata Police Commissioner Was an Attack on Federalism}}</ref> They were later released and even as CM Mamata Bannerjee was protesting on dharna against the arrest of Kumar, the Supreme court ordered interrogation of Rajeev Kumar at a location outside West Bengal to avoid further showdown.{{citation needed|date=August 2019}} In March 2019, the CBI filed a plea in Supreme court against telecom operators Vodafone and Airtel alleging their non cooperation in the scam investigation probe.<ref>{{Cite web|url=https://www.livemint.com/politics/news/saradha-case-supreme-court-seeks-reply-from-vodafone-airtel-on-cbi-plea-1553843206214.html|title=Saradha case: Supreme Court seeks reply from Vodafone, Airtel on CBI plea|date=2019-03-29|website=Mint|language=en|access-date=2019-03-29}}</ref> On 17 May 2021, CBI arrested Firhad Hakim,  Subrata Mukherjee, Sovan Chatterjee and Madan Mitra on the charges they took the bribes from Saradha Narada after West Bengal Governor Jagdeep Dhankar gave the permission to arrest the ministers(Firhad Hakim, Subrata Mukherjee) and one MLA (Madan Mitra) and former MLA(Sovan Chatterjee).

===Convictions and sentences===
In February 2014, Sudipta Sen was convicted in a case where he was charged, under various provisions of employment law, as a director of Saradha Group for his failure to deposit with the provident fund authorities INR 0.03 million that his firm owed to its employees; he was sentenced by the trial court to three years in jail, it was the first conviction in a series of civil and criminal cases, relating to corporate fraud and non-payment of deposits, pending against him.<ref>{{cite news|last=Dutta|first=Romita|title=Saradha chairman Sudipta Sen sentenced to three years in jail|url=http://www.livemint.com/Politics/TcKgleKIFyp7mP3htIMUsL/Sudipta-Sen-sentenced-to-3-years-in-jail.html|access-date=28 April 2014|newspaper=Livemint|date=21 February 2014}}</ref>

Later, Sudipta Sen wrote a letter to Prime Minister Narendra Modi and West Bengal Chief Minister Mamata Banerjee, where he mentioned names of several political leaders who took money from him. Sen, in his letter dated 1 December 2020, named Suvendu Adhikari, Mukul Roy, Adhir Ranjan Chowdhury, Sujan Chakraborty and Biman Bose as beneficiaries from the Saradha group.<ref>{{cite news|last=Kundu|first=Indrajit|title=Politicians who took money from me, cheated people are now joining BJP, alleges jailed Saradha promoter|url=https://www.indiatoday.in/india/story/saradha-group-sudipta-sen-letter-to-pm-modi-mamata-banerjee-1747035-2020-12-05|website=India Today|access-date=5 December 2020}}</ref> On 24 January Abhishek Banerjee exposed the letter accusing Suvendu Adhikari of extorting Rs. 6 crore from chit fund agency. He said "You (Suvendu) not only took Rs. 6 crore from Sudipta Sen, but also blackmailed him. In the letter, is clearly written that the night before he (Sen) went at large, you visited his office and took money from him."<ref>{{Cite web|date=2021-01-24|title=Abhishek Banerjee exposes letter accusing Suvendu Adhikari of extorting Rs 6 cr from chit fund agency|url=https://www.newindianexpress.com/nation/2021/jan/24/abhishek-banerjee-exposes-letter-accusing-suvendu-adhikari-of-extorting-rs-6-crfrom-chit-fund-agenc-2254551.html|access-date=2021-01-24|website=The New Indian Express|language=en}}</ref><ref>{{Cite web|date=2021-01-24|title=শুভেন্দুকে কঠিন শব্দে বিঁধে আক্রমণের ঝাঁজ বাড়ালেন অভিষেক|url=https://www.anandabazar.com/west-bengal/suvendu-adhikari-is-a-traitor-attacked-by-abhishek-banerjee-dgtl/cid/1263039|access-date=2021-01-24|website=আনন্দবাজার পত্রিকা অনলাইন|language=bn}}</ref> On 1 February Bankshall Court gave order to CBI for investigation of Sudipta Sen's letter.<ref>{{Cite web|date=2021-02-01|title=Sudipta Sen Letter: 'একাধিক নেতা কোটি কোটি টাকা নেন...' সুদীপ্ত সেনের সেই চিঠি নিয়ে সিবিআইকে তদন্তের নির্দেশ আদালতের|url=https://bengali.abplive.com/news/bankshall-court-gives-order-to-cbi-for-investigation-of-sudipta-sen-letter-which-he-wrotes-from-jail-789913|access-date=2021-02-01|website=এবিপি আনন্দ লাইভ|language=bn}}</ref> Kunal Ghosh wrote a letter to Home Minister Amit Shah in demand of arresting Mukul Roy and Suvendu Adhikari for money laundering scandal and Shah accepted that he had received the letter.<ref>{{Cite web|date=2021-02-07|title=মুকুল-শুভেন্দু: কুণালের চিঠির প্রাপ্তিস্বীকার শাহের|url=https://www.anandabazar.com/india/kunal-ghosh-approached-amit-shah-in-demand-of-arresting-mukul-roy-and-suvendu-adhikari-for-money-laundering-scandal/cid/1265296|access-date=2021-02-07|website=আনন্দবাজার পত্রিকা অনলাইন|language=bn}}</ref>

==See also==
* List of scandals in India
* Corruption in India
* [[Finance:Rose Valley financial scandal|Rose Valley financial scandal]] 
* [[Finance:Pyramid scheme|Pyramid scheme]]
* The Lokpal Bill, 2011
* 2011 Indian anti-corruption movement
* Jan Lokpal Bill

==References==
{{Reflist|30em}} 


{{DEFAULTSORT:Saradha scam}}
[[Category:Financial scandals]]
[[Category:Finance fraud]]
[[Category:Companies (Finance)]]
[[Category:Companies]]

{{Sourceattribution|Saradha Group financial scandal}}