Bhovi scam: ED arrests ex-MD for ‘money laundering’, 2nd arrest till date

Bengaluru: The Enforcement Directorate (ED) on Wednesday announced yet another arrest in the alleged scam at the Karnataka Bhovi Development Corporation (KBDC).

The ED said it has arrested R Leelavathy, the former Managing Director of KBDC, under provisions of the Prevention of Money Laundering Act (PMLA) on April 12. Leelavathy was produced before the special court and remanded in the ED custody for seven days.

“During the investigation under PMLA, 2002, it was found that Leelavathy was instrumental in the diversion of funds from KBDC by creating bank accounts fraudulently in the names of fake entities, in connivance with other suspects/accused namely B K Nagarajappa (the then GM of KBDC), Subbappa (the then Superintendent of KBDC) and others,” the ED said in a statement.

“They managed to divert funds from the accounts of KBDC to the accounts of fake entities/beneficiaries, which were further transferred to friends and family members of above named accused/suspected persons. Several bank accounts were opened and many beneficiaries/intended beneficiaries were cheated by adopting a very well-designed and foolproof modus operandi by Nagarajappa, Leelavathy, Subbappa and others,” the ED added.

The ED previously arrested B K Nagarajappa, who currently remains in the agency’s custody.

“Based on material in possession, reasons to believe were made out that Leelavathy is guilty of the offence of money laundering and has generated the proceeds of crime (POC); layered the same using bank accounts of her sister late Mangala Ramu and integrated the funds in the bank accounts of her friends and family members through bogus entities created for this purpose,” the ED alleged.

The two were arrested following search operations on April 4 at different locations in Bengaluru, including the corporation’s office at VV Towers. “As part of the search proceedings, incriminating documents, digital records and details of properties acquired out of Proceeds of Crime (POC) generated out of commission of offence of money laundering have been collected,” the ED said.