Enforcement Directorate Files 20,000-Page Prosecution Complaint Over Alleged Municipal Fund Fraud and Money Laundering
The Directorate of Enforcement (ED) has filed a 20,000-page prosecution complaint (chargesheet) before a Special Court under the Prevention of Money Laundering Act (PMLA), 2002, against 32 accused in connection with the alleged ₹103.42 crore Indore Municipal Corporation (IMC) fake bill scam.
According to the ED, the accused include contractor beneficiaries, officials of the Indore Municipal Corporation (IMC), officials from the Local Fund Audit/Resident Audit Office, and several private individuals who allegedly participated in generating, processing, and concealing the proceeds of crime. The allegations are part of an ongoing investigation and remain subject to judicial determination.
Investigation Began After Multiple FIRs
The money laundering investigation was initiated following multiple FIRs registered at MG Road Police Station, Indore, relating to the alleged fraudulent withdrawal of public funds from the IMC treasury.
According to the ED, investigators found that forged official records were allegedly used to obtain fraudulent payments, including:
- Fake bills
- Fabricated work orders
- Forged measurement books
- False completion certificates
- Manipulated note sheets
- Other falsified government documents
The agency alleges that in several instances, the projects either were never executed or had already been completed under genuine work orders, yet fresh payments were allegedly processed using fabricated records.
Alleged Fraud Involved Collusion Between Contractors and Officials
According to the ED, contractor firms allegedly acted in collusion with municipal officials and audit department personnel to create forged work-order files and process fake claims.
Investigators allege that approximately ₹103.42 crore was fraudulently siphoned from the municipal treasury through fabricated documentation and false payment approvals.
These allegations have not been proven in court.
ED Alleges Money Was Layered Through Businesses
According to the investigation, the alleged proceeds of crime were:
- Withdrawn in cash
- Distributed among contractors and public servants
- Routed through related companies and entities
- Disguised as legitimate business transactions
- Used to purchase movable and immovable assets
- Spent on personal expenses
The ED alleges these transactions were intended to conceal the origin of the funds.
Searches Led to Seizure of Assets Worth ₹22.04 Crore
The ED conducted searches at 20 locations on August 5 and 6, 2024.
According to the agency, investigators seized or froze assets worth approximately ₹22.04 crore, including:
- Cash
- Bank balances
- Fixed deposits
- Demat holdings
- Mutual fund investments
Officials also recovered documents and digital devices that are expected to form part of the evidence in the ongoing investigation.
Properties Worth ₹37.14 Crore Attached
The agency stated that it issued two provisional attachment orders under the PMLA.
According to the ED, 52 immovable properties valued at approximately ₹37.14 crore have been attached.
The properties reportedly include:
- Commercial buildings
- Residential houses
- Land plots
- Agricultural land
located across Madhya Pradesh and Uttar Pradesh.
Overall, assets worth around ₹59.18 crore have been provisionally attached, seized, or frozen during the investigation, according to the agency.
Three Arrested During Investigation
The ED earlier arrested:
- Abhay Singh Rathore, whom the agency describes as the alleged kingpin
- Mohd Zakir
- Rahul Badera
under Section 19 of the PMLA.
According to the ED, the three allegedly played key roles in planning the fraudulent scheme and laundering the alleged proceeds of crime.
These allegations remain under judicial consideration.
Special Court Takes Cognisance
The prosecution complaint was filed before the Special PMLA Court, Indore, on July 24.
According to the ED, the court has:
- Taken cognisance of the complaint
- Issued notices and summons to the accused
- Scheduled further proceedings
The case will now proceed through the judicial process.
Expert Highlights Importance of Internal Controls
Former IPS officer and cybercrime expert Prof. Triveni Singh said that large-scale financial frauds involving forged government records often rely on coordinated document manipulation, financial layering, and collaboration among multiple actors.
According to him, forensic examination of financial records, digital evidence, and property transactions is essential to tracing illicit funds and identifying beneficiaries.
He also emphasized the importance of:
- Strong internal audits
- Digital verification of government payments
- Continuous monitoring of public expenditure
- Robust financial governance systems
to reduce the risk of similar economic offences.
Investigation Continues
The ED stated that the investigation remains ongoing and is focused on:
- Identifying additional beneficiaries
- Tracing the remaining proceeds of crime
- Examining further financial transactions
- Determining whether additional individuals or entities were involved in the alleged money laundering network
Further legal action may follow depending on the evidence gathered.