‘Confidential info, Rs 100 crore profit'—ED's case against Axis Mutual Fund ex-dealer Viresh Joshi

The Print

a day ago

These allegations have been documented in the ED's remand application, which was moved before a Special PMLA Court in Mumbai on 2 August to seek his custody. He was sent to judicial custody Friday after the six-day custody of ED got over.
Of this amount, his brother received around Rs 33 crore in his account, while Joshi sent around Rs 14 crore abroad for buying properties, the agency further revealed.
New Delhi: Former chief dealer of Axis Mutual Fund Viresh Joshi made illegal and unethical use of confidential information about incoming orders to make a profit of at least Rs 100 crore over four years, the Enforcement Directorate (ED) has alleged.
The agency also questioned Joshi's brother, Vipul Joshi 7 August, sources aware of the development told ThePrint.
The agency's money laundering case stems from an FIR lodged by the Mumbai Police on the complaint of an investor who alleged that Joshi violated trust and ethics by sharing confidential information for personal gain. The Sion police station had booked Joshi and his aides under sections 120-B (criminal conspiracy), r/w sections 34 (common intention), 406 (criminal breach of trust), 417 and 420 (cheating), 465(forgery), 467 (forgery of valuable securities and wills), 468 (forgery of a document for the purpose of cheating) and 477-A (falsification of accounts) of the Indian Penal Code.
Months before the FIR, the agency had also carried out searches under the Foreign Exchange Management Act, based on findings by the Securities and Exchange Board of India. It also alleged that Joshi had remitted Rs 14 crore overseas for purchasing properties, including in the United Kingdom.
Viresh Joshi's lawyer, Advocate Manan Sanghai, said that all these points were already addressed in the investigation by SEBI in 2023 and that the Income Tax Department had already seized Rs 60 crore alleged to have been transferred to Viresh Joshi's account before it was invested in fixed deposits and Rs 30 crore was already deposited with SEBI.
'This arrest is nothing but high-handedness by the Enforcement Directorate. They are making this case more significant by comparing it to the overall value of the assets under management of Axis Mutual Fund. The Income Tax Department has frozen all alleged proceeds of crime, and there was no need for his custodial interrogation,' Advocate Mannan Sanghai told ThePrint.
'Trading terminal in Dubai, 31 bank accounts & foreign assets'
The entire saga began during the COVID-19 pandemic when Joshi, along with other Axis Mutual Fund dealers, were given separate dealing rooms to maintain social distancing.
This allowed Joshi to work without any physical supervision, and he also used a mobile number in his office while dealing with this high-value, confidential information, without disclosing it to Axis Mutual Fund, the SEBI found in its probe.
Using this information, Joshi had his conduits place bulk orders for stocks planned to be purchased in bulk by big clients and sold them shortly after they rose on the exchange, probably due to the bulk purchase orders. This entire system puts investors, especially retail ones, at a disadvantage as they are not entitled to any such confidential information related to stocks.
SEBI found that Joshi approached one of his aides, Sumit Desai, in September 2021, requesting that he arrange trading accounts through which Joshi could place orders.
In due course, Desai brought in Dubai-based Prijesh Kurani, whom he had known for five years and Pranav Vora, his known acquaintance for 10 years. Desai asked both of them to provide their service to the overall idea floated by Joshi.
Vora was asked to provide trading accounts, and he extended the services of several platforms for the execution of orders eventually placed by Kurani from Dubai, at the instructions of Joshi.
The Enforcement Directorate questioned Desai in March earlier this year, and he allegedly confessed to having played a key role in the entire scheme on the instructions of Joshi.
'He also stated that the front was run and business generated on the basis of the sensitive information passed by Mr Viresh Joshi. He further stated that he used to collect the profit share of Mr Viresh Joshi in cash and hand it over to him,' the agency alleged in the remand application, a copy of which ThePrint has seen.
The agency claimed that funds amounting to Rs 91 crore were credited into 31 bank accounts of Joshi and his family members, including his father and wife between 2018 to 2022.
The agency further claimed that Joshi and other conduits opened several bank accounts in the name of firms, partnerships or in their own names to transfer illicit funds in a systemic manner, including overseas.
The agency also found that Vipul Joshi received massive funds in his bank accounts, including Rs 16.57 crore from shell companies and Rs 17.24 crore through self-transfer or transfers by family members, in his five bank accounts. Additionally, the agency claimed that Joshi also controlled around 282 mule accounts, which he used for the seamless transfer of funds illegally acquired from this front-running scheme.
Around Rs 29 crore of these funds from Vipul Joshi's accounts were then transferred to the account of Viresh Joshi's controlled firm, Vibgyor Capital Holding Pvt. Ltd. These funds were further invested in a fixed deposit, which the Income Tax Department subsequently seized during their search operation.
The agency has further claimed that Joshi transferred Rs 2.4 crore from his bank account to purchase immovable properties abroad. However, these funds were passed on to his account through his family members, who had received funding from shell companies, the agency alleged.
The agency allegedly also found a similar transfer of Rs 1.74 crore from his father's account, who allegedly revealed in a statement that his son, Viresh Joshi, was the overall manager of his account.
'The arrestee was enquired with regard to the transactions and operations of mule accounts, however he purposely gave evasive responses and failed to give any justification of the transactions. It is submitted that the funds received by him are in his possession in the form of several immovable properties in India and abroad. However, he failed to provide any satisfactory explanation and submit any documentary evidence to support his claims,' the agency alleged in its remand application.
His lawyer, Advocate Sanghai, protested against the request for custodial interrogation, claiming that Rs 91 crore of the alleged proceeds of crime had already been recovered. However, the Special Public Prosecutor argued that Axis Mutual Fund has assets under management (AUM) of Rs 2.5 lakh crore and that the proceeds of crime are suspected to be around Rs 300 crore.
Special Judge R.B. Rote ruled that a custodial interrogation was necessary, as the agency sought to investigate the 282 entities whose names had surfaced in the investigation, and that merely the recovery of Rs 91 crore did not conclude the investigation.
'The ED wanted to investigate in respect of 282 entities as reflected in the investigation and confront with the entities as to how the accused operated and generated the proceeds of crime. Further investigation in respect of property purchased cross border from the proceeds of the crime is required. Merely because Rs 91 crore has been recovered, it does not mean that the investigation has been completed,' Judge Rote observed in his order.
'The investigation in respect of the offence of money laundering is distinct and separate and offence of money laundering is a continuing offence. The grounds for ED custody are sufficient and cogent. Without the ED custody, the investigation cannot be completed in a proper manner. Therefore, considering the seriousness and gravity of the offence and the grounds for ED custody, the custodial interrogation of the accused is necessary for the proper and effective investigation of the case,' he further observed.
(Edited by Viny Mishra)
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