A major investment fraud case has come to light as the Cuffe Parade police filed an FIR against seven directors of RA Associates, a real estate development company, for allegedly cheating around 70 investors out of 65 crore. The investors, including prominent businessman Rajesh Shah of Multiline Corporation, claim they were promised annual returns of 15% and a doubling of their principal investment upon the completion of a construction project. However, the company failed to deliver on its promises, prompting investors to approach the police.
The Fraudulent Scheme
According to the FIR, the Kothari brothers of RA Associates, including directors Ashok and Rajendra Kothari, convinced Rajesh Shah and others to invest large sums of money in 2015, assuring them lucrative returns. The investors were told they would receive a 15% annual return, and their principal amounts would be doubled once the construction project was completed. However, in September 2020, payments to the investors were abruptly stopped, and despite repeated inquiries, they received no response from the company.
In an attempt to resolve the issue, the Kothari brothers allegedly promised Shah and other investors that they would be allotted properties as settlement. On April 15, 2024, RA Associates sent a letter to Shah stating that 25,000 square feet of RERA-approved flats in a residential complex in Lalbaug would be allocated as part of the settlement. However, no formal agreement was executed, and no properties were delivered to the investors.
Legal Action and Investigation
The FIR was filed under the Maharashtra Protection of Interest of Depositors (MPID) Act, which is designed to protect investors and punish those involved in financial fraud. The Economic Offences Wing (EOW) of Mumbai Police has taken over the investigation, and the Kothari brothers have been charged with criminal breach of trust and cheating.
Rajendra Kothari, one of the accused directors, denied the allegations, attributing the case to "some misunderstanding" and claiming that the FIR was filed in haste. He stated that the company is in the process of resolving the issue with the complainants and that they had held two meetings in an attempt to settle the matter.
A Growing Concern in the Real Estate Sector
This case raises serious concerns about the transparency and accountability of real estate companies that promise high returns to investors. The investors who were lured by the promises of high returns and property allotments now find themselves in a legal battle, with their investments still unaccounted for.
The involvement of the Maharashtra Protection of Interest of Depositors (MPID) Act is significant, as it underscores the severity of the allegations and the growing need for stronger protections for investors in the real estate sector. With investigations underway, the case could have broader implications for real estate companies and investors across Mumbai.