What attracted the Munjal family of the Hero Group and 30-odd other ?sophisticated? high-networth individuals (HNIs) to invest in the scheme floated by Shivraj Puri, the relationship manager now suspended by Citibank and taken into custody by the police, was a fixed income scheme that offered guaranteed returns of up to 36% a year.
According to banking sources, it was largely the extended Munjal family (including Brij Mohan Lal Munjal?s brothers and their kin) who had invested in the scheme. While the exposure of Hero Group entities is only Rs 28.75 crore, members of the Munjal family invested Rs 150-175 crore.
Barring some senior citizens, most subscribers to the scheme were well-informed and ?sophisticated? HNIs who could not resist the scheme?s lucrative 3% monthly returns that Puri allegedly sold (or mis-sold) as being guaranteed by Citibank, the sources said.
In selling the scheme, Puri had named Premnath, his father-in-law, as its sole approved custodian. All cheques by the Munjals and the HNIs investing in the scheme were drawn in favour of Premnath, who had an account with Citibank?s DLF Phase II branch in Gurgaon. Puri had facilitated opening of this account in September 2009 with Premnath, Sheila Premnath and Diksha Puri as joint account holders. Funds were later diverted to 18 other Citibank accounts opened by close relatives and facilitated by Puri.
Sources point to three facts overlooked by the investors. One, guaranteed monthly returns of 2-3% on any scheme by a known bank should have aroused suspicion. Two, cheques cannot be issued in the name of an individual ? in this case Premnath ? by informed investors. Three, investors ignored matching the official system-generated account statements by the bank, and instead accepted the forged bank statements presented by Puri.
Despite a forged Securities and Exchange Board of India (Sebi) letter that accorded approval to the high-return generating scheme, it could not have been possible to get ?sophisticated? HNIs part with crores of rupees without having built a long-term relationship. Puri worked with Citibank for over seven years. For Citibank, which claims to have detected suspicious big-ticket transactions just two weeks ago, Puri had been a ?good performer?. ?He came across as a good-mannered and cultured person who did well for himself,? said a Citibank source.
In the second stage, Puri transferred large funds from several Citibank accounts to four brokerage firms ? Religare Securities, Bonanza Portfolio, Norman Martin and India Infoline. These transactions, together with information from some Citibank clients about the scheme sold by Puri, led the bank to him.
The police has recovered some Rs 4 crore in Citibank accounts allegedly opened by Puri and it has also frozen the brokerage accounts. While investors have still not started clamouring for their moneys, sources in the bank said there was every possibility that recoveries would happen since the money trail was being established.