A criminal complaint was filed against the founders and investors of B2B platform Bizongo last week over fraud allegations. The start-up has been accused of diverting customer payments for its now-discontinued supply chain financing business from escrow. Invoice marketplace TradeCred filed a complaint with the Economic Offences Wing of Mumbai Police on June 26 after ‘repeated delays’ in repayment. The case comes mere months after Bizongo initiated a fresh investigation into a suspected Rs 21 crore financial fraud from FY24.
According to details outlined in a Moneycontrol report, Bizongo had raised Rs 256 crore by selling customer invoices to investors on TradeCred. The complaint notes that payments were to be routed into escrow accounts designated for returning funds to invoice buyers. However the company allegedly deposited these amounts directly into its own operating accounts.
“Bizongo sold 1,532 invoices worth Rs 256 crore involving 81 customers…they received monies from their customers… directly into Bizongo’s bank account and misappropriated and/or siphoned off the same instead of crediting the said amounts into the Seller Escrow Accounts,” the complaint alleges
The financial company however disputed the allegations, insisting that all repayments were made to a “common escrow account as instructed by TradeCred”.
“Contrary to the claim, all repayments were made into a common escrow account as instructed by TradeCred. The structure of the agreement did not require us to route funds through individual customer-linked accounts. Bizongo has been consistently repaying its dues to TradeCred–reducing its outstanding principal from over Rs 250 crore at its peak to Rs 66 crore today, For the remaining Rs 77 crore, we have already submitted a settlement plan to TradeCred to close the account, and we await their response,” a spokesperson told the publication.
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