#responding to fraud case summons in Gurugram | Explore Tumblr posts and blogs

sushilkumarblog · 3 years ago

Text

Lost dreams: How CredForce duped investors of over Rs 250 crore

A Kolkata court issued a second set of arrest warrants after a Haryana-based ‘education company’ fails to pay dues to 218 investors who had subscribed to the firm’s issue of compulsory redeemable preference shares.

In 2017, seventy-five-year-old Kishwar Majid, a retired schoolteacher and a widow parked her life’s earnings, including her retirement benefits and accumulated savings, in what seemed an attractive investment offer—which had all the right boxes ticked.

Like hundreds of other investors, including retired government employees, homemakers, teachers, and entrepreneurs, Majid too invested in a ‘tax-free’ compulsory redeemable preference share (CRPS), which guaranteed returns of 12.5 per cent.

The investment was in CredForce Asia Ltd., an education and credentialing company that awarded credentials from Ivy League universities in the US, helping working professionals, particularly human-resources (HR) executives across the globe, gain credentials.

All was hunky-dorky until December 2019, when the Gurugram-based company stopped paying quarterly dividends and maturity dues.

The fly-by-night, for-profit company, claimed to provide a wide range of credentialing from premier colleges, including Ivy League business schools like the Wharton School of Business, under the University of Pennsylvania.

The sprinkling of the ‘Wharton’ brand and the lure of a tax-free dividend for that fiscal attracted Indian investors like retired schoolteacher Majid to invest in CredForce, which touted itself as the ‘world’s largest education credentialing powerhouse’.

The company—floated in 2012 and registered as TCG Hamilton India Ltd., and then as CredForce Asia Limited by Rajiv Gupta, Sanjeeva Shukla, and Sanjeev Dhingra as its directors—defaulted on its first payment in February 2020, failed to pay back maturity to investors, citing the Covid-19 pandemic.

2020: Pandemic and broken promises

“CredForce failed to pay the maturities and dividends from March 2020 onwards,” said Majid, whose life-long savings are with the company.

Attempts to communicate with the company through Abhenav Khettry, the wealth manager for the investors proved futile, said Tanvir Dagman, Kishwar Majid’s son.

More than ₹55 crore of 218 inventors’ principal, along with ₹15 crore of accrued dividend and interest, is struck with CredForce, Khettry, the wealth manager for the 80 Kolkata-based investors in CredForce and who himself has invested in the preference shares of the company, told EastMojo.

Investors, besides filing a complaint with the anti-fraud department of Kolkata police, filed 40 lawsuits under Sections 138 and 142 of the Negotiable Instruments Act, for a case of cheque bounce, says Dagman.

On May 20, 2022, a court in Kolkata issued non-bailable arrest warrants against the executives of CredForce.

The 11th Metropolitan Magistrate’s court in Kolkata, directed the Commissioner of Police, Gurugram, to arrest and produce the accused, including Rajiv Gupta, Sanjeeva Shukla, and Ganesh Singh Negi in the court on June 20, 2022. The Metropolitan Court adjourned the case to June 30, 2022, after the Gurugram police informed it that they could serve the arrest warrants on June 18, 2022.

“The Gurugram police had until now not taken any action against the accused for reasons best known to them,” Dagman told this correspondent.

On April 7, 2022, the Kolkata court issued arrest warrants against the three CredForce directors and had directed the superintendent of police Gurugram to produce the accused in court.

The arrest warrants were issued after the accused failed to respond to a court summons.

“CredForce, established an excellent credential in the early years of its incorporation, which encouraged my clients to invest in the credentialing and education company,” wealth manager Khettry said.

From 2015 until December 2019, CredForce raised more than ₹70 crore via issues of preference shares and repaid ₹20 crore to investors, said Khettry.

“It promptly serviced all the committed dividends to investors and the company’s revenue and profits grew by more than 30 per cent year-on-year.

“The start-up received substantial media coverage during the period so, I advised my clients to invest in its CRPS,” he added,

By March 31, 2018, according to the company’s balance sheets, CredForce had more than ₹250 crore as reserves after deducting costs, expenses, and taxes. EastMojo has the copies of the financial statements of CredForce Asia Ltd for the financial year 2017-18)

However, the company neither filed income-tax nor a ROC returns from 2017-18.

Edvantic: Same wine, new bottle?

In May 2020, investors were alarmed when they came to know through social media platforms that CredForce Asia Ltd. had floated a new entity called Edvantic Services Pvt Ltd with different directors and registered offices.

In May 2020, CredForce executive headed by CEO Rajiv Gupta quietly created a new entity called Edvantic Services Pvt Ltd. registered in Bengaluru. The new entity with new directors, moved all employees, intellectual property, and contracts of CredForce Asia Limited to Edvantic Services Pvt Ltd, which also floated a US affiliate called Edvantic Inc.

It had also changed CredForce Inc’s name into Edvantic Inc. in Texas, Dagman added.

“Rajiv Gupta has fraudulently siphoned funds out from CredForce and transferred it to Edvantic Inc in the US. We have complained to the serious fraud investigation office of the Union ministry of corporate affairs and also requested Indian and US federal investigating agencies to investigate CredForce/Edvantic Inc. for siphoning of funds, fraud, and breach of trust,” Dagman told this correspondent.

In May 2021, CredForce offered to buy back the shares, but in June 2021, the company expressed an inability to make payments due to a complaint filed with the EOW, said Khettry.

It was an invalid excuse as CredForce had announced to buy back shares only the previous month (in May 2022), Khettry pointed out.

CredForce kept delaying payments and sending false information buying for more time, say Indian investors.

“The floating of the new entity was to safeguard all future revenues for themselves. Even with ₹250 crore reserves in CredForce, all legitimate investors have been defrauded,” Dagman, who has been collecting data on the company, informed EastMojo.

CredForce came under severe pressure from investors on social media platforms, promised investors to buy back the preference shares or pay back the maturities by March 2021 and issued post-dated-cheques worth ₹20 crore for Delhi and Kolkata investors. The cheques were dated March 25, 2021. However, the cheques bounced.

Investors filed cheque bounce cases under Section 138 of the Negotiable Instruments Act, with Delhi and Kolkata courts, which have issued arrest warrants against the company directors.

It is a well-planned scheme to siphon funds by the Guptas, said Aditya Bajoria, another investor, who, along with his family member and family trust, invested ₹1.75 crore in CredForce.

“Between the husband-wife duo-Rajiv and Geetika—who, according to her LinkedIn profile, is the vice-president, global talent strategy with global IT major Accenture, based out of Austin, in Texas, US—they own more than 90 per cent of the company’s shareholdings. Rajiv Gupta has no intention to pay the investors,” Bajoria feared.

“Despite registering cases with the economic offence wing (EOW)of the Delhi police and other investigating agencies about the alleged fraud and slew of arrest warrants issued by several courts in Delhi and Kolkata, they (the law enforcement authorities) not taking any action against the accused of reasons best known to them,” Bajoria told this correspondent.

Geetika Gupta, who holds 26 per cent of the shares in the company, is also an accomplice to the alleged scam, alleged Bajoria. Indian investors have no agreement and have never signed any resolution for CredForce’s funds to be utilised in Edvantic Inc, he said.

“I had invested in CredForce for the son’s higher education,” said Sharmistha Mitra, a Kolkata-based finished-leather entrepreneur.

The investment was very important for her, she added.

“On maturity, the CRPS would have helped fund my son’s higher education,” Mitra, who along with her family members invested more than ₹30 lakh in CredForce, told this correspodent.

“As a businesswoman, I don’t have the ready cash flow to fund my son’s education abroad. So, the investment was a good option at that time…,” Mitra said.

While most directors of CredForce are still in India, Rajiv Gupta, and his wife, Geetika, have shifted base to the US, where the duo lead an ostentatious life in Austin, Texas, said Dagman.

The arrest warrants against CredForce are not the first legal action initiated by the fly-by-night for-profit company.

“An American district court in Pennsylvania, fined CredForce $1.2 million for a fraud committed by it against the University of Pennsylvania and Wharton, the same institution on whose name the wealth manager and the directors of CredForce lured investors to invest in the company,” says Dagman.

In 2021, a federal court in Philadelphia, Pennsylvania, ordered CredForce Inc., —the US affiliate of Indian Company CredForce Asia Ltd—to pay $1.2 million it owed Ivy League business school University of Pennsylvania’s Wharton School, the Wall Street Journal had reported.

The same modus operandi has been used by Gupta and his directors to dupe investors in India too, says Nishant Jalan. Nishant, his family members and trust invested ₹2.82 crore in CredForce preference shares.

“Like in the US, Rajiv Gupta has misled investors and allegedly siphoned funds from the Indian companies,” said Jalan.

“We have a strong suspicion that Rajiv Gupta’s wife Geetika, who holds a senior position in the global talent management with IT major Accenture, is also involved in the scam,” Jalan alleged.

“Rajiv Gupta and his wife are living a luxurious life in the US at the expense of the investors in India who are trying to recover their investments,” Jalan said.

Geetika Gupta, according to her LinkedIn profile, is a vice-president-global talent strategy at Accenture, based in Austin, Texas.

“The Guptas, who have applied for permanent residency in the US, have been living in up-market Austin, Texas in a $3 million home since 2018,” alleges Jalan.

When this correspondent contacted Ganesh Singh Negi, the financial and accounts officer of CredForce Asia Ltd., and now a director of Edvantic Services Pvt Ltd., he refused to divulge any details of the company.

“I am no longer with CredForce but with Edvantic now. I am not authorised to speak to the media,” Negi told this correspondent by phone.

“For any information, please contact Sanjeeva Shukla, who is the chief development officer of Edvantic Inc,” Negi, who was the signatory of dividend pay-outs of CredForce, said.

According to CredForce’s dividend pay-out letters and terms of the CRPS issue, investors were entitled to receive dividends along with interest every quarter, says Jalan.

When contacted, Sanjeeva Shukla—one of the directors of CredForce and now a director of Edvantic Services Ltd and Edvantic Inc.—by phone, the former CredForce director said: “I will give the CredForce side of the story in detail if you call me later in the evening.

“CredForce’s side of the story too needs to be told,” he added.

Shukla is now the chief development officer at Edvantic Inc and holds no executive position with the Indian affiliate of the company.

Shukla, however, did not answer further calls from this correspondent, or respond to WhatsApp messages.

CredForce in its email communications with investors maintained the company had been renamed Edvantic Services Ltd. because its focus was shifting from ‘skill-credentialing’ to ‘education management’, several Indian investors say.

Though Rajiv Gupta in email communications told Indian investors that unredeemed preference shares would be redeemed by June 30, 2022, however, none of the investors has been paid until now.

A search about Edvantic America Inc. on the internet shows that the annual revenue and valuation of the Rajiv Gupta-promoted company was $30.1 million during the current fiscal.

1 note · View note