Date:03/09/2008 URL: http://www.thehindu.com/2008/09/03/stories/2008090361340300.htm

Kerala - Thiruvananthapuram

Another firm under scrutiny

Staff Reporter

Crores tied up in Eenchakkal-based firm

Police trying to trace investment firm’s office
Employee-poaching by this firm led to INest’s collapse

Thiruvananthapuram: The police are investigating yet another city-based investment company which had accepted crores of rupees as deposits from at least hundred persons on the guarantee that their investments would double in a short span.

The firm had opened its office at Eenchakkal in May. The police found the office shuttered this week after they started investigating INest and Total 4 U, similar investment firms, on the charge of financial fraud. Investigators are yet to locate the company’s new office.

The police said a woman working in a managerial position for the government-owned Small Industries Development Corporation (SIDCO) controlled the company.

The police are also investigating her in connection with the collapse of INest, whose 20-year-old owner Sabarinath was arrested on Monday on the charge of cheating over 300 depositors.

Investigators said the Eenchakkal-based firm had recruited several of Sabarinath’s employees. INest employees who defected to the new company stole a large number of blank receipts (of the type issued to depositors) from their parent firm. INest suffered its early financial setback when the defected employees started making false financial claims (in the name of others) using the stolen deposit receipts.

The police said the promoters of the new firm engineered the downfall of INest Solutions, which the conspirators perceived as a competitor. They will question the SIDCO official in connection with the suspected conspiracy. The police said the official had initially helped Sabarinath construct his business empire. They went separate ways after one of Sabarinath’s former employees launched the new investment firm. The police said a gang employed by Sabarinath’s competitor had ransacked his company’s office on August 19.

Investigators said Sabarinath had toured Tamil Nadu extensively with two friends of his and purchased several foreign cars having vintage and classic value. The police were yet to trace these cars. He had also paid Rs.2.2 crore as advance for an 8-acre hilltop farmhouse at Thachootukavu. The sale agreement period expired before Sabarinath could garner sufficient money to seal the deal. Sabarinath also floated a music company, Total Music, in August.