GSC Raju, who is the promoter of the Leo Meridian Infrastructure Projects and Hotels Ltd (LMIPHL), and his close aide A V Prasad were arrested under the Prevention of Money Laundering Act (PMLA) and sent to the ED custody.
"Investigation so far has unearthed 33 shell companies and more than forty contractors in this case," the ED said.
"He further mortgaged parts of the already sold lands to the banks to obtain loan for a resort project. Even approach roads were also fraudulently mortgaged to the banks and revenue records were manipulated to cheat the Banks & Plot owners," the ED observed.
"He had also created large number of fake vendor and contractor firms to siphon off the sanctioned loans under the guise of bogus invoices and bogus provision of material and services. A large portion of these diverted loan funds were cyclically rotated back into LMIPHL to create bogus exaggerated capital works in progress and in turn bogus fixed assets," ED maintained.
"Part of the diverted funds were diverted back into LMIPHL as investments using Kolkata based jama-kharch companies," the ED added.