Rose Valley financial scandal
| Founded | 1997 |
|---|---|
| Founder | Kajal Kundu |
| Years active | 1997–2015 |
| Territory | India (West Bengal, Odisha, Assam, Tripura, Jharkhand, and others) |
| Ethnicity | Indian |
| Leader(s) | Gautam Kundu (Chairman) |
| Criminal activities | Ponzi scheme, financial fraud, money laundering |
The Rose Valley financial scandal, also referred to as the Rose Valley chit fund scam, is a substantial financial fraud case and alleged political scandal that emerged in India during the early 2010s. The controversy centers around the Rose Valley Group, a conglomerate accused of operating unauthorized collective investment schemes and Ponzi schemes, extracting over ₹15,000 crore from millions of depositors predominantly across eastern India.[1]
Origins and Operations
[edit]The inception of the Rose Valley Group dates back to 1997, when Kajal Kundu, a former Life Insurance Corporation insurance salesman with extensive experience, founded Rose Resorts and Plantations in Tripura. Initially, the company focused on collective investment schemes linked to rose plantations, inviting investors to finance agricultural projects in return for promised dividends. However, this venture faced early regulatory challenges when, in 1999, the company sought formal approval from the Securities and Exchange Board of India (SEBI) but was denied due to non-compliance with regulatory requirements. Despite this setback, operations continued without authorization until a tragic incident in 2003, when Kajal Kundu's vehicle plunged into a lake while en route from Agartala to Guwahati, resulting in the deaths of him, his wife, and son. This event marked a significant turning point, with control shifting to his brother, Gautam Kundu, who would reshape the modest company into a sprawling financial entity marked by dubious practices.
Under Gautam Kundu's leadership, the company was revitalized through the launch of the "Ashirvad" scheme, which became a fundamental part of Rose Valley's growth. This scheme, marketed as a real estate investment opportunity, allowed investors to deposit funds as booking amounts for land parcels. Upon maturity, investors had the option to either take possession of the allotted land or receive their principal back along with extraordinarily high interest rates, ranging from 11.96% to 17.65%—far exceeding typical bank rates. This model appealed to many low-income investors in eastern India, who were often unaware of the complicated terms but were drawn in by the tantalizing returns. Kundu strategically expanded the business from Tripura to other states, including West Bengal, Odisha, and Assam, setting up regional offices that acted as collection hubs staffed by aggressive agents earning large commissions.
Between 2005 and 2011, the company experienced rapid financial growth that caught the attention of regulators. Starting with modest collections of ₹3.75 crore during 2005-2006, deposits soared to ₹1,271.98 crore by 2009-2010. This explosive growth led the Economic Offences Investigation Cell, under the Left Front government, to formally alert SEBI on December 7, 2009, prompting a request for an investigation into the group's operations. However, despite this warning, collections continued to rise, reaching ₹2,016.32 crore by March 31, 2011—just as the political landscape shifted with the rise of the Trinamool Congress in West Bengal. It was during this peak in January 2011 that SEBI finally prohibited Rose Valley Real Estate and Construction Limited from raising more funds, although by that point, Kundu had already diversified into various sectors.
Gautam Kundu's business expansion followed a notable pattern of using depositor funds to establish seemingly legitimate enterprises. In the hospitality sector, he opened one of Bengal's largest hotels at Mandarmani beach and subsequently acquired several properties, including the Chrome Hotel in Kolkata, and establishments in Durgapur, Siliguri, and other locations. These properties became integral to another fraudulent scheme launched in 2011—the Holiday Membership Plan operated through Rose Valley Hotels and Entertainment Ltd. Investors in this scheme paid monthly fees for supposed vacation accommodations or were promised the return of their principal plus interest (up to 17.65%) at maturity. SEBI would later identify about 21.9 lakh investors involved in this plan before it was terminated in 2013.
Simultaneously, Kundu launched Rose Valley Media and Entertainment Limited in 2009, aiming for a robust presence in television, radio, and cable networks. This media empire expanded to include various channels such as the entertainment channel Ruposhi Bangla and news channels like News Time (Bengal) and Odisha Time. Kundu also made significant investments in sports entertainment by becoming the main sponsor of the Kolkata Knight Riders in the Indian Premier League. Through Rose Valley Films, he emerged as a key player in Bengali cinema, investing nearly ₹10 crore annually in widely acclaimed films, which garnered respect in the industry for its artist-friendly payment practices and non-intrusive approach to creative decisions.
Throughout this diversification, Gautam Kundu crafted an image of lavish success, owning a Rolls-Royce and a collection of luxury vehicles. However, investigations by SEBI consistently indicated that these ostensibly legitimate business activities were financed entirely by illegal deposit schemes. The regulator repeatedly classified Rose Valley’s operations as unregistered collective investment schemes that posed significant risks to investors, highlighting that the company never secured necessary registration from the Reserve Bank of India for its financial activities. Despite facing multiple prohibitory orders beginning in 2011, the group managed to operate continuously by creating new companies and schemes, exploiting regulatory loopholes and leveraging political connections until its eventual collapse in 2015.[2]
Investigation
[edit]The situation intensified in 2015 when the Enforcement Directorate (ED) detained Gautam Kundu under the Prevention of Money Laundering Act, alleging he orchestrated one of India's most extensive Ponzi scams. Investigators discovered the group maintained over 3,000 bank accounts and possessed assets distributed across 12 Indian states.[3] Estimates of the total fraud suggested it exceeded ₹15,400 crore.[4] In 2024, the ED filed a supplementary charge sheet that implicated Subhra Kundu—the wife of Gautam Kundu—among other accused individuals.[5]
Asset Seizures and Restitution
[edit]The ED took significant action in 2018 by seizing assets worth over ₹4,200 crore, which included various properties such as hotels, land, luxury vehicles, and other valuable assets. Following judicial approval from a special PMLA court, the ED successfully facilitated the restitution of ₹19.40 crore to defrauded investors in August 2024.[6]
In October 2024, the Indian government commenced a large restitution program, distributing ₹515 crore to approximately 7.5 lakh victims of the scam.[7][8] Further disbursements included ₹5 crore to 7,346 victims[9] and ₹100.5 crore to another group of affected individuals.[10] By March 2025, the ED reported securing ₹450 crore designated for future restitution efforts.[11] Additionally, the ED initiated the auctioning of properties located in Tripura to fund restitution initiatives.[12]
Political involvement
[edit]The Rose Valley chit fund scam had significant political ramifications, particularly for the All India Trinamool Congress. Several leaders of the party faced questioning and arrest due to their alleged links to the group.
Sudip Bandyopadhyay
[edit]In January 2017, Trinamool Congress MP Sudip Bandyopadhyay was arrested by the Central Bureau of Investigation (CBI) for allegedly promoting Rose Valley schemes and benefiting financially.[13]
Tapas Paul
[edit]Actor and Trinamool MP Tapas Paul was also implicated in the scam, serving as a director in Rose Valley's media wing, and was arrested in relation to the alleged misconduct.[14][15]
Sadhan Pande and family
[edit]In 2016, the Enforcement Directorate uncovered transactions showing that Shrreya Pande, daughter of Late Trinamool MLA and Minister of State for Consumer Affairs Sadhan Pande, had received nearly ₹2 crore from Rose Valley for interior design work at their Kolkata and Mandarmani properties. Shrreya, a socialite with film and modeling experience, claimed the payments were legitimate professional fees but acknowledged outstanding dues of ₹25 lakh from the company.
ED officials summoned Shrreya to investigate whether the payments aligned with market rates and how she was selected among designers, noting she lacked formal interior design training despite claiming clients like Tata Group and RBI. She initially avoided appearing before the ED, sending lawyers with documentation instead, while maintaining she was targeted due to her political family connections. Sadhan Pande declined comment, becoming the second TMC minister after Tapas Paul implicated in the probe.
2017 political fallout
[edit]The arrests of Bandyopadhyay and Paul in January 2017 triggered intense political conflict in West Bengal. Chief Minister Mamata Banerjee condemned the arrests as a "political vendetta" by the central government. She called for mass protests and questioned why leaders from the BJP, specifically Narendra Modi and Amit Shah, were not subjected to similar scrutiny in light of the scam.> In response, Banerjee convened an emergency meeting with TMC MPs and party leaders demonstrated at the CBI office in support of Bandyopadhyay, with West Bengal minister Firhad Hakim among them.
The reactions split along party lines. Leaders from the BJP, such as Dilip Ghosh, welcomed the arrests, suggesting that more were imminent, while Sidharth Nath Singh cited the "ongoing violence in Bengal" as a concern. CPI(M) MP Md Salim noted Bandyopadhyay's "swift fall from prominence." Meanwhile, the Indian National Congress rallied behind the TMC, with spokesperson Randeep Singh Surjewala accusing Modi of "vendetta politics" and raising questions about why central minister Babul Supriyo had not been arrested despite being named in the scam. Additionally, senior Congress leader Ahmed Patel contacted Banerjee to express his solidarity during the crisis.
Amid the political upheaval, Bandyopadhyay's wife, who is a TMC MLA, refrained from making public comments, stating that the party would manage the situation.The events underline the intricate connections between politics and crime in West Bengal and reflect the ongoing tensions within the state's political environment.
Role of the Film Industry
[edit]In January 2019, the Central Bureau of Investigation (CBI) arrested producer Shrikant Mohta, co-founder of SVF Entertainment (Bengal's most successful film production company with over 120 films including acclaimed works like Chokher Bali and Autograph), for allegedly defrauding Rose Valley's Brand Value Communication of ₹24 crore through disputed film distribution agreements.[16]
The arrest on January 24, 2019, involved dramatic confrontations at Mohta's Kolkata office, where local police initially resisted CBI officials before facilitating the arrest hours later.[16] CBI claimed Mohta failed to respond to summons and provided inconsistent statements regarding a 2010 agreement where Rose Valley paid ₹24 crore for broadcasting rights to 70 SVF films—a deal disputed by Rose Valley chairman Gautam Kundu, who alleged only 30 films were delivered.[16] Investigators seized approximately 20 paintings allegedly purchased with misappropriated funds.[16]
Mohta's legal team maintained he had filed for anticipatory bail in the Orissa High Court and had previously cooperated with investigations, while SVF Entertainment stated all charges had been quashed by the Calcutta High Court—a claim affirmed by the Supreme Court.[16] Additionally, prominent Bengali actors Prosenjit Chatterjee[17] and Rituparna Sengupta[18] were summoned for questioning regarding their connections with the group's media ventures.
Related Companies
[edit]The Rose Valley Group operated through an array of subsidiaries and associated companies, many of which were subsequently identified as shell companies. By 2013, the Indian government had initiated investigations into over 150 companies for financial irregularities, including numerous entities affiliated with Rose Valley.[19]
See Also
[edit]References
[edit]- ^ "Rose Valley scam: All you need to know about the chit fund case". Business Today. 4 February 2019.
- ^ "Rise and rise of Gautam Kundu". The Telegraph. 26 March 2015.
- ^ "Rose Valley chairman Gautam Kundu arrested by ED". The Economic Times. 26 March 2015.
- ^ "Rose Valley Group's CMD Gautam Kundu has 150 cars, 3,078 bank accounts and more: ED". The Economic Times. 15 July 2015.
- ^ "ED files supplementary charge sheet in Rose Valley chit scam case". Hindustan Times. 2024.
- ^ "Rose Valley Group Ponzi scheme: ED facilitates restitution of Rs 19.40 cr to defrauded investors". The Economic Times. 30 August 2024.
- ^ "Govt begins restitution in Rose Valley scam". NewsOnAir. October 2024.
- ^ "Press Information Bureau release". PIB. 2024.
- ^ "Rose Valley chit fund scam: Restitution process of Rs 5 crore begins". India Today. 5 October 2024.
- ^ "Rose Valley victims get another Rs 100.5 crore". The Sentinel. October 2024.
- ^ "ED secures Rs 450 crore for Rose Valley victims". India Today. 14 March 2025.
- ^ "Chit fund scam: Auction of properties begins". Tripura Times. 2024.
- ^ "Rose Valley chit fund scam: TMC MP Sudip Bandyopadhyay gets bail". The Indian Express. 20 May 2017.
- ^ "Rose Valley road to minister daughter". The Telegraph. 9 December 2014.
- ^ "Trinamool MP Tapas Paul arrested in Rose Valley chit fund scam". Hindustan Times. 30 December 2016.
- ^ a b c d e "Film producer Shrikant Mohta held by CBI in Rose Valley case". The Times of India. 25 January 2019.
- ^ "ED summons Bengali actor Prosenjit Chatterjee". Deccan Chronicle. 9 July 2019.
- ^ "Bengali actress Rituparna Sengupta summoned by ED". SpotboyE. July 2019.
- ^ "Probing 154 companies for financial frauds: Pilot". Business Standard. 5 August 2013.
External Links
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