The corporation is a state government department meant for the welfare of the Bhovi community, which is included in Karnataka’s Scheduled Castes list.
R Leelavathy, a former managing director of the KBDC, was taken into custody on April 12, the federal probe agency said in a statement.
She was produced before a special Prevention of Money Laundering Act (PMLA) in Bengaluru and sent to ED custody, it said.
The ED conducted searches in this case earlier this month and made its first arrest — former KBDC general manager B K Nagarajappa. He is also in the agency’s custody at present.
Leelavathy, the ED claimed, was “instrumental” in the “diversion” of funds from the KBDC by creating bank accounts “fraudulently” in the names of fake entities, in connivance with other suspects/accused like Nagarajappa, Subbappa (the then superintendent of the KBDC) and others.
They managed to “divert” funds from the accounts of the KBDC to those of fake entities/beneficiaries which were further transferred to friends and family members of these accused and other suspected persons, according to the agency.
The probe found, the ED alleged, that several bank accounts were opened and many beneficiaries/intended beneficiaries were “cheated” by adopting a “very well designed” and “foolproof” modus operandi by Nagarajappa, Leelavathy, Subbappa and others.
The ED said Leelavathy generated “proceeds of crime” and layered these funds using the bank accounts of her late sister Mangala Ramu and she subsequently “integrated” these monies in the bank accounts of her friends and family members through “bogus” entities created for this purpose.
The money laundering case stems from multiple Karnataka Police FIRs filed on charges of “misuse and diversion” of funds worth Rs 97 crore from the KBDC. PTI NES DIV DIV
