Shell firms exposed

Rise of shell firms

Post-demonetisation, many shell firms came into existence to profit by taking loans from banks and evading taxes by falsifying financial records. The companies exist only on paper and are mostly used as a front for illegal activities, such as ponzi schemes, money laundering, multi-level marketing and deceitful chit fund operations. The biggest expose blew the lid off 114 shell companies found working from one small room in Jubilee Hills, an affluent part of Hyderabad.

Sudhakar reported about the shell firms operating in Hyderabad, most of them from a single location. As many as 21 companies were found operating from a tiny flat in Domalaguda in Hyderabad as a means of tax evasion. These ghost companies also duped job seekers by collecting money from them in exchange for work. Sudhakar tracked down a company in Hyderabad that deposited and withdrew more than Rs 3,000 crore from banks post demonetisation, while operating from a residential address. The identity of more such companies was revealed through further investigation.

The investigation also revealed how the shortage of staff at the Serious Fraud Investigation Office (SFIO), even after an increase in budget, is an impediment for probes into financial fraud cases.

Article links:

https://timesofindia.indiatimes.com/city/hyderabad/nine-out-of-12-companies-under-ponzi-radar-from-telangana/articleshow/65193790.cms

https://timesofindia.indiatimes.com/city/hyderabad/demon-hyderabad-company-with-ghost-address-deposited-rs-3178-crore/articleshow/65206797.cms

https://timesofindia.indiatimes.com/city/hyderabad/under-shell-umbrella-staff-directors-of-multiple-firms/articleshow/65144333.cms

https://timesofindia.indiatimes.com/city/hyderabad/big-crackdown-13560-shell-cos-to-log-out-400-chit-firms-weeded-out/articleshow/65157110.cms
https://timesofindia.indiatimes.com/business/india-business/1-room-114-shell-cos-shocker-from-satyam-raju-kin/articleshow/65141754.cms