The Saradha Group financial scandal was a major financial scam and alleged political scandal

caused by the collapse of a Ponzi scheme run by Saradha Group, a consortium of over 200 private
companies that was believed to be running collective investment schemes popularly.

The group collected around ₹200 to 300 billion (US$4–6 billion) from over 1.7 million depositors
before it collapsed in April 2013. In the aftermath of the scandal, the State Government of West
Bengal where the Saradha Group and most of its investors were based instituted an inquiry
commission to investigate the collapse. The State government also set up a fund of ₹5 billion
(US$72 million) to ensure that low-income investors were not bankrupted.

The central government through the Income Tax Department and Enforcement Directorate
launched a multi-agency probe to investigate the Saradha scam and similar Ponzi schemes. In May
2014, the Supreme Court of India, inter-state ramifications, possible international money
laundering, serious regulatory failures and alleged political nexus, transferred all investigations
into the Saradha scam and other Ponzi schemes to the Central Bureau of Investigation (CBI),
India's federal investigative agency. Many prominent personalities were arrested for their
involvement in the scam including two Members of Parliament (MP) - Kunal Ghosh and Srinjoy
Bose, former West Bengal Director General of Police Rajat Majumdar, a top football club official
Debabrata Sarkar, Sports and Transport minister in the Trinamool Congress government Madan
Mitra.

Background –
The Saradha group scam began to unravel in the first quarter of 2013 when investors demonstrated
in front of the Trinamool Congress office demanding the government take action against the
group’s officials for defaulting on payments. It finally blew up in April 2013 when the chairman
of the group that ran the ponzi scheme, Sudipta Sen and the company’s executive director Debjani
Mukherjee, were arrested from J&K after a chase for a few days across north India during which
they kept travelling in an SUV. They were arrested along with driver Arvind Singh Chauhan from
Sonmarg on April 23, 2013. The arrest warrant for Sen was issued on April 13. Saradha group
operated through a network of more than 100 companies and several thousand agents arranged in
a pyramidal structure who were encouraged by commissions that ranged from 25-40%. The design
operated with the name -- Saradha, the name of Ramakrishna Paramhamsa’s wife and spiritual
partner evokes deep respect among millions in Bengal. Armed with a name that lent an immediate
respectability among the masses, Sen began to sell secured debentures and preferential bonds but
did not conform to the guidelines of the market regulator SEBI or seek its permission to float the
schemes. After 2010, Saradha group companies began offering collective incentive schemes and
investors never knew about where their money was invested. They were simply promised high
returns on their money after a fixed period. By 2012, SEBI instructed the group to stop all schemes
till the authorities obtained their nod. However, Sudipta Sen continued the business till the collapse
in 2013.

How many people were cheated –

About 1.7 million to 1.8 million depositors -- mostly poor and lower middle class people -- lost
their money. They were lured by the promise of high returns that an army of thousands of agents
in a pyramidal structure sold in the market. The deposits were raised primarily from West Bengal,
Assam, Jharkhand, Odisha and Chhattisgarh.

High Profile Arrests –

The Saradha scam generated great controversy since several leaders of ruling Trinamool Congress
were allegedly involved with the scam. Those arrested include Madan Mitra, sports and transport
minister in Mamata Banerjee cabinet, who was nabbed on December 12, 2014. He was released
on bail on September 9, 2016. Incidentally, he was the first incumbent minister to be arrested in
the state. The other prominent Trinamool faces to be arrested were Rajya Sabha MP Kunal Ghosh,
who also headed the media ventures of Saradha group and another Rajya Sabha MP Srinjoy Bose.
Party vice-president and former police officer Rajat Majumdar was also arrested. Debabrata
Sarkar, an official of East Bengal football club, was also arrested.