Kozhikode: The Directorate of Enforcement (ED), Kozhikode, has arrested the Indian Union Muslim League’s former Manjeshwar MLA M C Kamaruddin and religious leader T K Pookoya Thangal in connection with a money laundering case linked to Fashion Gold deposit scam.

Kamaruddin, who also served as the IUML’s Kasaragod district president, was the chairman of four companies under the Fashion Gold banner, while Pookoya Thangal was the managing director.

The four companies — Fashion Gold International Pvt Ltd, Fashion Ornaments Pvt Ltd, Qamar Fashion Gold Pvt Ltd, and Nujum Gold Pvt Ltd — began collecting illegal deposits from the public in 2008, promising exorbitant monthly returns of 12-14%. Following the 2016 demonetisation, they started defaulting, triggering a flood of complaints.

According to an ED statement, the two were arrested on Tuesday, April 8, under the Prevention of Money Laundering Act (PMLA), 2002. The Special Court for PMLA cases in Kozhikode remanded them in custody and granted the ED two days' custody for interrogation.

"After their questioning, they will go back to judicial custody for two weeks, which may be extended," said ED's special public prosecutor Adv Rajesh Kumar.

The ED’s investigation was based on 168 cheating cases registered across various police stations in Kannur and Kasaragod districts against the Fashion Gold firms, Kamaruddin, Pookoya Thangal, and 29 others. The Kerala Police Crime Branch, which took over the probe and filed a chargesheet in the first batch of FIRs, pegged the total liability towards the 168 complainants at Rs 26.15 crore.

The Crime Branch also invoked the Banning of Unregulated Deposit Schemes (BUDS) Act and attached six properties belonging to the two accused.

The police probe revealed that the companies and their directors collected large sums from the public "with dishonest intention of cheating" by promising unusually high returns. The investigation further found that around Rs 20 crore had been siphoned off by the accused.

The ED said in the statement that the Fashion Gold companies were not authorised to accept public deposits. To bypass this, they allegedly received funds under the guise of share capital or advances from the public. Most depositors, particularly NRIs, were made shareholders or directors on paper, it said.

"The accused persons purchased immovable properties in their personal names using funds collected by the Fashion Gold companies. These properties were later sold or transferred, and the funds siphoned off," the ED said.

The ED had earlier provisionally attached immovable properties worth Rs 19.62 crore belonging to Kamaruddin, Pookoya Thangal, and other accused under the PMLA. The Adjudicating Authority in New Delhi confirmed the attachment. Their arrests now, the ED said, are part of the ongoing investigation.

The Kerala Police had also arrested Kamaruddin and Pookoya Thangal earlier. Kamaruddin was released on bail on February 11, 2021, after spending 96 days in jail. Pookoya Thangal, who had been absconding for 10 months, surrendered before the Hosdurg court in Kasaragod in August 2021. He was granted bail after spending 93 days in prison.