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State police chief Loknath Behera said the crime branch would investigate the matter.
“The investment fraud involving Fashion Gold jewellery at Kasaragod will be probed by the state crime branch,” he said in a release.
Police had registered a case against Majeshwaram MLA M C Kamaruddin and T K Pookoiya Thangal of IUML, a major ally of the opposition Congress-led United Democratic Front (UDF), under section 420 (cheating) of the Indian Penal Code, suspecting a multi-crore fraud.
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Police had conducted raids at the homes of the accused MLA and his partner on Tuesday.
Kamaruddin had rejected the charges as “politically motivated” and it was possible for them to return the money to investors, while senior IUML leader and MP P K Kunhalikutty said it appeared the company had gone bankrupt and the party would look into the matter.
In an apparent damage control move, the UDF had removed Kamaruddin from the post of district chairman of the front.
A senior police official had said the complaints alleged that the company failed to pay the investors even after they paid forthe shares.
“The complaints show that a fraud of around Rs one crore has happened. But there are many investors who are not willing to approach the police.
When considering all those, the amount will go upto over Rs 100 crore,” the official, who requested anonymity, had told PTI.
The state BJP had earlier alleged that even though all evidence had been submitted, police were yet to take action.