The Enforcement Directorate (ED) in Mumbai has filed a prosecution complaint (PC) before the special PMLA court in connection with a bank fraud case involving M/s Max Flex & Imaging Systems Limited (MFISL) and 15 accused persons, including company promoters Hitesh R Jobalia and Nimesh N Shah. The complaint, filed on February 10, was acknowledged by the special court, which took cognisance of the case on February 14.
MFISL, which operates in the printing press and paper industry, allegedly caused wrongful losses amounting to over Rs464 crore to the Consortium group of SBI (lead bank) and eight other consortium member banks. its directors conspiring to divert funds to shell companies.
The ED’s investigation, initiated following an FIR registered by the CBI’s Bank Security and Frauds Cell in November 2022, revealed that the company’s directors conspired to defraud the banks by obtaining loans fraudulently. This was achieved by submitting inflated stock statements and fabricated balance sheets.
The ED’s investigation revealed that MFISL and the accused directors and associated entities conspired to cheat the Consortium group of the State Bank of India and eight banks.
They did this by fraudulently obtaining loans and submitting inflated stock statements and balance sheets for the company. ED investigation revealed that MFISL misused the credit facilities from banks by forging and producing fabricated financials. MFISL was involved in circular transactions with its related associate entities without any actual transfer of goods creating a facade of legitimate trade transactions in its books of accounts thereby manipulating the stock registers. The bank funds were subsequently siphoned off under the guise of loans and advances to related parties. During the investigation, it was found that the key person involved in this bank fraud Hitesh Jobalia (MD and Promoter of MFISL) has passed away.
The company’s promoters diverted and misused the funds received from banks to purchase various properties and channel them into firms and companies registered in the names of employees, ex-employees, and relatives of the company’s directors (shell companies).
