Personal expenses, fixed deposit in father’s name, transfers to her sister out of public funds: Details as ED attaches assets worth Rs 1.77 crores of Rana Ayyub

The Enforcement Directorate has attached assets worth Rs 1.77 crores of alleged journalist Rana Ayyub under the Money Laundering Act. The ED has, in its attachment order said, “Rana Ayyub has cheated the general Public Donors in a pre-planned manner and with the intention to cheat the general public donors”.

The order says that Rana Ayyub’s scam started right from the time she collected the money and started withdrawing it from the savings account of herself and her family members. The ED order further said that a Fixed Deposit amounting to Rs. 50 Lakh was booked from her saving bank account through net banking and opening a separate Current bank account and subsequently, funds were transferred from her saving bank account and bank account of her sister and father and did not utilize for the purpose for which it was raised by Rana Ayyub.

Terming the funds raised and misused by Rana Ayyub as “proceeds of crime”, the ED order stated that Rana Ayyub knowingly indulged in “Proceeds of Crime including its acquisition, possession, use and projecting it as untainted property and therefore, she has committed the offence of money laundering as defined under section 3 of the Act, 2002 which is punishable under section 4 of the Act”. The actions by Ayyub are considered scheduled offences under the PMLA, ED said.

While the Uttar Pradesh Police has not yet filed a chargesheet in the case, the ED has stated that if the assets of Rana Ayyub are not attached by the ED, the department has reason to believe that this money would be siphoned off, making it impossible for the amount to be attached later, if the ED were to wait for the chargesheet to be filed.

Considering the reasons stated, ED provisionally attached the amount collected by Rana Ayyub, obtained and used criminally, for a period of 180 days from the date of the issuance of this order.

Details of the FIR filed in the case against Rana Ayyub

FIR No. 2049/2021 dated 07/09/2021 was registered by the Indirapuram Police Station, Ghaziabad Police, U.P, against Rana Ayyub for the commission of offences under Sections 403/406/418/420 of IPC, 1860 and Section 66D of Information Technology Amendment Act, 2008 and Section 4 of Black Money Act. The allegation in the FIR was that she illegally acquired money from the general public in the name of charity. The complaint was filed by Vikas Sankrityayan on the 28th of August 2021.

There were three campaigns mentioned in the FIR, pursuant to which, Rana Ayyub had raised crores from the public.

(a) Funds for slum dwellers and farmers during April- May 2020.

(b) Relief work for Assam, Bihar and Maharashtra during June- Sept 2020.

(c) Help for Covid-19 impacted people in India during May-June 2021.

The FIR mentioned that while Rana Ayyub is a journalist, she received money from foreign donors for which she did not have the required permissions mandated under Foreign Contribution Regulation Act, 2010.

Details of the investigation by the Enforcement Directorate under PMLA

The ED had, on the 11th of November 2021 received an email from the complainant with details of the case. In the email, the complainant had sent a letter received from Ketto, sent to donors. The letter by Ketto informed the donors that for the three campaigns ₹1.90 Crore and USD 1.09 Lacs [total in INR 2.69 Cr. Approx.] were received out of which only ₹1.25 Crores have been spent. “For any query relating to utilization of funds the donor has been advised to reach out directly to the campaigner at [email protected]”, the letter read.

After receiving the email, ED reached out to Ketto for details. On the 15th of November 2021, Varun Seth of Keto Foundation wrote back to ED saying:

1. The fundraiser campaigns were launched through the website ‘www.ketto.org’ which is operated by a private company Ketto Online Ventures Private Limited in which Varun Sheth is one of the directors.
2. Rana Ayyub wrote an email to Ketto on 23.08.2021. In the email, she said that she received an amount of Rs. 2.70 crores from Ketto, out of which 1.25 crores had been spent. She said she would pay an Income Tax of Rs. 90 lacs and that she would be left with around Rs. 50 Lacs.

Thereafter, Varun Seth was summoned by the Enforcement Directorate. In his statement to the ED, Seth said the following:

1. Seth said he is one of the Directors of M/s Ketto Online Ventures Pvt. Ltd which is an online crowdfunding platform for social and medical causes from India.
2. Rana Ayyub started 3 fundraisers on Ketto.org in the last 20 months. when a user starts a fundraiser on Ketto.org they agree to Ketto Terms of Use, Privacy Policy and digital agreement for raising funds on the platform. They also submit KYC information to withdraw the funds.
3. Rana Ayyub started 3 fundraisers and withdrew the entire amount.
4. Details of the money withdrawn for all three campaigns:

a) Campaign 1 (to help COVID victims): Rs 82,55,899 raised, Rs 79,63,640 withdrawn. In this campaign, USD 1,00,983 was returned to donors. Interestingly, the money from this campaign was withdrawn in the accounts of Rana Ayyub herself and Mohammad Ayyub Waquif, her father.

b) Campaign 2 (to help slum dwellers and farmers): Rs 71,37,217 collected, Rs 68,84,560 withdrawn. Additionally, 75,600 USD was raised and 73,332 USD was withdrawn. The amounts were withdrawn in the account of Rana Ayyub’s father and one Iffat Shaikh, a family member of Ayyub.

c) Campaign 3 (Relief work for Assam, Bihar and Maharashtra): Rs 42,01,368 raised, Rs 40,53,640 withdrawn. Additionally, 37,203 USD was raised and 36,087 USD was withdrawn. The funds from this campaign were also withdrawn in the account of Rana Ayyub’s father.

5. The money was withdrawn after giving the KYC details of Rana Ayyub and her family members.

6. That Ketto Online Ventures Pvt. Ltd does not manage or handle any foreign funds. Any foreign funds are managed by Ketto Online Ventures Inc. (Ketto USA). A campaigner who raises funds on Ketto website has an option to accept foreign funds by their choice; Ketto gives the campaigner the option to either accept or not foreign funds for their campaign. Ketto also takes declaration from user who is withdrawing funds that they have necessary government approval to accept the foreign funds. 

Further, on the 10th of December 2021, Varun Seth wrote another email to ED in response to questions by the department with the following disclosures:

1. The ED has asked Varun Seth if Mohammad Ayyub Waquif and Iffat Shaikh were eligible to withdraw the money. Seth said that they are only a fundraiser platform and the person raising the funds can add beneficiaries for the withdrawal and Ketto has nothing to do with it.
2. Regarding the reasons given by Rana Ayyub for withdrawing the funds raised through the bank accounts of Mohammad Ayyub Waquif and Iffat Shaikh, he submitted that who receives the money collected is the decision of the person raising funds and Ketto has no control over it.

Summons issued to Iffat Shaikh by ED and her response:

In an email dated 6th of December, Iffat told the ED that she was in Dubai and due to the ill health of her husband and the travel restrictions imposed due to the Omicron variant, she could not travel to India to attend the summons. She further said that the Power of Attorney had been given to her SISTER Rana Ayyub and that the required documents had been submitted in Mumbai. The documents submitted by Rana Ayyub revealed that Rana Ayyub had spent funds of Rs. 40 Lakh on the relief works, Rs. 74.50 lakh donated to PM Care Funds/CM Care Funds and an amount of Rs. 1.05 crores was paid as an Income Tax.

Summons issued to Mohammad Ayyub Waquif by ED and his response through Rana Ayyub:

Rana Ayyub, on behalf of her father, responded to ED over email saying that he had suffered two brain strokes and was bound to a wheelchair. She said that by September she had spent every penny received by her including amounts being donated to PM Care and that she has submitted all the Information/documents to ED office Mumbai on 29.09.2021 which revealed that Rana Ayyub had spent funds of Rs. 40 Lakh on the relief works, an amount of Rs. 74.50 Lakh donated to PM Care Funds/CM Care Funds and an amount of Rs. 1.05 crores has been paid as an Income Tax.

Summons issued to Rana Ayyub by ED and her statement to the department:

1. Rana Ayyub claimed that she had received money ONLY in Indian Rupees, however, the details provided by Ketto disputed her version.
2. She claimed that the entire amount that was transferred to her sister and father’s account was subsequently transferred to her account to be used for the purposes they were raised for.
3. She has submitted a list of donors to ED.
4. Neither her father nor her sister nor she received any information on their registered email address as per RBI guidelines on foreign remittance. She further said that they do not have FCRA registration since it was not required to receive money in INR. Interestingly, Rana missed mentioning that she also received foreign donations.
5. She claimed that she used the money for relief work (purchasing foodgrains, tarpaulin Sheets, Covid essentials. Bills of Rs. 40 lakhs had been submitted for the tarpaulin Sheets and food grains that were distributed as a part of the relief work and the receipts were given to the IT Department.

What did Rana Ayyub say about the Rs 50 lakhs Fixed Deposit made in her father’s name after the first campaign

On the 19th of May 2020, Rana Ayyub made a fixed deposit of Rs 50 lakhs in the name of her father from the funds raised by the public. Rana Ayyub hilariously stated that they had earmarked money for a hospital. She claimed that because the “government was hounding her”, the NGOs and the people she was in touch with backed out and the hospital plan could not take off.

She further claimed to ED that on the advice of her bank manager who knew she was working on a “Noble Cause”, an FD in her father’s name was made. She said that it was the bank manager who suggested she make an FD of Rs. 50 lakh as the FD would earn interest and give additional money to the hospital.

Interestingly, in an agreement between Rana Ayyub and Ketto, the purpose of this campaign was stated as “to help 2000 poor farmers from Nasik and Latur and poor people from Dharavi and Navi Mumbai by way of providing a package of Oil, Rice, Sugar, Dal, Hospital Fees etc”. However, the purpose of building a hospital was not the stated purpose.

To this, Rana Ayyub said that to her “memory”, no agreement of this kind existed.

What Rana Ayyub said about the transfer of Rs 50 lakhs to her new current account after the second campaign

On the 13th July 2020, after the end of the second campaign, Rana Ayyub had transferred Rs 50 lakhs to her new current account. Rana Ayyub claimed to the ED that the bank manager who oversaw her savings account told her that due to limits on the amount of withdrawal and owing to the fact that she was supposed to be doing relief work with this money, she sould open a current account linked to her saving account where she could debit and credit this money without any restrictions.

Assessment Order dated 04.09.2021 passed by Income Tax Department, as submitted by Rana Ayyub to ED

1. Rana Ayyub received a total of Rs. 2,69,50,695/- as donations through 3 donation campaigns started on the platform Ketto and out of which Rs. 80,49,856/- was received in foreign currency.
2. Although Rana Ayyub claimed that roughly Rs. 60-70 Lakh were spent for relief work, investigation of her bank statements/credit card shows that the amount spent on relief work is only Rs. 28 Lakh.
3. A large portion of the money that she collected from the public (Rs.2.4 crores) has not been utilised. In fact, the amounts stay idle in her own account and in her father’s personal account. This, after 1 year of the campaigns.
4. As a journalist, Rana Ayyub is not allowed to collect donations from foreign sources.
5. The accounts in which the money was withdrawn was personal accounts. In fact, instead of carrying out further relief work, Rana Ayyub opened a new current account and made an investment of a fixed deposit in her name.
6. Interestingly, the order states categorically that Ayyub made personal expenditures from the money collected from the public for “relief work”.
7. She had first claimed to the Income Tax Department that since she is not the beneficiary of the donations (despite using it for personal use), she is not liable to pay tax, however, was “willing to pay tax” if needed.
8. Rana Ayyub made personal expenditure to the tune of Rs. 19 lacs from the same account. 
9. Total Income Tax payable by totalled Rs. 1,50,77,973/-

Final conclusions and findings by the Enforcement Directorate after investigating the documents and letters by all parties involved

1. Rana submitted a four-page note to ED on 29.09.2021. In the note, Rana Ayyub said that she had spent Rs. 40 Lakh on the relief work, Rs. 74.50 Lakh donated to PM Care Funds/CM Care Funds and Rs. 1.05 crores was paid as Income Tax.
2. Rs. 3,52,927.01/- was spent on relief work through her credit card.
3. The invoices were submitted by Rana Ayyub of Rs. 34,80,142/-.
4. The ED found that there were payments made to Manisha Traders and Pooja Super Market which did not match the receipts that Rana gave for her ‘relief work’. This could indicate her personal expenses.
5. the Assessment Order passed by the Income Tax Department against Rana Ayyub shows that the amount spent on relief work was only Rs. 28 lakhs.
6. As a journalist, Rana Ayyub was not allowed to collect donations from foreign sources, however, she not only received the donations anyway but had not used Rs. 2.4 Crores despite 1 year of the campaign.
7. The bank account in which the money was withdrawn by Rana Ayyub or her family members were personal savings accounts. Instead of doing further relief work, she opened a new current account and made an investment of a fixed deposit in her name. She also made personal expenditures from the same savings account.
8. Payment of Rs. 1,50,77,973/- was made towards the Income Tax Department as Income Tax paid. The source of the said amount was the receipt of funds raised. However, this also included payments of Rs. 8955271.38/- from Substacks Inc. which was her professional earning.
9. The transfer of the funds into PM Care Funds and CM Relief Funds was an afterthought. The direct donations to the PM Care/ CM Relief Funds could also be done by the individual donors instead of donating to the campaigns launched by Rana Ayyub. It is clear that the donors had donated funds for the specific campaigns launched by Rana Ayyub but she did not use those funds for the specific purpose and kept idle in her bank accounts and in the bank account of her father. Thus, she attempted to project the funds (proceeds of crime in this case) as untainted by receiving the raised funds in the bank account wherein her professional earnings were also being received and by keeping the raised funds in her bank accounts idles rather than using the funds when it was required & for the purpose for which it was raised and hence cheated with the general public donor.
10. The available balance in the bank a/c in the name of Rana Ayyub on 22.11.2021 was Rs. 89,92,004.30/-. This amount included the Rs. 76.00 Lakh transferred from the bank account of her father Mohd. Ayyub Waquif. This was the amount that was raised by Rana Ayyub during the campaigns through Ketto and withdrawn in the bank account of Mohd. Ayyub Waquif (her father). This amount was unused (for the purpose collected) and parked in her father’s account.
11. That a Fixed Deposit of Rs. 50 Lakh was booked by Rana Ayyub out of the funds raised through the campaigns. Rana Ayyub stated the purpose of FD was to generate interest on the fund. However, the funds were raised for Campaign number 1 for the purpose to help 2000 poor farmers from Nasik and Latur and poor people from Dharavi and Navi Mumbai by way of providing a package of Oil, Rice, Sugar, Dal, Hospital Fees etc. Thus, she was directly involved in acquiring funds (the proceeds of crime in this case) of Rs. 50.00 Lakh and projected it as untainted by booking a Fixed Deposit.
12. That Rana Ayyub refunded back to donors the amount of USD 100983/- which were raised for the specific purpose of Campaign No. 3 i.e. ‘Help for Covid-19 impacted people in India during May-June 2021.’ Rana Ayyub has stated that the aforesaid Fixed Deposit of Rs. 50.00 Lakh was booked for the purpose of constructing a hospital and booking an FD could generate interest. The refund itself shows that she had no intention to build a hospital. It further shows that the funds were refunded to the donors instead of withdrawal because the investigation was initiated against her by the Income Tax Department and Enforcement Directorate to check the actual utilization of the funds raised by her through these campaigns.
13. She opened a new current a/c in her name and the payment of Rs. 50.00 Lakh was transferred on 15.07.2020 from her savings bank account. Further a payment of Rs. 21.40 Lakh was transferred from the bank account of Iffat Shaikh, out of the funds raised through the campaigns and the available balance in the bank account was Rs. 57,19,179/-. This amount was parked and not used for the purpose stated in the campaigns.
14. ED found that it was clear that right from the beginning the intent for raising funds for charity by launching aforesaid campaigns was solely for cheating the general public donors and to earn property by routing through her/her family member’s bank accounts. There was no intention of doing any charity from the money collected.
15. ED said that from the investigation, it was abundantly clear that the funds were raised in the name of charity in a completely pre-planned and systematic manner and the funds were not utilized completely for the purpose of which the funds were raised.  
16. The investigation discloses that in a pre-planned manner and with criminal intent.

Through the investigation, the ED has now attached the amount lying unutilised. The amount comes to Rs 1,77,27,704. This includes the fixed deposit of Rs 50 lakh in her father’s name, an available balance in the bank account of Rs. 57,19,179 and an amount of Rs. 76.00 Lakh (out of the available balance) which was credited on 29.09.2021 from her father’s bank account out of the funds raised by launching campaigns by Rana Ayyub.