A multi-layered financial fraud involving the diversion of hundreds of crores in public funds across Haryana and Chandigarh has exposed an extensive network linking government accounts, bank officials, shell entities, jewelers, and real estate developers. Investigations conducted by the Central Bureau of Investigation and the Enforcement Directorate reveal that money meant to be placed into secure fixed deposits was siphoned off using forged debit instructions and manual overrides. While initial inquiries pegged the diverted sum at Rs 504 crore across eight state entities, subsequent probes expanded the estimated fraud to Rs 597 crore and eventually Rs 657 crore once interest claims and municipal funds were accounted for. To date, investigators have named 37 individuals as accused, secured 26 arrests, and uncovered an elaborate laundering pipeline designed to conceal the final recipients of the cash.
Diversion of Fixed Deposits into Shell Entities and Shadow Accounts
The unauthorized withdrawals targeted accounts belonging to key administrative bodies, civic corporations, and educational institutions. According to the investigation, the funds were supposed to be locked into interest-bearing fixed deposits in designated commercial branches, specifically within selected offices of IDFC First Bank and AU Small Finance Bank. Instead of completing the standard banking procedures, rogue personnel allegedly processed fraudulent paperwork to route the funds elsewhere. The Haryana State Pollution Control Board suffered the largest single loss, with Rs 169.27 crore diverted from its primary account and another Rs 0.328 crore taken from a secondary balance.
Other municipal bodies and public welfare undertakings saw their reserves drained in a similar manner. CREST Chandigarh recorded Rs 82.02 crore diverted, while the Municipal Corporation Panchkula and the Municipal Corporation Chandigarh lost Rs 80 crore and Rs 73.50 crore respectively. Substantial sums were likewise stripped from development and welfare boards, including Rs 53.86 crore from the Haryana School Shiksha Pariyojana Parishad, Rs 50 crore each from Haryana Power Generation Corporation Limited and the Haryana Labour Welfare Board, and Rs 48.72 crore from the Haryana Rural Development Fund Administration Board. Even civic councils and schools were not spared, with investigators citing unauthorized movements of Rs 18.10 crore from Municipal Council Kalka, Rs 10 crore from the Haryana State Agricultural Marketing Board, Rs 7.80 crore from DC Model Senior Secondary School, and Rs 1.99 crore from DC Montessori School.
The funds were systematically diverted into intermediary entities created to move money away from state balance sheets. Prominent among these conduits was Capco Fintech Services, which reportedly absorbed Rs 471.69 crore from various government departments and private sources. Another front, Swastik Desh Projects, received Rs 203.50 crore, which included roughly Rs 70.26 crore routed directly from pollution control board holdings. Accounts belonging to an entity named RAS Traders also served as central holding hubs for money taken from the pollution board, CREST, and the Chandigarh Smart City initiative, moving capital out in rapid disbursements rather than holding steady deposits.
Paper Gold Transactions and Laundering Through Real Estate Channels
Once inside the intermediary accounts, the money was layered through bullion merchants to convert the digital funds into physical liquid wealth. The Enforcement Directorate discovered that Sawan Jewellers received approximately Rs 329.57 crore from the network, including Rs 138 crore from Capco Fintech, Rs 131 crore from Swastik Desh Projects, and nearly Rs 45 crore from RAS Traders. According to investigators, these firms executed large gold purchases entirely on paper in the names of shell companies without physical deliveries taking place. The paper transactions allowed the syndicate to draw massive cash withdrawals through hawala operations while disguising the money trail. Similar transactions were traced through Malik Jewellers and KLG Jewellers, prompting agencies to seize gold valued at around Rs 20 crore during their ongoing raids.
Alongside the bullion pipeline, diverted capital was channeled into private property portfolios and corporate partnerships. Real estate entities associated with developer Vikram Wadhwa, such as Prisma Residency LLP, Kinnsair Realty LLP, and Martel Buildwell LLP, reportedly received portions of the diverted money. Investigators found that funds were deliberately split into numerous smaller tranches to frustrate audit tracks, moving continuously between shell firms, building developers, and private individuals.
The financial layering also provided personal benefits to public and private conspirators who facilitated the diversion. According to central agencies, some government officials received direct commissions, cash payouts, gold jewelry, private hotel parties, and additional personal amenities in exchange for overlooking protocol violations. The continuous movement of capital across unrelated corporate balance sheets created an intricate web that shielded the illicit transactions until sudden administrative reconciliations exposed the missing balances.
Insider Collusion, High-Profile Arrests, and Institutional Repayments
The scheme began to unravel in January 2026 when the Haryana Development and Panchayats Department moved to close its accounts with IDFC First Bank and AU Small Finance Bank to transfer its capital elsewhere. While one institution returned Rs 25.45 crore upon instruction, IDFC First Bank was able to produce only Rs 1.27 crore. The sharp divergence between official government ledgers and actual bank balances triggered immediate red flags, prompting comprehensive audits across multiple state boards and local civic bodies.
Subsequent investigations placed bank personnel at the center of the conspiracy. Rishabh Rishi, a former branch manager at IDFC First Bank, is accused of directly contacting state officials, arranging the opening of specialized accounts, and organizing the fraudulent transfers. Federal agents traced Rs 34.22 crore into personal accounts belonging to Rishi and his wife, Divya Arora. Another former banking official, Abhay Kumar, was tied to the operation through his family, with his wife Swati Singla and brother Abhishek Singla identified as key partners in Swastik Desh Projects.
The CBI has filed three chargesheets in the ongoing legal proceedings, formally accusing 37 individuals and taking 26 into custody. The chargesheet names six Haryana-cadre IAS officers, three employees from IDFC First Bank, an official from AU Small Finance Bank, and nine other state employees. Those arrested face formal counts under legal statutes covering criminal conspiracy, cheating, forgery, and violations of the Prevention of Corruption Act.
Following the formal claims made by affected departments, IDFC First Bank stated that it has disbursed Rs 645.59 crore as principal reimbursement to the claimant public bodies. While significant sums have been returned to the state, the case remains active before the courts as the CBI and ED continue tracing secondary transactions, real estate holdings, and the full extent of the cash payouts to determine the final beneficiaries of the diverted wealth.
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