Bengaluru: Former Managing Director BK Nagarajappa has been arrested in connection with the multi-crore fraud case of Karnataka Bhovi Development Corporation and has been remanded in custody for 14 days, the ED said in a statement.

During the ED investigation, it was found that illegal money laundering was taking place through agents of the Bhovi community. Therefore, BK Nagarajappa has been arrested and further investigation is being carried out.

On April 4, ED officials raided the premises of the corporation’s office at University Tower on Ambedkar Road in the city and searched the places related to the accused and suspects in the scam. During this time, Nagarajappa was found to be involved in the illegal transfer.

He transferred money from KBDC to the accounts of friends and family members using fake beneficiary accounts. Therefore, they were arrested on the basis of the evidence collected during the raid. Later, they were produced before a special court, which ordered them to be remanded in 14-day ED custody.

What is the scam?

In 2021-22, there were allegations of irregularities in lending to entrepreneurs, including misuse of public records to provide loans worth lakhs of rupees and illegal transfer of more than Rs 10 crore.

Later, to cover up the case, a complaint was filed in Bangalore and Bangalore Rural Kalaburagi districts against Subbappa, the Superintendent of the Corporation, for stealing more than 200 files including accounting files, cash books, project files, bank cheques, and other files of the Bhovi Development Corporation.

Recently, the state government had ordered a CID investigation into the case.

CID officials had arrested Subbappa, the superintendent of the Bhovi Corporation. Businessman Jeeva, who was facing a CID investigation in connection with the same scam, committed suicide in Raghavendra Layout, Padmanabhanagar, Bengaluru.