ED Freezes Assets Worth Rs 26.27 Crore in Karnataka Bhovi Development Corporation Scam

Enforcement Directorate Takes Action

On Monday, the Enforcement Directorate (ED) announced that its Bengaluru Zonal Office has provisionally attached immovable assets valued at around Rs 26.27 crore, which have a current market worth of Rs 40 crore. This action is taken under the Prevention of Money Laundering Act (PMLA), 2002.

Details of the Accused

The attached assets are linked to B K Nagarajappa, R Leelavathy, and other individuals implicated in a case concerning the misappropriation of funds from the Karnataka Bhovi Development Corporation (KBDC). The ED's statement highlighted that these properties were provisionally seized due to their involvement in fraudulent activities.

Fraudulent Activities Uncovered

The investigation revealed that B K Nagarajappa, who served as the General Manager of KBDC, along with R Leelavathy, the former Managing Director, colluded with middlemen to misappropriate funds. They sanctioned loans and financial assistance to over 750 fictitious beneficiaries, whose bank accounts were fraudulently created.

Diversion of Funds

The funds sanctioned by KBDC were subsequently redirected to various entities, including Adithya Enterprises, Somanatheswara Enterprises, and others controlled by Nagarajappa and his associates. These funds were utilized for purchasing properties, compensating middlemen, and transferring to other individuals and entities.

Lavish Lifestyle Funded by Misappropriated Money

The misappropriated funds were primarily used to support a lavish lifestyle and to acquire both movable and immovable assets in the names of Nagarajappa, Leelavathy, and their family members. Both individuals were arrested under section 19 of the PMLA on April 5 and April 12, 2025, respectively, and are currently in judicial custody.