#e4mExclusive:  ED alleges Gameskraft ledger shows Rs 32 lakh paid to raise questions in Lok Sabha

The Enforcement Directorate (ED) has alleged that proceeds generated from the online gaming platform RummyCulture were diverted through a sophisticated cash-extraction network and subsequently used for various alleged illegal payments, including payments to raise questions via Members of Parliament in the Lok Sabha, according to court records placed before the Karnataka High Court.

The allegations form part of the grounds of arrest and "reasons to believe" recorded by the ED in its money laundering investigation against the promoters and senior executives of Gameskraft Technologies Pvt Ltd and associated entities. 

According to documents reproduced in the high Court judgment, the ED has alleged that the company generated substantial revenues through online real-money gaming operations and subsequently laundered a portion of those proceeds by disguising them as legitimate business expenditure. 

The agency claims that nearly Rs 100 crore was booked under heads such as software maintenance, software development and consultancy during FY21 and FY22.

Alleged Circular Cash Movement

The agency's investigation claims that vendors receiving these payments allegedly returned the funds in cash after deducting commissions, GST and TDS liabilities. According to the ED, this cash was then deployed for a range of unauthorised purposes rather than genuine business activities.

In one of the most significant claims made before the court, the ED has relied on a spreadsheet allegedly recovered from the mobile phone of Gameskraft co-founder Deepak Singh Ahlawat. Investigators claim the spreadsheet contains a detailed accounting of cash disbursements and reflects how funds generated through the alleged diversion mechanism were subsequently utilised.

According to the ED, the spreadsheet records total payments of approximately Rs 64.69 crore, against receipts of about Rs 62.45 crore, and contains a series of entries categorised under states, individuals and specific activities. The largest allocations reflected in the ledger include Rs 11 crore for Telangana, Rs 8 crore for Andhra Pradesh, Rs 6 crore for Karnataka, Rs 5 crore each for entries described as "Punjab (Delhi Letter)" and "Bangalore (Delhi Letter)", Rs 2.15 crore for Kerala, and Rs 2 crore for Delhi.

The agency has also pointed to a number of entries that it claims are indicative of the end-use of the cash. Among them is an entry titled "Questions (Lok Sabha)" carrying an amount of Rs 32 lakh, which investigators have cited while alleging that portions of the funds were used to influence public processes.

Other entries include Rs 1.5 crore tagged as "Directors GK", Rs 55 lakh marked as "Paid Chennai", Rs 50 lakh under "BOBO", Rs 30 lakh under "Gondal", and smaller allocations including Rs 20 lakh for "Society Players", Rs 20 lakh for "3rd Misc C", Rs 15 lakh for "2nd Misc C", Rs 12.5 lakh for "Misc C", and Rs 10 lakh listed as "Bidri (One Time)".

Particularly noteworthy are the entries described as "Punjab (Delhi Letter)" and "Bangalore (Delhi Letter)", each reflecting payments of Rs 5 crore. While the ED has highlighted these entries in court filings, the agency has not publicly disclosed the identities of the recipients or the precise purpose of the alleged payments in the portions of the record currently available.

The alleged payments form a crucial component of the ED's money laundering case. Investigators contend that proceeds generated through what they describe as fraudulent gaming practices were systematically layered and disguised through accounting entries before being converted into cash and routed to third parties.

Money Laundering Angle

The agency had also argued that the diversion of funds was not limited to operational expenditure. Court records show that investigators are also examining whether proceeds were used for investments in movable and immovable assets and whether funds were routed through related entities and family-controlled structures.

According to the ED's submissions reproduced in the judgment, the alleged proceeds of crime were further utilised for investments and other transactions that investigators believe were designed to conceal the origin of the funds.

Broader Investigation

The alleged illegal payments are part of a wider probe into the operations of Gameskraft and its gaming platforms, including RummyCulture. The ED has alleged that the company employed deceptive practices that caused financial losses to users, including the use of multiple user IDs linked to common bank accounts, participation by users from states where online real-money gaming was restricted, and other practices that investigators say require further examination.

The agency has also cited complaints filed with law-enforcement authorities and grievance records allegedly recovered during searches to argue that the scale of alleged victimisation extends beyond the specific FIRs that triggered the money laundering investigation.

Founders released from jail

In a significant setback to the Enforcement Directorate (ED), the Karnataka High Court on Tuesday declared the arrest of Gameskraft founders Deepak Singh, Prithvi Raj Singh and Vikas Taneja illegal and ordered their immediate release, holding that the central agency had failed to adhere to the statutory safeguards governing arrests under the Prevention of Money Laundering Act (PMLA).

The order was passed by Justice M. Nagaprasanna, who had reserved judgment after hearing extensive arguments from both sides over the legality of the founders' arrest following searches conducted by the ED on May 7 and 8.