Delhi Police lodges FIR against ‘GO Mechanic’ founders; investors allege criminal conspiracy, fraud, forgery by company

New Delhi: The Delhi Police’s Economic Offences Wing (EOW) registered an FIR on October 20 against ‘Go Mechanic’ co-founders and others after the investors SCI investments, Orios and Chiratae Ventures filed a complaint alleging criminal conspiracy, fraud, forging of documents, cheating and falsification of accounts.

Go Mechanic’s, Amit Bhasin, Kushal Karwa, Rishabh Karwa, Nitin Rana, all founder directors, Prateek Jain (vice-president finance), Vishal a.k.a Vishambhar Sharma (vice-president, admin) and others have been named in the FIR, a copy of which is with IANS.

According to the FIR, SCI, Orios and Chiratae are collectively referred to in this complaint as the "Investors/ We /Us".

“Between 2017 and 2021, we/the Investors invested in the company. As is typical in such transactions, these investments were made on the basis of a review of the documents which were provided by/under the instructions of the accused founder directors. The accused founder directors represented that the company had high growth potential by producing books of accounts and other financial records which showed healthy business activity and revenues,” the FIR read.

“We/Investors relied heavily on the representations of the accused founder directors that these records contained an accurate picture of the business activity and financial position of the company, and accordingly agreed to invest in the company. But for such representations, we/investors would not have invested any amount in the company. The fraud complained of in this complaint was not discovered despite review of such documents at the time of each round of investment due to the fudged and incorrect data provided, and because of the systematic and intricate manner in which it had been planned and executed by the accused,” it further stated.

“Based on the above and other representations/warranties set out in the respective share subscription agreements, investors invested an aggregate of approximately Rs 211.51 crore in the company over multiple rounds between 2017-2021 (including through secondary purchase of equity shares from the accused founder directors for about Rs 13.4 crore),” it stated.

“We/Investors wish to inform you that we have recently discovered that the accused persons had fabricated and falsified the books of accounts and financial records of the company that were presented to us in order to dishonestly and fraudulently induce us into investing in the company between 2017-2021,” said the complainants.

“We/Investors have discovered such facts based on recorded admissions and confessions of the accused persons themselves. A thorough investigation is required to unearth the extent to which such financial records were cooked up and falsified, but the accused persons have admitted and confessed that they had inflated and manipulated ‘revenue figures’ in order to mislead us (the Investors) to induce us into investing,” the complainants further stated.

“We/Investors have also discovered that instead of using our investment of over Rs 200 crore towards the legitimate business activity of the company, the accused have fraudulently abused their authority as directors, agents, and employees of the company to commit criminal breach of trust by diverting and siphoning the capital/funds for personal and ulterior uses,” the complainant companies alleged. “We/Investors have furthermore discovered that in order to conceal their criminal acts, the accused persons fraudulently and dishonestly forged banking records and fabricated the books of accounts of the company (by recording fictitious transactions) so that the non-executive nominee director, investors and other stakeholders of the company were misled and kept in the dark about its true financial position,” they claimed.

The complaints claimed that on January 11, 2023, Amit Bhasin and Kushal Karwa visited Sequoia Capital India LLP's office in New Delhi and confessed to its representatives that there had been "over-reporting of revenues" and "under-reporting of expenses" in the company, i.e., falsification of financial records.

“As per the last information available to the investors, the company had outstanding debt obligations of Rs 78.63 crore to financial creditors, out of which other obligations (including statutory dues) amount to Rs 6.91 crore. Upon being questioned by the investors, the accused founder directors confessed that data sent to its lenders was fudged, including details of cash balance and cash statements for two consecutive months,” they said.

“It can be noted from the facts highlighted below, that the accused founder directors were fully aware of such fudging,” they said.

The complainants claimed that the forensic investigation unearthed several emails which establish that the accused were forging and deliberately altering the bank statements of the company to mislead stakeholders.

Citing an example, the complainants said that an email dated 13.08.2022 sent by one of the accused, Yogesh Namawat to Strides Ventures (to whom the company has provided certain security/guarantee), contains the bank deposit statements of the company's account with Kotak Bank.

“Prateek Jain was also marked on this email. The email contains a "portfolio report" which shows positive balance of Rs19,92,09,071 as on 29.07.2022 in the company's Current A/c No. 8011985842 with Kotak Bank. However, upon verification it has been found that the actual bank balance in this account as on 28.07.2022 was a negative balance of Rs 9,99,07.817.86 and the next entry is on 31.07.2022 showing negative balance of Rs10,08,33,055.86,” the FIR read.

“This is a clear instance of forgery of bank statements by the accused, ie., line items in the bank statements have been fraudulently and deliberately altered and falsified to inflate the balance by approximately Rs30 crore s to mislead stakeholders, including the recipient of the email,” it said.