New Delhi:In what is being termed at the country’s biggest financial scandal, the founder of PACL (formerly called Pearl Agrotech Corporation) was arrested by the Central Bureau of Investigation on Friday after it was found that the company allegedly cheated investors of $6.8 billion (Rs 45,000 crore apprx).

Nirmal Singh Bhangoo’s arrest has taken place after 17 months of the market regulator Sebi (Securities and Exchange Board of India) ordering PACL to return money to millions of investors, saying the company was running an illegal investment scheme.

The scheme promised depositors returns on investments in agricultural land, the regulator said.

However, PACL has argued it was selling land to customers and not investment schemes, and so was not subject to Sebi regulations.

There has been no response or official statement from the comapny as of now.

PACL founder Bhangoo and three other company officials were arrested on Friday as part of the ongoing investigation into allegations of criminal conspiracy and cheating, said R K Gaur, a spokesman for the Central Bureau of Investigation.

The case involves alleged collection of about Rs 45,000 crore ($6.8 billion) from roughly 55 million investors across the country, Gaur said, terming it a “Ponzi scheme case”.

Regulators have stepped up scrutiny of unregistered investment products over the past two years, plugging regulatory loopholes that had long allowed unregulated entities to raise billions of dollars from small investors. Many people ended up losing their life savings in these schemes.

In a similar case, Subrata Roy, founder of conglomerate Sahara India, has spent the last 21 months in jail for not complying with a court order to return $5.4 billion (around Rs 36,000 crore) to investors who put money in a 2008-11 time deposit plan that was later ruled illegal.