New Delhi, May 26 (PTI) The Enforcement Directorate on Monday said it has attached assets worth more than Rs 26 crore of two former Karnataka Bhovi Development Corporation (KBDC) officials as part of a money laundering investigation into alleged financial irregularities in this state-government run department.

The KBDC works for the welfare of the persons belonging to the Bhovi scheduled caste.

The attached properties belong to B K Nagarajappa, a former general manager of KBDC, R Leelavathy, an ex-managing director of the body, and some other accused.

A provisional order has been issued under the Prevention of Money Laundering Act (PMLA) to attach the assets that are worth Rs 26.27 crore but have a current market value of Rs 40 crore, the central agency said in a statement.

Nagarajappa and Leelavathy were arrested by the ED in April as part of this investigation and they are currently lodged in jail under judicial custody.

The ED alleged that the two officials, in connivance with middlemen and their associates, "misappropriated" the funds from KBDC by sanctioning the loans, subsidies and financial assistance to the bank accounts of more than 750 "fake" beneficiaries, which were "fraudulently" opened by them.

Later, the amounts so sanctioned from KBDC were "diverted" to the bank accounts of various entities like Adithya Enterprises, Somanatheswara Enterprises, New Dreams Enterprises, Harntiha Creations and Annika Enterprises "controlled" by Nagarajappa and others.

This money was used in the purchase of properties, making payments to middlemen and further diverted to bank accounts of individuals and various other entities, the agency claimed.

"The money misappropriated from KBDC was mainly used to maintain their luxurious lifestyle and to acquire immovable and movable properties in their names and in the names of their family members," the ED said.

The money laundering case stems from multiple Karnataka Police FIRs filed on charges of "misuse and diversion" of funds worth Rs 97 crore from the KBDC. PTI NES RT RT