Mumbai, May 10 (IANS): The Enforcement Directorate (ED) on Monday said that they have arrested Mahadev Ramachandra Deshmukh, the ex-President of Shri Chhatrapati Shivaji Education Society (SCSES) of Maharashtra, in a money-laundering case pertaining to fraud with MBBS students to the tune of Rs 29 crore.

The ED initiated its money-laundering investigation on the basis of an FIR registered by Vaduj police station in Maharashtra's Satara against Deshmukh and others.

It has been alleged that the management had collected funds in cash from the students for admission in an MBBS course into a college, namely the Institute of Medical Science and Research whereas it was not eligible for the course.

The ED learnt in the investigation that Kolhapur-based Society, a charitable trust engaged in educational activities, had received permission to run a medical college for academic years 2012-13 and 2013-14 for 100 seats per annum (85 seats government quota and 15 seats management quota).

However, in 2014, the Admission Regulatory Authority rejected the permission for admission in MBBS for the academic year 2014-15.

Though admission permission was granted only for 200 students, from 2012-13 to 2015-16, but Deshmukh fraudulently and illegally collected Rs 29 crore in cash from more than 550 students in the guise of donations for admission in MBBS but 350 of these students were left in the lurch.

"Various agents were appointed on commission basis by Deshmukh for luring prospective candidates for admission on payment of donations," the official said.

The ED produced Deshmukh before a court which sent him to the agency's custody till May 18.