Sahara India conglomerate Subrata Roy speaks to the media as he arrives at the Supreme Court for a hearing in New Delhi. India's Supreme Court has rejected an appeal by the Indian tycoon accused of a multibillion dollar fraud to be released from jail and allowed house arrest. (Altaf Qadri/AP)

Subrata Roy is one of India’s richest men, runs one of its biggest companies and lives on a 300-acre estate complete with a giant lake and its own hospital.

But since February, Roy, 65, has been a resident of New Delhi’s feared Tihar jail — the largest prison complex in South Asia — accused of running an illegal $4 billion investment scheme.

Instead of being incarcerated alongside hardened criminals, Roy has been living like a VIP. The court has allowed him to set up shop in an air-conditioned conference room as he tries to negotiate the sale of some of his iconic hotel properties — including New York’s Plaza Hotel — to raise $1.6 billion to pay back investors and secure his release by the end of the month.

Keshav Mohan, a lawyer for the Sahara Group — Roy’s $26 billion business empire that includes hotels, TV channels and a Formula One racing team — said the court’s detaining of Roy without formal charges as he works to pay back the investors is “unprecedented under Indian law and violates fundamental rights of a citizen.”

Roy was once heralded as an Indian success story. He was regarded as a Robin Hood figure whose financial company helped the poor, and a benefactor who sponsored the national cricket team.

But Roy’s arrest in February has cast a shadow on his man-of-the-people image and raised questions about the legitimacy of his empire.

“The authorities are behaving as though all he needs is a little bit of time to pay some overdue bills,” said Shiv Viswanathan, a sociologist with O.P. Jindal Global University outside New Delhi. “Is Subrata Roy part martyr, part Robin Hood, part crook?”

Very rich, helping very poor

Just two years ago, Roy appeared invincible.

The Sahara Group chairman, with an ever-present smile and trademark black vest, built his 36-year-old empire from nothing. He made most of his early money by running a savings program for poor and working-class Indians in far-flung villages without formal banks.

Over the years, Roy became something of a messiah for India’s “unbanked,” as about two-thirds of Indians still have no access to formal banks. But critics have said that the Sahara Group used cleverly worded savings programs to escape regulatory scrutiny for years and that not all the names on its investor list were genuine.

As the Indian economy began expanding in the 1990s, Roy diversified into the construction industry and hotels. He joined the growing list of India’s new billionaires who flaunted their newfound wealth and clout.

His sprawling estate of more than 300 acres in the northern city of Lucknow — called Sahara City — evokes an Indian version of Michael Jackson’s Neverland Ranch. It boasts dozens of fountains, grounds for football and cricket, a golf course, a helipad, a 6,000-seat auditorium, an Olympic-size swimming pool and Swiss chalets for guests. It also has a 26-foot sculpture of “Mother India,” a sari-clad deity waving the national flag and riding a chariot drawn by lions.

Roy lived with his family in the middle of it all, in a domed mansion inside the complex he calls the White House.

People in India still recall the gala wedding in 2004 in which his son, Sushanto, got married before 10,000 guests — including Bollywood stars and the prime minister. Roy sent private jets to collect those who had sent their regrets.

“In his mind, [Roy] lives in an opulent Bollywood movie set,” said one wedding guest, who spoke on the condition of anonymity for fear of offending his well-known boss.

Over the years, Roy developed an unusual corporate culture at the Sahara Group, which has 1.2 million workers and is one of India’s largest employers. Instead of chairman, he called himself “managing worker” and “chief guardian of the world’s largest family.”

Employees wear a black-and-white uniform instead of casual Friday attire and greet one another with a special hand-on-the-heart “Sahara salute.”

Most money returned

Roy’s troubles began when the Securities and Exchange Board of India, the country’s stock-market regulator, said in 2010 that two companies — part of Roy’s conglomerate — violated a law that limits investor numbers to 50.

More than 30 million people invested their small savings with the Sahara in 2008, the company said, with the permission of India’s ministry of corporate affairs.

Lawyers for Sahara have long argued that their investment plan was not under the jurisdiction of the security regulator.

But in 2012, the Supreme Court disagreed and ordered Roy to refund investors’ money — nearly $4 billion. Roy’s people said they did just that, at one point sending more than 127 trucks loaded with supporting documents that stopped traffic in Mumbai.

It took more than a year to scan all the records. The Supreme Court studied one page from the dump that had first names of investors and street names, and said that it “may well be fictitious, concocted and made up.”

Perhaps more telling, there are no angry investors demanding refunds. Sahara representatives say that is because more than 90 percent of the investors have had their money returned.

Yet the Supreme Court’s concern about the fictitious names gives credence to years of whispers that Roy is running a vast money-laundering operation or Ponzi scheme.

“There are many companies which are a clever combination of a Ponzi scheme and money-laundering. The general suspicion is that such companies take tainted cash money from politicians for safekeeping,” said Prithvi Haldea, chairman of Prime DataBase, who works on investor protection issues. “They then create a database of millions of small-cash investors to show this cash in its books as official. Classic way of turning black money into white.”

Gautam Awasthi, another lawyer for the Sahara Group, dismissed allegations that his client was engaged in money-laundering or running a Ponzi-style scheme as “wrong, baseless” and a malicious attempt to “defame” the Sahara Group.

Telling his story

In his jail cell, Roy is writing a book by hand about his captivity. (Another book, “Life is Too Beautiful,” is planned for publication after his release.)

Despite court-ordered access to a conference room loaded with modern amenities such as WiFi, satellite television and videoconferencing, he still does not use a cellphone, tablet or computer.

“He has staff members that dial the phone for him, type for him,” said a business executive who has observed Roy. “He is modern in the way he runs his business, but he lives like a Mughal king.”

To be released, Roy must raise $1.6 billion by Sept. 30 by selling his crown jewels: the Plaza Hotel and the Grosvenor Hotel in London. The money, the Supreme Court said, will be used to refund investors. Roy’s attorneys said he paid one-third of the amount in June. But in recent weeks, a proposed deal with the sultan of Brunei fell through, Roy told the court, leading to questions about whether he is serious about selling.

“Buyers have been ready for a year now, but the Sahara team keeps upping the price and changing their mind,” said a banker in London who is familiar with the negotiations.

Some say Roy may never part with the hotels because the patriot in him likes the Indian flag flying on top of them. And he believes he will clear his name.

“Ours is a beautiful human story,” Roy said at one point before the court. “If you know it, you will love us.”