A Chinese online investment fraud to the tune of Rs 903 crore spanning India, China, Taiwan and UAE was unearthed by the Hyderabad Police on Wednesday (12 October).
Ten people including Chinese national Lec aka Li Zhongjun, Taiwanese national Chu Chun-yu, Virender Singh, Sanjay Yadav, Sahil Bajaj, Sunny alias Pankaj, Navneeth Kaushik, and Hyderabad residents Mohammad Parvez, Syed Sultan and Mirza Nadeem Baig have been arrested in the case.
The masterminds used forex money exchange to “convert funds illegally gathered through dubious mobile applications to US dollars and transferred them abroad through hawala operators,” as per Indian Express.
The money changers and forex exchanges are permitted by the Reserve Bank of India (RBI).
Hyderabad Police commissioner CV Anand said they have so far recovered Rs 1.91 crore by freezing various bank accounts. He added that they expect the fraud to be of a much bigger scale. “The amount could run into thousands of crores. What we have found is evidence of Rs 903 crore moved out illegally,” he told NDTV.
How did the scam come to light? How did the fraud take place? Let’s take a closer look.
Fraud exposed
The scam was unravelled after a Hyderabad resident who lost Rs 1.6 lakh after investing in an app named LOXAM approached the police in July.
During the investigation, the Hyderabad Police discovered that his money had been deposited in the account of Xindai Technologies Pvt Ltd in IndusInd Bank.
This account was opened by Virender Singh Rathour at the direction of a Chinese national Jack who paid him a 1.2 lakh commission.
Another account in the name of Betench Networks Private Ltd was found linked to Xindai.
The bank accounts of Betench and Xindai had the same phone number, as per Indian Express.
As per the police, the Betench account was opened by Delhi resident Sanjay Kumar Yadav on the orders of Lec alias Li Zhounjau, and he also handed over its details to Pei and Huan Zhuan in China.
Li paid Sanjay and Virender a Rs 1.2-lakh commission per bank account, the police said.
Yadav opened 15 other bank accounts and sent their details to Taiwan’s Chu Chun-yu, who is temporarily in Mumbai.
Chu Chun-yu reportedly informed the police that he sent the bank account details, user IDs, passwords and SIM cards to other countries.
As per NDTV, the main accused Li Zhongjun and Chu Chun-Yu probably came to India in 2019-20 to recruit their operatives. However, they had returned after the onset of the COVID-19 pandemic.
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Money change firms involved
The police commissioner told reporters that the money was transferred from the Xindai Technologies bank account to 38 other accounts, including that of Hyderabad residents- Syed Sultan and Mirza Nadeem Baig.
As per the Hyderabad Police, similar bank accounts were opened by Syed and Mirza for a commission on the instructions of Mohammad Parvez.
On his part, Parvez gave the bank account details and internet banking credentials to Dubai-based Imran.
These two bank accounts were used by Imran and others for committing investment fraud, says the police.
Ten people have been arrested in Rs 903 crore investment fraud case. Moneycontrol (Representational image)
A huge chunk of money from the 38 bank accounts was transferred to the accounts of authorised money change firms Ranjan Money Corp and KDS Forex Private Limited, owned by Navneeth Kaushik.
In seven months, Ranjan Money Corp did transactions of up to Rs 441 crore, while KDS Forex conducted transactions worth Rs 462 crore in 38 days. “These authorised money change firms would get 0.2 per cent of the transaction as commission,” the commissioner was quoted as saying by NDTV.
Kaushik then converted this money into US dollars through several foreign exchange firms in the name of ‘international tours and travels’.
After converting rupees to dollars, he gave the moolah to Sahil and Sunny, who in turn transferred the sums abroad through hawala operators, Anand said, as per Indian Express.
What next in the case?
The Hyderabad Police said they plan to urge the Enforcement Directorate (ED) and other central agencies to continue with the investigation.
Commissioner Anand also hit out at banks and regulatory agencies over their alleged negligence.
“The money change and forex firms were legal entities, authorised by the Reserve Bank. But they were violating guidelines, like forex only for foreign travel, maintenance of seven different registers, submitting weekly, monthly and quarterly reports. Also, concurrent audit and daily reconciliation of statements are not done,” he was quoted as saying by NDTV.
Similar fraud cases
In September this year, a senior executive with an electricity distribution company in Mumbai said he and his family were cheated to the tune of Rs 2.15 crore by a person who promised them three to five per cent monthly returns on their investment, as per Hindustan Times (HT).
The Mumbai Police said the accused, Amit Kumar Sharma who ran A K Future Investments, paid high returns initially to gain the confidence of the complainant and attract more investors. However, soon he started defaulting on payments, and later it was found he never invested the money in share markets as he had told the complainant.
The accused had instead transferred the money to the bank account of his friend Karuna Ravi Singh, a Malad resident and another accused in the case, the police said, as per HT.
In 2021, as many as 570 hearing- and speech-impaired people in Pune were cheated through a fraudulent investment scheme that claimed to provide double returns within two months.
By July this year, the Pune Police recovered an amount of Rs one crore and arrested six people, who were also hearing and speech impaired, in connection with the case.
As per the police, the accused opened private companies named Platinium Investment and Finance Global Solutions and Suyo Abhi Enterprises and lured these investors through investment schemes offered by these companies. The accused received money from several investors, however, they did not give assured returns, reports Indian Express.
With inputs from agencies
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