An investment fraud to the tune of Rs 712 crore detected by the Hyderabad police last week once again highlights how gullible people are becoming victims of fraudsters sitting abroad and operating through their local agents using the latest technology tools.
The case also shows how the masterminds based in China are operating in a well-planned manner without the risk of being caught. The modus operandi of the fraudsters also ensures that they leave no trail of the defrauded money.
In all the three major cases detected in Hyderabad, the prime accused are Chinese, who were running the rackets remotely through their conduits in India and other locations.
In the latest case, the police claimed to have made a breakthrough with the arrest of nine accused from Mumbai, Lucknow, Gujarat, and Hyderabad for links with fraudsters based in Dubai and China.
According to the police, the gang cheated 15,000 gullible investors in India to the tune of Rs 712 crore in less than a year and routed this money to China through Dubai in the form of crypto currency.
Those arrested were identified as Prakash Mulchandbhai Prajapati, Kumar Prajapati, Naimuddin Wahiduddin Shaik, Gagan Kumar Soni, Parveez alias Guddu, Shameer Khan, Mohammed Munawar, Shah Sumair, and Arul Dass.
The investment fraud was busted after police took up investigation in April following a complaint by a Hyderabad resident, who lost Rs 28 lakhs to the fraudsters.
The complainant, a techie, fell into the trap of the gang, which was luring people with the offers of investment-cum-part time jobs.
The victims were approached on Telegram and WhatsApp and were given simple task of liking YouTube videos or writing Google reviews.
The victims were initially asked to make small investments of up to Rs 5,000. “To win the trust of the victims, the fraudsters paid them high returns. The investors were thus lured to make higher investments,” said Hyderabad Police Commissioner C.V. Anand.
Police investigations revealed that every time victims loaded or invested money, his investment amount was displayed in a window like an online wallet. It had options like Invest money, withdraw money, perform tasks etc.
However, the victims were not allowed to withdraw the money till completion of all tasks. By then, most of them had already invested Rs 5-6 lakh.
In the case of the victim from Hyderabad, he was given 4 sets of 30 tasks each. In the first set he loaded with Rs 25,000 and earned a profit of Rs 20,000 on the website, but the victim was not allowed to withdraw the money.
When questioned, he was told that he has to complete all the four sets of tasks to get the profit. The victim invested higher amounts in the subsequent sets. When he wanted to withdraw profits, he was asked to pay Rs 17 lakh as withdrawal fee. It was only then he realised that he was cheated.
Tracking the trail of fraud money proved a daunting task for the investigators and this shows how the fraudsters are executing their plans.
Initially, it was found that Rs 28 lakh that the victim lost was transferred to six accounts including an account maintained in the name of Radhika Marketing and from there, the money was transferred to various other Indian bank accounts and finally in Dubai, the fraudulent money was used to purchase crypto currency.
The account in the name of Radhika Marketing was being maintained by Munawar of Hyderabad. Investigations revealed that he along with Arul Dass, Shah Sumair and Shamir Khan went to Lucknow on the instructions of Manish, Vikas and Rajesh, who all are residents of Lucknow, to open bank accounts in the names of shell companies with an offer of Rs 2 lakhs per account.
They opened 33 shell companies and 61 accounts in the name of companies and handed over the same to Manish. He had sold the accounts to Kumar Prajapati, an associate of Prakash Prajapati.
According to the police, Prakash Prajapati, a resident of Ahmedabad is associated with Chinese Lee Lou Guangzhou, Nan Ye, Kevin Jun etc. He was coordinating with the Chinese in supplying Indian bank accounts and shares the OTPs for operating these accounts from Dubai/China through remote access apps.
According to police, the Chinese masterminds were running this entire system of task based investment frauds. They were the ones running these scam and luring the victims by sending messages over Telegram.
The defrauded money was credited to Primary Shell/Mule bank accounts being supplied by Prakash Prajapati, layered to some secondary bank accounts to hide the proceeds of crime. Finally it was being sent to Chinese. Prakash Prajapati was coordinating with his other associates, Arif, Anas, Khan Bhai, Piyush and Sailesh etc who are the residents of Mumbai, settled in Dubai in converting the fraudulently gained Indian rupees to USDT (Crypto) and transfer the same to China.
For every fraudulent transaction in these accounts, Prakash Prajapati was paid 2-3 per cent commission.
Police found that Prakash Prajapati was transferring part of his commission through Hawala to give the same to the account suppliers with the help of Kumar Prajapati and he was routing major portion of it back from China by importing electric bikes.
Police found that Prakash Prajapati was using a Tron coin wallet address for getting his commissions to be paid in USDT or TRON. These crypto wallet transactions in his wallet have crypto transfers to another wallet address, which in turn has been found to have transaction linkages with two other crypto wallets including Hezbollah wallet (labelled as a wallet belonging to a terror financing module), police said.
This is not the first such investment fraud case detected in Hyderabad. A bigger fraud surfaced in October 2022. Police then busted a Chinese investment fraud of Rs 903 crore and arrested 10 accused including a Chinese national and a Taiwanese national.
The cyber crime cell of the city police busted the fraud during the investigation into a complaint by a citizen who was cheated after he invested Rs 1.6 lakh in an investment app called LOXAM.
Police had found during the investigation money of the complainant was deposited in the bank account of Xindai Technologies Pvt Ltd. Further investigations revealed the scam.
Money changers licensed by the Reserve Bank of India (RBI) to deal in foreign exchange were involved in the scam. Though they had a license to provide foreign exchange to those travelling abroad, they were found to be violating FEMA.
Chinese national Lec alias Li Zhongjun and Taiwanese national Chu Chun-yu were arrested along with eight others for running a hawala scam from Delhi and Mumbai.
Sahil Bajaj, Sunny alias Pankaj, Virender Singh, Sanjay Yadav, Navneeth Kaushik, Mohammad Parvez, Syed Sultan, and Mirza Nadeem Baig were also arrested.
According to the police, Navneeth Kaushik, a resident of Delhi had obtained RBI licenses for two money exchanges.
The police investigations revealed that the transactions in the account of one of the exchanges are to the tune of Rs 441 crore in a period of seven months.
Transactions of another Rs 462 crore were done in another exchange.
“It came to light during the investigation that fraud has been committed through hawala to the extent of Rs 903 crore,” Police Commissioner Anand said.
Virender Singh of Pune revealed that he opened a bank account in the name of Xindai Technologies on the orders of Jack (Chinese) and gave the internet banking user name and password of the bank account to him.
Sanjay Kumar of Delhi opened another account on the instructions of Lec alias Li Zhounjau and gave it to Pei and Huan Zhuan in China.
Similarly, he opened 15 other bank accounts and sent them to one Chu Chun-yu of Taiwan who was temporarily residing in Mumbai. He was sending account details, user ID, password and SIM cards to other countries. Sanjay Yadav and Virender Rathor received Rs 1.2 lakh commission per account which was arranged by Lec alias Li Zhounjau.
In 2021, Cyberabad Police had busted a racket led by two Chinese nationals as kingpins that cheated people across India by enticing them with huge returns on investments.
Three accused were arrested in the case while other accused including two Chinese nationals remained at large.
The economic offences wing of Cyberabad Police had busted the racket being run in the name of ‘Shared Bike (BK)’/ ‘Sharing Economy’.
According to police, the accused cheated around 20,000 people all over the country to the tune of Rs 50 crore.
The accused had three attractive investment schemes to lure investors. On investment of Rs 300, Rs 3,000 and Rs 15,000, they promised high returns of Rs 1,350, Rs 13,500 and Rs 67,500, respectively, over a period of 90 days.
Since people were initially reluctant, the fraudsters deposited money into the bank accounts of some of the investors to gain the trust of others.
The arrested include Uday Pratap, a resident of Gurugram. He was the authorised signatory for an account of Mobicentric Technologies in a private bank in Hyderabad which is one of the fraudulent companies and he was also director of Corporfountain India Pvt Ltd, Gurugram.
The other accused were Nitesh Kumar Kothari, of Delhi and Rajesh Sharma, of Gurugram.
According to the police, the three accused were working under the control of the absconding Chinese nationals — Zhang Hongwei alias Peter and Peng Guowei alias Javie.
The accused launched a shared bike app and started cheating people through Skype and WhatsApp.
In January 2020, Peng Guowei left India and did not return due to international travel restrictions while Zhang Hongwei never came to India.
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