A Chinese investment fraud amounting to Rs 9,030 crore spanning India, China, Taiwan, Cambodia and the United Arab Emirates has been busted by the Hyderabad Police. Ten people, including Chinese and Taiwanese nationals, have been arrested.
Here’s a 10-point cheat sheet on this big news story.
-
The scam used online investment apps to lure investors, with funds deposited in virtual accounts and then illegally taken out of the country via licensed money exchanges and foreign currency exchange offices, exploiting gaps in the regulatory framework.
-
“We believe hundreds of thousands of investors across the country have been defrauded. In Delhi alone a fraud of Rs 1 trillion may have taken place. The amount could run into tens of thousands of rupees. What we have found is evidence that Rs 9,030 crore has been illegally withdrawn,” Hyderabad Police Commissioner C. V. Anand told NDTV.
-
The two arrested suspects, Chinese national Li Zhongjun and Taiwanese national Zhu Junyu, are believed to have travelled to India to recruit operatives between 2019 and 2020, but returned to China when the pandemic erupted. Once the scam resumed, the duo shared all the details with their superiors in China and Taiwan.
-
The complaint in the case was filed in July by a Hyderabad-based man who alleged that he was duped after investing Rs 16 lakh in an investment app called LOXAM. Police found that the man’s money had been transferred to an IndusInd Bank account named Xindai Technologies Pvt Ltd.
-
The Xindai account was opened by suspect Virender Singh, who was arrested in Pune. Police said he had opened the account on the orders of a Chinese national calling himself Jack for a fee of Rs 12 lakh.
-
Another account in the name of Betenchi Networks Ltd was also found to be linked to Xindai. It was opened by Delhi-based Sanjay Kumar on the instructions of a Chinese national. Kumar opened a total of 15 accounts, charging Rs 12 lakh each, and shared details with a Taiwanese national, Chu Chun-yu.
-
From Sindai Technologies, the funds were transferred to 38 bank accounts and ultimately deposited at licensed money exchangers Ranjan Money Corporation and KDS Forex Private Limited, both owned by Naveen Kaushik. Kaushik sent the funds to exchange houses, which converted the rupees into dollars and handed them over to Sahil and Sunny, who then transferred the funds overseas through hawala.
-
According to police, Ranjan Money Ltd transacted Rs 4.41 billion in seven months, while KDS Forex transacted Rs 4.62 billion in 38 days. “These authorised money exchangers received 0.2 per cent of the transaction value as commission,” Anand said.
-
Accusing banks and regulators of negligence, Anand said, “The money exchange offices and currency exchange bureaus were licensed entities of the central bank. But they violated guidelines like restricting currency exchange to international travel only, maintaining seven different registers and submitting weekly, monthly and quarterly reports. There was also no contemporaneous audit or reconciliation of daily statements.”
-
Hyderabad police said they would write to the Enforcement Directorate and other central agencies to take up the investigation.The investment scam follows a larger loan app scam, also linked to China, that was uncovered by Telangana police during the coronavirus pandemic.