How Tarnaka resident's complaint blew the lid of Rs 903 Cr Chinese investment scam; 10 arrested

The Hyderabad Cyber Crime Police have arrested 10 accused including a Chinese and Taiwan national in a Chinese investment fraud case of worth Rs 903 crores.

It took the cops two months to get to the kingpin, Commissioner of police C.V Anand said. "This case is very complicated and perhaps the first of its kind in the country. It puts the country's economic security in danger," he said.

The ten accused who have been arrested are Sahil Bajaj, Sunny aka Pankaj, Virender Singh, Sanjay Yadav, Navneeth Kaushik, Mohammad Parvez, Syed Sultan, Mirza Nadeem Baig and Chinese national Lec @Li Zhongjun and Chu Chun-yu (Taiwan national)

How did the case begin?

The investigation began when a resident from Tarnaka registered a complaint with the Cyber Crime Police stating that he was cheated after investing 1.6 lakh rupees in an investment app called 'LOXAM'. On investigation, it is found that the money of the complainant was deposited in the bank account of IndusInd Bank in the name of Xindai Technologies Pvt Ltd.

The trail of transfers

The Xindai Bank Account was opened by one of the accused- Virender Singh who was arrested in Pune. Virender revealed that he opened a bank account in the name of Xindai Technologies Pvt Ltd on the orders of a Chinese National named Jack and gave the internet banking username and password of the bank account to Jack.

Upon further investigation, the Hyderabad police found another account- Betench Networks Pvt Ltd that shares the same phone number that was opened by another accused- Sanjay Kumar.

Sanjay opened the account upon the instructions of another accused Lec@ Li Zhounjau. Let further forwarded the account credentials to Pei and Huan Zhuan in China. "It is to be noted that both Virender and Sanjay know each other and have spent nearly 2 years in China where they met Jack, Lec and other possible accused persons," the CP said.

Sanjay also opened 15 virtual bank accounts and sent the credentials to accused Chun Chun-yu, a Taiwan national temporarily residing in Mumbai and was arrested yesterday.

Chu Chun-yu sends account details, User ID, password and SIM cards to other countries. The Police found that Sanjay Yadav and Virender Rathor received Rs.1.2 lakhs commission per account which was arranged by Lec. Chu Chun-Yu was also found to be travelling to Cambodia often. The police suspect that the main operations are being carried out there.

"The Commission for those who create accounts and send the details is 0.2% of the money deposited into the account," C V Anand explained.

The money was being taken from multiple apps in the name of investment, foreign money exchange etc. Once the money is deposited, it is moved to 38 other bank accounts created by multiple people across various countries.

Pei, Jack and Huan Zhuan are yet to be arrested.

Three accused from Hyd

Similar to Sanjay and Virender, two people from Hyderabad who created bank accounts for the sake of commission have also been identified. The two persons are Syed Sultan, and Mirza Nadeem Baig. They were instructed by another accused, Mohammed Parvez from Hyderabad, to create the account.

Parvez in turn gave those bank accounts to another person named Imran who resides in Dubai. Imran along with others used these bank accounts for Investment Fraud.

What after the transfers?

After multiple transfers, the money is directed to Ranjan Money Corp and KDS Forex Pvt Ltd. One of the accused Navneet Kaushik, who owns these accounts, sends these accounts for Forex exchanges run in the name of International Tours and Travels. Navneet sends the dollars to Sahil and Sunny. The Cyber Crime Police further found that Sahil and Sunny joined hands with other fraudsters and transferred the above money abroad through hawala.

"Ranjan Corp has laundered 441 crores in the last seven months and KDS has laundered 462 crores in the last 36 days," CV Anand said. "The amount is diverted systematically through multiple bank accounts. None of these transactions seems to have been monitored by the banks or any other financial associations," he added.

So far Rs. 1.91 crores have been frozen in various bank accounts in this case.

RBI rules for forex

The Rs 903 crores were converted into dollars without any proof of foreign travel which is mandatory as per RBI rules. The money changers and Forex Exchanges are licensed by RBI. However, they have repeatedly flouted the guidelines laid down by RBI regarding money-changing activities.

"As per the RBI, seven types of registers need to be maintained by the Ranjan and KDS. Not even a single register has been maintained. No statements have been submitted or an audit conducted. Furthermore, all KYC norms have been violated," C V Anand explained.

"It is also pertinent to note that both Ranjan and KDS had one client (as per their books) and no one seemed to notice or doubt how many crores of money exchange one client had done," he said. He further stated that the activities of authorized money lenders need to be monetised and strengthened.

He said that there are multiple apps involved in the case which are yet to be identified.

The police suspect that nearly 10,000 crores have been laundered and converted like this. Further investigation is ongoing.

The CP further stated that the Enforcement Directorate, CBI and other necessary departments will be informed about the international racket for further investigation.