Rs 903 Crore Investment Fraud Spanning China, Taiwan Detected In Hyderabad

The fraud used online investment apps to lure investors. The money was put into virtual accounts and passed through authorised money change and forex firms, to be moved out of the country illegally, exploiting gaps in the regulatory framework.

"We suspect there would be lakhs of investors across the country who may have been defrauded. Just in Delhi, Rs 10,000 crore fraud may have happened... The amount could run into thousands of crores. What we have found is evidence of Rs 903 crore moved out illegally,'' Hyderabad police commissioner CV Anand told NDTV.

The two main accused -- arrested Chinese national Li Zhongjun and Taiwanese national Chu Chun-Yu -- are suspected to have come to India in 2019-20 to recruit their operatives but returned to China when the pandemic broke out. Once the fraud restarted, they shared all details with their bosses in China and Taiwan.

The complaint in the case was filed by a Hyderabad resident in July. He said he was cheated after investing Rs 1.6 lakh in an investment app called LOXAM. The police found his money had gone to an account -- Xindai Technologies Pvt Ltd -- in IndusInd Bank.

The man who opened the Xindai account was Virender Singh, who was arrested from Pune. He claimed that he had opened the account on the orders of a Chinese national whom he identified as Jack, for a 1.2 lakh commission, the police said.

Another account, in the name of Betench Networks Pvt Ltd, was found linked to Xindai. It was  opened by Delhi resident Sanjay Kumar, on the instruction of the Chinese national. Altogether, he opened 15 accounts -- each for a Rs 1.2 lakh commission -- and shared their details with Taiwanese national Chu Chun-Yu.

From Xindai Technologies, money was transferred to 38 bank accounts and finally landed with authorised money change firms Ranjan Money Corp and KDS Forex Pvt Ltd, owned by Naveen Kaushik. He sent the money to forex exchanges, converted rupees to dollars and handed them to two others -- Sahil and Sunny -- who sent the money abroad through hawala.

In seven months, Ranjan Money Corp conducted transactions of upto Rs 441 crore. KDS Forex conducted transactions involving Rs 462 crore in 38 days, the police said. "These authorised money change firms would get 0.2 per cent of the transaction as commission,'' Mr Anand said.

Accusing banks and regulatory agencies of negligence, Mr Anand said: "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 is not done."

The Hyderabad police said they would write to the Enforcement Directorate and other Central agencies to take the investigation forward. The investment fraud comes on the heels of a massive the loan app fraud which again had a Chinese connection. It was detected by the Telangana police during the Covid pandemic.