Hyderabad police have cracked a 903 crore Chinese investment fraud case involving India, China, Taiwan, Cambodia and the UAE. Ten people – including a Chinese and a Taiwanese – have been arrested.
Here’s your 10-point cheat sheet in this big story:
- Fraud uses online investment apps to lure investors. The money was deposited into virtual accounts and transferred through authorized currency exchange and foreign exchange companies, taking advantage of loopholes in the regulatory framework to move illegally out of the country.
- “We suspect that thousands of investors across the country may have been defrauded. In Delhi alone, there may have been a fraud of Rs 10,000 crore … the amount could be in the hundreds of crores. The evidence we found was Rs 903 crore Hyderabad Police Chief CV Anand told NDTV.
- The two main defendants – arrested Chinese national Li Zhongjun and Taiwanese citizen Zhu Chunyu – are suspected of having come to India in 2019-20 to recruit their agents, but returned to China when the pandemic broke out. Once the fraud resumed, they shared all the details with their bosses in mainland China and Taiwan.
- The complaint in the case was filed in July by a Hyderabad resident. He said he was scammed after investing Rs 1.6 lakh on an investment app called LOXAM. Police found that his money had entered an account at RHB Bank, New Generation Technology Sdn Bhd.
- The person who opened the new generation account was Virender Singh, who was arrested in Pune. He claimed he opened the account on the order of a Chinese man he identified as Jack for a $120,000 commission, police said.
- Another account named Betench Networks Pvt Ltd was found to be linked to the new generation. It was opened by Delhi resident Sanjay Kumar at the direction of a Chinese national. He opened a total of 15 accounts – each charging a commission of Rs 120,000 – and shared their details with Taiwanese national Chu Chun-Yu.
- Funds from the new generation of technology were transferred to 38 bank accounts, eventually reaching Ranjan Money Corp and KDS Forex Pvt Ltd, an authorized currency exchange company owned by Naveen Kaushik. He wired the money to a foreign exchange exchange, converted rupees into dollars, and handed it to two other men – Sahir and Sonny – who sent the money abroad via hawala.
- In seven months, Ranjan Money Corp made up to Rs 441 crore in transactions. Police said KDS Forex conducted transactions involving Rs 462 crore within 38 days. “These authorised currency exchange companies will receive 0.2 per cent of the transaction as a commission,” Mr Anand said.
- Accusing banks and regulators of negligence, Mr Anand said: “Money exchange and foreign exchange companies are legal entities authorised by the Reserve Bank. But they have breached guidelines such as foreign exchange for foreign travel only, maintaining seven different Register, weekly submission, monthly and quarterly reports. Also, there is no simultaneous audit and daily reconciliation of statements.
- Hyderabad police said they would write to the Enforcement Directorate and other central agencies to move forward with the investigation. The investment fraud follows a massive loan app fraud, again linked to China. It was discovered by Telangana police during the Covid pandemic.