ED Arrests Four Individuals in Connection with Cyber Investment Scams

(Judicial Quest News Network)

Bengaluru 02, September, 2024

The Directorate of Enforcement (ED) has arrested four individuals in Bengaluru in connection with a significant cyber investment scam. The arrests include Shashi Kumar M (25 years old) and Sachin M (26 years old), who were apprehended on August 15, 2024, and Kiran S.K. (25 years old), who was arrested on August 15, 2024. Additionally, Charan Raj C (26 years old) was arrested on August 21, 2024. The accused are implicated in defrauding individuals by inducing them to invest in stock markets through fraudulent applications.

The Hon’ble Special Court in Bengaluru has granted the ED custody of these four individuals for seven days each. To date, the ED has conducted 13 searches under Section 17 of the Prevention of Money Laundering Act (PMLA), 2002, at various locations. These searches have resulted in the seizure of incriminating materials, including mobile phones and digital devices. The ongoing investigation has traced proceeds of crime exceeding Rs. 25 Crore generated from this cyber investment scam.

Details of the Predicate Offense

The PMLA investigation stems from multiple FIRs registered by state police across the country. Highlights from some of these FIRs include:

1. Faridabad FIR: A victim in Faridabad was defrauded of Rs. 7.59 Crore by scammers who induced her to invest in stocks through fake apps. She was lured via a Facebook link, added to a WhatsApp group named ICICI IR Team (57), and subsequently instructed to use fraudulent apps such as IC ORGAN MAX and Techstars.shop. The scam involved transferring money to various bank accounts provided by the scammers.
2. Noida FIR: In Noida, a businessman lost Rs. 9.09 Crore to scammers who used a similar modus operandi. He was added to a WhatsApp group named GFSL Securities Official Stock C 80 and directed to download a fraudulent app, leading to substantial financial loss.
3. Bathinda FIR: A doctor in Bathinda was defrauded of Rs. 5.93 Crore. Scammers induced him to download a fake app named GFSL Securities through a Facebook link and transfer funds under the guise of stock market investments.

Modus Operandi of the Investment Cyberfraud

The PMLA investigation has revealed the following tactics employed by the scammers:

1. Luring Victims: Scammers attract victims through social media platforms with false promises of high returns on investments and exclusive IPOs.
2. Fake Groups: Victims are added to WhatsApp or Telegram groups with fake members who post fabricated success stories to establish credibility. These groups often have names similar to well-known financial institutions.
3. Fraudulent Apps: Victims are convinced to install fake investment apps using links or APK files provided by scammers. The apps mimic real stock market platforms but are designed to deceive.
4. Fake Investments: Victims are encouraged to invest in fake stocks and IPOs. Initially, they may see fictitious returns, which eventually vanish when they attempt to withdraw their funds. Scammers demand additional fees, taxes, or brokerage charges before disappearing.
5. Siphoning Funds: To build trust, scammers may show fabricated returns to encourage further investment. Once substantial funds are deposited, victims find themselves unable to withdraw their money, leading to further demands for payments.

Behind the Scenes: Cybercrime Operations

1. SIM Card Procurement: Scammers acquire SIM cards through black markets and use them to create WhatsApp accounts and link them with shell company bank accounts.
2. Creation of Shell Companies: Hundreds of shell companies are set up using coworking space addresses. Scammers submit forged documents to open these companies and use them for laundering the proceeds of crime. Funds are moved through a network of mule accounts before being converted into cryptocurrency.
3. Cryptocurrency Conversion: The proceeds are converted into cryptocurrency to obscure the funds’ origins and facilitate their transfer abroad.
4. Human Trafficking: Some victims, lured by fake job offers, are trafficked to regions like the Golden Triangle (Thailand, Laos, Myanmar), where they are coerced into participating in cyber fraud operations.

The investigation is ongoing, and further developments are expected as the ED continues to uncover the extent of the scam and its network.