ED Arrests Four in Bengaluru Over Rs 25 Crore Cyber Investment Scam

The Directorate of Enforcement (ED) has recently arrested four individuals in Bengaluru in connection with a cyber investment scam. Shashi Kumar M (25 years old), Sachin M (26 years old), and Kiran S K (25 years old) were arrested on August 15, 2024, while Charan Raj C (26 years old) was arrested on August 21, 2024. The accused were involved in creating companies and opening bank accounts through which funds obtained from the cyber scam were laundered. The Hon’ble Special Court in Bengaluru has remanded these individuals to ED custody for seven days each.

So far, 13 searches have been conducted under Section 17 of the Prevention of Money Laundering Act (PMLA), 2002, leading to the seizure of incriminating materials, including mobile phones and digital devices. The ED’s investigation has traced over Rs 25 crore in proceeds from this cyber investment scam.

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Summary of Predicate Offense

The PMLA investigation is based on multiple FIRs filed by state police across the country. Some examples of these cases include:

a) Faridabad FIR: A victim in Faridabad was defrauded of Rs 7.59 crore by scammers who lured her into investing through fake apps. After clicking on a stock market investment link on Facebook, she was added to a WhatsApp group named ICICI IR Team (57) and later to another group called C6RAM Investment Academy. She was instructed to install an app called IC ORGAN MAX and transfer Rs. 61 lakh to a bank account provided by the app’s customer care. Subsequently, she was directed to install another app, Techstars.shop, and transfer additional funds, totaling Rs. 7.59 crore. An FIR was filed under sections 420 and 120-B of IPC on March 29, 2024.

b) Noida FIR: A businessman in Noida was defrauded of Rs 9.09 crore using a similar method. He was added to a WhatsApp group named GFSL Securities official Stock C 80 and was instructed to download an app and transfer funds to various accounts provided by the app’s customer care.

c) Bathinda FIR: A doctor in Bathinda was cheated of Rs. 5.93 crore by scammers who convinced him to download a fake app named GFSL Securities and invest in the stock market.

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Modus Operandi : 

The investigation has revealed the following steps in the scam:

a) Luring Victims: Victims are initially attracted via social media platforms with promises of high returns on investments and special IPO quotas.

b) Fake Groups: Once interested, victims are added to WhatsApp or Telegram groups with fake members who share fabricated success stories to build trust. These groups often mimic the names of well-known financial institutions.

c) Fake Apps: Victims are then directed to install fraudulent apps that resemble legitimate ones. The apps use the names of real stocks and companies to appear authentic.

d) Fake Investments: Victims are persuaded to invest in fake stocks and IPOs and transfer their money to bank accounts of shell companies.

e) Siphoning Funds: Initially, victims may see fictitious returns on their investments, which encourages them to invest more. Eventually, they find themselves unable to withdraw their funds. Scammers then demand additional payments for taxes or fees before disappearing, leaving victims with no recourse.