In a single-bedroom house in the Yelahanka area on the northern fringe of Bengaluru, a 33-year-old MBA graduate and a 36-year-old software engineer set up a nameless private enterprise two years ago. Two men hired as employees lived in the house and were tasked with keeping eight mobile phones active—day and night.
Last month the Bengaluru cyber crime police arrested the MBA graduate, Manoj Sreenivas, the software engineer, Phanindra K, along with four others including the cell phone minders, Sreenivas and Somashekhar.
It was an investigation into a complaint of cheating to the tune of Rs 8.5 lakh filed by a 26-year-old woman—who was lured (on an app initially and later on a WhatsApp group) into making small investments for high returns and was eventually cheated—that led the police to the doorstep of the rented house in Yelahanka.
The investigation has found that the one-bedroom house was a back office for a massive fraud network operating across India, where thousands of people have been cheated after being lured by strangers on social media into investing small amounts for high returns.
Rs 854 crore and 84 bank accounts
The investigation of the network in Bengaluru revealed that Rs 854 crore of funds had moved rapidly through 84 bank accounts in the last two years. When the cyber crime police traced these accounts and froze them in September, only Rs 5 crore remained in them.
When the cyber crime police went a step further and looked for the bank accounts linked to the cyber crime in Bengaluru on the National Cyber Crime Portal (which is linked to the 1930 national helpline), they found there were 5,013 cases across India where the same set of bank accounts had been used by cyber criminals to funnel swindled funds. There were 17 cases from Bengaluru, out of the 487 reported from Karnataka.
The investigation has found that the Rs 854 crore of funds that travelled through the 84 suspect accounts were moved to gaming apps, cryptocurrencies like USDT, online casinos and payment gateways to be encashed by the main operators of the fraud who are suspected to based in Dubai and whom the Bengaluru layer of operators never met physically.
The police suspect the Dubai-based operators who set up the network by communicating only through social media to the Bengaluru layer are possibly linked to Chinese operatives. The Dubai-based operators are yet to be apprehended by the police.
Similar case in Hyderabad
A similar case unravelled in Hyderabad in July this year when the cyber crime police said that 15,000 people had been cheated out of Rs 712 crore through 113 bank accounts created for fake companies by a group of local operatives found to be linked to Dubai-based operators having China links.
The Hyderabad investigation also found a terror-funding link where some of the fraudulently acquired funds were allegedly diverted to crypto wallets linked to the Lebanese Hezbollah group.
“Accounts are opened in Indian banks and run in an organised manner by fraudsters based in India who are in touch with Dubai-based operators who are in touch with Chinese operators. IP addresses through which these Indian bank accounts are being operated are in Dubai,” Hyderabad police commissioner C V Anand stated then.
Clones of OTP sent to Dubai numbers
“In the Bengaluru case, no link to China operators or any terror financing has been found. Investigations are still underway to find the key operatives,” Bengaluru police commissioner B Dayananda said on September 30.
“The Indian operators received a commission of 1-3 per cent for every transaction they facilitated for the fraud network. The Indian operators opened local bank accounts without going through the KYC process for transferring funds in the first level,” a Bengaluru cyber crime official, Haziresh Tilledar, said.
A crucial finding in the Bengaluru case is that the local operatives were asked by the Dubai-based operatives to use an app that would send clones of bank OTPs (sent to the local phone numbers linked to the suspect bank accounts) to the Dubai operators as well—to make it seem that the bank accounts were being operated locally.
The police suspect that the motive behind keeping eight mobile phones constantly active in the rented house in north Bengaluru was to facilitate fund transfers between the suspect bank accounts to mule accounts and to siphon the funds out through crypto currency, gaming apps and online casinos.
“The online casinos and gaming apps seem to be a key source of money laundering as there are no records of winnings. One of the main accused was planning on starting his own gaming app to launder his own earnings from the fraud,” a Bengaluru police official said.
The laundered money goes through international banks and is shown as investments in various foreign companies, according to the police.
The Bengaluru investigation has found that the local operatives invested as much as Rs 1.37 crore of funds earned from the racket on software, a casino, a resort and a garment factory.
According to police officials, the gangs lure victims through WhatsApp and Telegram. “Initially, they are asked to invest small amounts ranging from Rs 1,000 to 10,000 on the pretext that they would earn Rs 1,000 to 5,000 per day as profit,” a police official said.
In the Bengaluru cyber crime case, registered on April 28, the 26-year-old complainant told the police her friend had come across an app called The Winegroup, using which she earned some returns on small investments.
“We were made a part of a WhatsApp group called ‘Small Group of TWG2006’, which had six group admins (with different phone numbers). I asked some of my friends to join the group as well. They deposited small amounts of returns to my bank account. I started to transfer more funds (to 29 UPI IDs) amounting to Rs 8.5 lakh. The group admins later refused to pay the principal amounts or the returns. They did not respond to messages,” the victim stated.
Key accused arrested
The investigation received an impetus when the cyber crime police found a bank employee who had helped open one of the fraudulent bank accounts in the name of a fake company, Subbu Enterprises in Karnataka, where the funds from the victims were transferred.
When the police tracked down Vasanth Kumar, the suspect who had opened the bank account, they found that he and an associate, Chakradhar, were primarily entrusted by a network to open bank accounts in the name of fake companies to gather funds swindled from the victims.
“The probe revealed that the funds (Rs 8.5 lakh) that were swindled from the victims in the Bengaluru case were first transferred to an account of a fake firm called Divya Enterprises in Tamil Nadu and then to the account of Subbu Enterprises in Bengaluru,” a police source said
“When the person in whose name the account was opened for the firm Subbu Enterprises was questioned, he reported that he was not linked to the bank account and that his credentials may have been misused by A6 (Vasanth Kumar),” the police said.
As many as 45 bank accounts linked to the two fake firms—Subbu Enterprises and Divya Enterprises—have been unearthed by the cyber crime police. “There were no employees or offices for these companies. They are shell companies,” a police official said.
Most victims from Telangana
Most of the cases linked to the 84 fraudulent bank accounts discovered by the Bengaluru cyber crime police on the National Cyber Crime Portal are from Telangana, where 719 cases are reported, followed by Gujarat (642) and UP (505).
“This is probably the first time that the bank accounts involved in an online fraud have been tracked on the NCRP records to ascertain the extent of the spread of a cyber crime operated by a gang in the country,” a cyber crime official said.
The police said there might be local gangs in every region in the country who may all be working for operatives who are based abroad. “We are writing to the Enforcement Directorate to conduct further investigations,” an official said.
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In bail hearings, the two key accused persons—MBA graduate Manoj Sreenivas and the bank account creator Vasanth Kumar—argued that they had been falsely implicated by the police. They also claimed that the police complaint was filed by their friends after the former refused to pay huge amounts of money demanded by them.
“The complainant voluntarily invested the amount, the petitioners have not approached her to deposit,” the accused argued.
A local Bengaluru court granted bail in one of the cases against the local operatives on September 30. They are still being held, however, in other cases registered in Bengaluru over the last two years. The Karnataka High Court has granted an interim stay on investigations in the cyber crime, for which the six local people are arrested.
