Rs 854 crore, 84 bank accounts: How one-bedroom house in Bengaluru became cyber crime hub

It was a complaint of cheating to the tune of Rs 8.5 lakh filed by a 26-year-old woman, who was lured – first on an app and later on a WhatsApp group – to make small investments for high returns, that led the cyber crime police to their doorstep.

The probe has found that the house taken on rent by Sreenivas and Phanindra was allegedly a back office for a massive fraud network operating across India, where thousands of people have been cheated after being lured on social media to invest small amounts for high returns.

The investigations by the cyber crime police into the network in Bengaluru has revealed that as much as Rs 854 crore moved rapidly through 84 bank accounts in the last two years. When the police traced these accounts and froze them in September, only Rs 5 crore remained.

When the cyber crime police went a step further and looked on the National Cyber Crime Portal, they found 5,013 cases across India where the same set of accounts had been used by cyber criminals. There were 17 cases from Bengaluru itself out of 487 reported from Karnataka. Police also found that 719 cases had been reported from Telangana, 642 from Gujarat, and 505 from Uttar Pradesh.

Investigations have found that Rs 854 crore that travelled through the 84 accounts was moved to gaming apps, cryptocurrency like USDT, online casinos and payment gateways, to be encashed by the fraud’s main operators, who are suspected to based in Dubai and whom the Bengaluru layer of operators never met physically.

Money laundering route in Bengaluru cyber fraud

Police are probing whether the Dubai-based operators, who set up the network by communicating only through social media to the Bengaluru layer, are linked to Chinese operatives.

A similar case had unravelled in July in Hyderabad, where the cyber crime police revealed that 15,000 victims had been cheated of Rs 712 crore through 113 bank accounts created for fake companies. In that case, local operatives were found to be linked to Dubai-based operators with China links. The Hyderabad probe also found a terror funding link, where some of the funds were allegedly diverted to crypto wallets linked to the Hezbollah group.

“In the Bengaluru case, no links 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.

“Indian operators received a commission of one to three percent on every transaction they facilitated. They opened local bank accounts without going through the KYC process,” Bengaluru cyber crime official Haziresh Tilledar said.

Local operatives were asked to use an app that would send clones of bank OTPs (sent to the local phone numbers linked to fake bank accounts) to the Dubai operators as well – to make it seem like the fake accounts were being operated locally.

Police suspect the motive behind keeping eight mobile phones constantly active was to facilitate fund transfers between fake bank accounts and mule accounts, and to siphon the money 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,” Bengaluru police stated.

The probe 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 would 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 case registered in Bengaluru on April 28, the 26-year-old victim told the police that her friend had come across an app called ‘The Winegroup’, where she earned some returns on small investments. The victim, too, decided to download the app.

“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 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 amount or the returns. They did not respond to messages,” the victim stated.

Investigation by the Bengaluru police 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 in Karnataka, where the funds were transferred.

When the police tracked down the suspect, Vasanth Kumar, who had opened the bank account, they found that he along with an associate Chakradhar were allegedly entrusted by a network to open accounts in the name of fake companies.

“The probe revealed that the funds swindled from the victims in the Bengaluru case were first transferred to an account of a fake firm in Tamil Nadu and then to the account of another firm in Karnataka,” police sources said.

“When the person in whose name the account was opened was questioned, he reported that he was not linked to the bank account and that his credentials may have been misused,” the Bengaluru police said.

As many as 45 bank accounts linked to the two fake firms in Karnataka and Tamil Nadu have been unearthed by the police. “There were no employees or offices for these companies. They are shell companies,” police said.

“This is probably the first time bank accounts involved in an online fraud have been tracked on NCRP records to ascertain the extent of a cyber crime,” an official said.

“There may be similar local gangs in other parts of the country. We are writing to the Directorate of Enforcement to conduct further investigations,” police said.

In bail hearings following their arrest on September 9, Sreenivas and Kumar argued that they had been falsely implicated by the police. “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 on September 30, but they are still being held in other cases registered in Bengaluru over the last two years.

The Karnataka high court has also granted an interim stay on investigations in the cyber crime in which the six men were arrested, but there are 16 other cases against them.