In Assam, a stock market ‘fraudster’ goes on the run – and trading scam dominoes begin to fall

According to Assam Director General of Police G P Singh, 59 people in 28 cases across the state have been arrested in a crackdown against trading frauds, and the state CID has taken charge of the matter. Some are as young as 22, operating from different towns and cities in Assam, while some are local “finfluencers” or financial influencers. Fourteen SITs have also been constituted by the state CID to investigate these cases.

Among people who had invested through Barman, alarm bells started ringing around July-end, when their “monthly returns” did not come on time.

An investor from Kolkata said he first put his faith – and money – in DB Stock Broking in October last year, and gained confidence through word-of-mouth recommendations by people he knew.

“People told me he had proven to be reliable. I especially gained confidence because they had received payments even during the height of the Covid pandemic. He said he was investing in stocks, debt, IPOs, etc. He was promising returns as high as 7% monthly, 24% quarterly, 50-54% half yearly and 100% yearly. So I invested with him. After initially receiving the promised returns, I invested some more in March. At the end of July, we were confused because the payment did not come in time. We followed up with him and he told us the issue would be resolved soon and that he had been unable to pay us because of a shortage of employees. We waited and then saw on local media that he had shut down his office and fled,” the investor told The Indian Express.

The web unravels

Since then, the investors, who have put money ranging from a few thousands to several lakhs, have not received any further information. They first protested in front of his locked office and then his residence in Guwahati’s Jalukbari. On August 22, they received another shock. Barman had told them he was partnered with a stockbroker, Angel One. Responding to news reports about his disappearance, Angel One issued a statement that DB Stock Broking was not an “authorised person” registered with them, and that Barman was registered in his individual capacity since 2019, and that the trading volume mapped to him was “miniscule”.

The investors then went on to file complaints with the police.

While police said the extent of his financial dealings are still under investigation, they have received close to 30 complaints from different people. Even as a lookout circular was issued against him, people elsewhere in the state began to have doubts about the financial dealings that they had entered into.

Around 480 km away from Guwahati, suspicions began to swirl around Bishal Phukan, a 22-year-old who claimed to be a stock trader and investor, and founder of different ventures including a production company and, most recently, a pharmaceutical company six months ago.

Since 2021, his social media has been splashed with images of an affluent lifestyle – with frequent car purchases to international vacations. He had been taking money from different people in and around Dibrugarh promising high returns – as much as 30% – on investments made with their money through his demat account in 60 days.

As the local media began raising questions about the nature of his dealings, he even released a statement on his social media on August 24 claiming that he had “understood the market” after he began trading in 2020 – he would have been 18 at that time – and that he had committed “no offence” by taking people’s money through a “valid banking transaction” on the basis of a “valid agreement”. Last week, Dibrugarh police lodged a suo motu FIR and arrested him.

ASP Dibrugarh Sizal Agarwal said his dealings were a “multiple crore scam”, and that the initial investigation had found that he had taken around Rs 60 crore from investors not just in Assam but as far as Odisha, Chhattisgarh and Kerala.

Phukan’s case received exceptional publicity, especially because the people the police have summoned in connection with the case is choreographer and social media influencer Sumi Bora, whose lavish wedding in a five-star hotel in Udaipur last year had made news.

ASP Agarwal said that during interrogation, Phukan claimed he “considers her a sister”, and had “gifted” the wedding to her by spending Rs 3 crore on it. The case has since been transferred to the state CID and will be investigated by a SIT constituted by it.

Phukan’s case and the publicity it received truly opened the floodgates, with police launching a crackdown against such cases and people coming forward with complaints in different parts of the state, leading to the arrest of a total of 59 such people within the span of a week.

For instance, in Sonitpur district, at least 11 people have been arrested by the police in four different cases for individually running such unregulated operations.

“These are all for illegal trading activities. In all these cases, the people had been waiting for money promised to them. When they started hearing about other cases and finding about what others are experiencing, they also got aware. Around 10 people have come forward with complaints in Sonitpur,” said SP Barun Purkayastha.

‘Bull market phenomenon’

Indicating the magnitude of the fraud, Chief Minister Himanta Biswa Sarma said the state government has taken the Enforcement Directorate and Income Tax Department “into confidence”. “The Assam police will be investigating these cases but we have also asked the ED for assistance. The big cases will be investigated by the CID, the smaller ones by the district police, and overall in the whole matter, we have taken the Income Tax department and the ED into confidence. And if it emerges later that the CBI should get involved in any of the cases, we’ll hand it over to the CBI,” he said.

Explaining the modus operandi across these cases, a senior police officer who is part of the investigations said, “After Covid, the share market has performed exceedingly well, so some people claim to be experts and claim to have made good returns. Some people, say their friends, give them money to invest, which also helps them avoid taxes which they would incur by investing from their own accounts. And as a guarantee, they sign loan documents.”

He said that in most cases, the individuals initially pay the amount committed to win confidence.

“It spreads by word of mouth and people start to invest. The money deposited gets rotated around the investors, but who has seen whether that amount is actually being generated? You get a big corpus, so you can either use that to trade if you’re actually an expert or you can use it in any money laundering scheme. Or you can do chain or multi-level marketing so people are incentivised to draw more people in. This has always been happening; now it’s happening in the name of the share market. One day, when your withdrawal becomes more than what’s coming in, you panic,” said the officer.

He said that building an image of luxury and affluence through social media is an inherent part of the exercise. “Unless they sell this idea, no one will invest money. You have to show people how successful you are,” he said.

Perhaps the most luxurious image had been built by Sapnanil Das, a 26-year-old trader from Sivasagar town, whose social media boasts a host of luxury vehicles bought by him – most recently a Ducati motorbike and a Land Rover Defender.

His arrest last week from Guwahati drew a host of people defending him. Das, who claimed to have created a fortune through trading, would take classes about the market and trading through a forum he created called Trading for a Living.

“I teach people of Assam about the financial market, the goal is to build a better community of trading and investing and to prove that trading is not gambling. This community will help everyone, so that we can grow together,” says its website. On August 29, while panic about trading scams was spreading, he abruptly announced his “retirement”.