A Special Task Force (STF) of Uttar Pradesh police on Thursday busted an alleged online trading scam worth over ₹3,700 crore in which around 6.5 lakh people were cheated on the pretext of getting money for clicking on web pages.
The task force has arrested three persons so far and sealed the bank accounts of the company -- Ablaze Info Solutions Limited, located in Noida Sector-63 -- which had a total balance of ₹500 crore.
“We have arrested the company’s owner, Abhinav Mittal, its COO Sridhar Prasad and technical head Mahesh Daya. Mittal has a B.tech degree and Sridhar is an MBA degree holder,” said Special Task Force SSP Amit Pathak.
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“The company has accounts in several banks and some bank employees are also under scanner. We will soon initiate action against these officials. We have informing ED, SEBI and RBI about the fraud," Mr. Pathak added.
Tall claims
The victims of the fraud said that the company’s owner portrayed himself as the “Mark Zuckerberg” (Facebook owner) of the country. He had launched a social networking site to lure the customers. The victims said that the company even claimed to be starting its own private bank to deal with the customers as the size of its transactions was growing rapidly.
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‘Earn per click’ scheme
According to the SSP, the company has so far done the business of over ₹3,700 crore. “We have written a letter to the authorities concerned to stop transaction of ₹524 crore of the company. We wanted to continue our probe for another week, but the information of our investigation reached the company top brass and they had started to transfer money to other accounts,” Mr. Pathak said.
The company made only ₹1 lakh in 2011, but between 2012 and 2016, its business grew from ₹1.5 lakh to ₹3700 crore. Preliminary investigation revealed that Ablaze Info duped around 6.5 lakh people with its ‘earn ₹5 per click’ scheme.
“The accused started a web portal — socialtrade.biz — where an investor had to pay an amount, from ₹5,750 to ₹57,500, in the company's account to become a member. Each member was promised ₹5 per click on links provided by the company," said a senior police officer.
Changing identity
The accused constantly changed their company’s name to evade arrest. Some of the companies they floated to dupe people are socialtrade.biz , freehub.com , intmaart.com , frenzzup.com , 3W.com. The police said they received a complaint against the company that it was cheating people under ponzi scheme.
“The criminals used public money to buy properties and luxury cars. They regularly partied at five-star hotels in the name of promotional activities. They had also planned to visit Australia with their important customers, who brought huge business," Mr Pathak said.
Educated investors
Not only semi-literate people but also highly educated ones, invested their hard-earned money in the company. The victims of the fraud included many IT, media professionals and doctors among others. To win the confidence of the customers, the company used to ask for online funds transfer and paid the money back into their account online.
According to the police, the company initially stopped payments to the customers, but when it noticed that returning some money was helping them lure more people, it started paying back some of them.
“The company avoided dealing in cash, so I confidently invested my money. The company had big plans, which sounded possible. The police action has been a shock for us. Like me, lakhs of other people invested their money in the company,” said Rahul Kumar, a Noida-based professional.
The fraud plan
The police said that the company asked people to buy their package after which they would get online add links in their email accounts. For visiting these add links, the company used to give handsome money to the customers. The company used to claim that it gets outsourced work of publicity of products from other companies and it distributes the work and profit among its customers. The company had also offered incentives to the existing customers on making more clients based on multi-level marketing.
The police said that the company used to make adds and share them with the customers, who believed that they were genuine promotion material outsourced by other companies.