Manoj Kumar Laha, 47, who runs a paan shop in Odisha’s Bhadrak district, 120 km from the State capital Bhubaneswar, wondered every day how he could make more than ₹15,000 a month. Over the past decade, Laha had lost ₹1.22 lakh in chit funds, but he continued to hope for a windfall that would pull him and his family of six out of poverty. “We have a little land that we farm, but this isn’t enough if I want to educate my children [a girl and a boy] well,” he says.
In April this year, Laha faced another setback when he lost ₹10,000 ‘invested’ in a crypto token, a digital asset. He was told that all he had to do was deposit money through an app, and he would get a monthly income. He was also told he would get additional monetary benefits for recruiting more people to the scheme. Reluctant to risk it, he chatted with peers. “A number of small traders in Banta Chhakm [a road junction near the town headquarters] were talking about it and attending weekly meetings, so I thought I’d take a chance,” he says.
The crypto token was an alleged facade for an illicit multi-level marketing (MLM) Ponzi scheme promoted through Solar Techno Alliance (STA), with a ‘turnover’ exceeding ₹1,000 crore in the two years of its being, say the Odisha police. The group is not registered in India or abroad.
STA allegedly duped over 2 lakh ‘investors’, many of whom were from Bhadrak. The group’s India head, Gurtej Singh Sidhu, 40, was arrested following a chase across the country by the Odisha Economic Offences Wing (EOW), which functions under the Crime Investigation Department (CID) of the State police.
Nirod Kumar Das, the group’s Odisha head, and Ratnakar Palai, who promoted STA on YouTube, were also arrested. Lookout circulars have been issued for three top, or upline, members, though one has escaped to Dubai.
Unlike Laha, and unburdened by the pressures brought on by middle age, Ramachandra Nayak, 27, living in Tihidi village, 30 km away, in the same district, was happy with his income from an iron fabrication unit set up by his father. Then he met an STA member, who had seemingly acquired wealth overnight. Nayak couldn’t resist the temptation to match his acquaintance’s new-found social status.
He invested ₹5,000 in STA and subsequently ₹1 lakh more by taking a personal loan from a bank. Within three months, Nayak received a notice from the bank when he failed to pay his equated monthly instalment (EMI) on time.
The group’s website, Solartechnoalliance.com, which is still operational, though registrations are on hold, describes the STA token as “a decentralized multi-utility token that can be used in every industry services insight decentralized crypto payment gateway”, giving no specifics. It makes no mention of founders or key stakeholders; there are many grammatical and typographical mistakes, and a statement around a turnover exceeding 1 trillion dollars.
For Laha and Nayak, unschooled in sophisticated technical operations, and schooled in Odia, the red flags were impossible to detect. Also, not detailed on the website was the MLM aspect of the scheme. All publicity was by word of mouth, with weekly meetings in Bhadrak and other places. ‘Achievers’, investors who added more people to the network, would be given iPhones and two-wheelers, the EOW found.
“I lost only ₹10,000 in STA,” laments Laha. “But thousands, mainly small traders, had invested lakhs of rupees.” One of Nayak’s friends, a migrant labourer in Tihidi, had returned during the COVID-19 pandemic from Surat, where he worked in a cotton factory. Nayak says like him, he too took a bank loan of ₹1 lakh to try his luck with STA.
It was 2021. People who had lost their jobs and returned to their villages were desperate for money and stability, and STA seemed like a break from a bleak time.
STA India head Gurtej Singh Sidhu (left) with Hungarian national David Gez, the group’s CEO, at a private function. | Photo Credit: Special Arrangement
Money trapped
In July this year, the EOW received a tip-off about a crypto token linked to Das, a businessman from Bhadrak. Bhadrak and Balasore districts have been hubs for chit fund schemes, which have left several economically struggling people bereft. It was suspected that this token served as a facade for a Ponzi scheme. EOW Deputy Superintendent of Police Sasmita Sahoo and an inspector, posing as potential investors, visited Bhadrak and interacted with a suspect masquerading as an NGO worker.
This ‘NGO worker’ explained that individuals needed to download the STA Trust Wallet application (no longer on Google Play). After verifying their credentials, the app would create an account in their name. To begin with, a minimum ‘investment’ of ₹3,000 was required.
Preliminary investigations by the EOW revealed that ‘investors’ were under the impression that STA’s business was thriving due to active supervision by its top leaders, who regularly held Zoom meetings with them. Occasionally, STA India head Sidhu, and CEO David Gez, 33, from Hungary, would attend these meetings to boost the confidence of investors.
Investors were allegedly promised 3-5% of returns daily on their deposits, which had a 20-month lock-in period. The primary objective, says Sahoo, was to bring in new investments through referral links, on which earnings were possible through referral bonuses. “Ponzi schemes operate as pyramid structures, with early joiners mopping up profit at the expense of latecomers, ultimately leading to a collapse as the token’s value decreases,” she says.
The EOW registered a case on July 28 based on its preliminary findings, naming Gez, Sidhu, and Das in the FIR, which cited the Odisha Protection of Interests of Depositors (in Financial Establishments) Amendment Act, 2016.
STA India head Gurtej Singh Sidhu with actor Govinda at a private function of the group. | Photo Credit: Special Arrangement
Countdown and showdown
A meeting of STA at a hotel in Goa on July 31, to be attended by actor Govinda and hundreds of upline members, heightened the EOW’s vigilance. The meeting aimed to launch the group’s blockchain system, enabling it to introduce its own crypto coin, moving away from tokens.
Cryptocurrency transactions occur in two forms: an organisation can trade in crypto coins if it has its own blockchain system, which includes a network of computers. If an entity relies on someone else’s system, it is referred to as a token. Creating a token is relatively easy, and it can be listed on exchanges for trading. Tokens are often considered a precursor to coins.
But the value of the STA token had started to decline, according to the EOW. Investors had begun to withdraw their funds, indicating a sense of panic within various WhatsApp groups formed by STA members. Advice was given within these groups to avoid panicking. By then, the EOW had made inroads into many WhatsApp groups.
Recognising the significance of the July 31 event as an opportunity to locate STA’s top leadership, the EOW team travelled to Goa. It was later revealed that ₹1.5 crore, contributed by upline members, was spent on the event, including for accommodation at luxurious hotels and cruise parties, some part of it being for the star, Govinda.
While the EOW team waited outside the venue, Sidhu got wind of its presence. He fled to Mumbai, then flew to New Delhi, travelled by road to Punjab, and eventually reached Sri Ganganagar in Rajasthan, bordering Punjab. The EOW pursued him and located the hotel he was staying at. Sidhu was arrested at 11.45 a.m. on August 4, with two EOW members and backup from the Rajasthan police. He was produced in a Cuttack court on August 6. Das was arrested the same day and ₹30 crore found transacted through his bank account.
People enter the Economic Offences Wing and Special Task Force office in Bhubaneswar to submit their grievances. | Photo Credit: Biswaranjan Rout
Contact tracing
Sidhu initially got in touch with Gez through Facebook, say EOW officers. They, along with another individual from Amsterdam, came together to initiate the project. “We retrieved interesting data from Sidhu’s phone. He had saved the phone numbers of upline members in names ending with MLM,” says Sahoo.
On investigation, the EOW found that Sidhu hailed from a farmer family, and had not advanced beyond Class IV. His relationship with his parents was strained, and he had been engaged in odd jobs, including tyre and pipe repair work in Faridkot, Punjab, where he grew up. At one point, seeking to improve his financial prospects, Sidhu had ventured into Amway, a network marketing company that sells products from nutritional supplements to frying pans.
His family, including his wife, daughter, 19, and son, 12, enjoyed a prosperous life in Punjab thanks to the earnings from STA. The organisation had established income slabs based on hierarchy within the network. A ‘Pearl’ member received a guaranteed income of $1.5 per day, while the daily remuneration of ‘Kohinoor’ members was between $2,500 and $3,000. Other slabs included ‘Ruby’, ‘Emerald’, ‘Topaz’, ‘Diamond’, ‘Pink Diamond’, ‘Blue Diamond’, and ‘Hope Diamond’, according to the police.
Sidhu has been the only ‘Kohinoor’ member found. He has been photographed arriving at meetings in an open-top car, with people showering flowers on him. He paid small amounts to Gez, who worked as a waiter in a hotel. Investigators believe that Gez’s foreign background helped instil confidence in potential investors.
During the launch of STA, Sidhu utilised a bulk messaging service to send out messages, the EOW found. Those who responded became upline leaders within the group, assuming roles at the apex of the pyramid structure. They took on the responsibility of expanding the network.
Sarbjeet Kumar, who runs a photography and videography shop, at Sarairanjan in Bihar’s Samastipur district. | Photo Credit: Special Arrangement
Speaking out
Following Sidhu’s arrest, victims began reaching out to the EOW, seeking the return of their money. Sarabjeet Kumar, who operates a photography and videography shop covering weddings in Bihar’s Samastipur district, says that in March this year he invested ₹20,000 in STA. “Upline members urged me to invest more to increase my earnings. I took a loan of ₹2.2 lakh in my wife’s name, putting ₹1.2 lakh into the scheme and using the rest for household expenses,” he says.
In the Sarairanjan area, Kumar’s cousin, who runs an agricultural products shop, invested ₹9 lakh. Investigators also discovered that a retired teacher in Bhadrak district had put his entire savings into the scheme.
Initially, the EOW investigators believed that there were around 10,000 victims in Odisha, but that number has now surged to 21,000. Bhadrak and Balasore districts have been the hardest hit. STA’s victims are spread across several States, with Bihar, Rajasthan, West Bengal, and Punjab having a significant number of investors. There are members of the group even in Hungary, Saudi Arabia, and Nepal, according to the investigators.
While recovery of their money looks like a distant reality, the victims hope for justice. “The company, devoid of any substantial business, continuously recruited new members and collected deposits. This alone can serve as sufficient grounds for conviction under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978,” says Jai Narayan Pankaj, a senior IPS officer from the Odisha cadre, who heads the EOW.
The police are aiming for prosecution under Section 420 (cheating) of the Indian Penal Code, and the Information Technology (Amendment) Act, 2008, to ensure stricter penalties.
“Most of the funds collected are in the form of STA tokens. We have reached out to Binance, a crypto trading platform, which is said to hold 21 crore STA crypto tokens. Unfortunately, they have not responded to our request,” says Pankaj, adding that they are exploring alternative channels. “When these funds are converted from tokens to actual currency, it is possible that they won’t be deposited into personal accounts. Instead, mule accounts may be employed. Nearly all cyber frauds utilise mule accounts, avoiding personal ones,” says the EOW chief, who has led teams that have exposed several loan app scams.
Fraudulent funds typically traverse from one mule account to another, ultimately ending up in accounts associated with shell companies. These shell companies collaborate with crypto traders to convert the funds into cryptocurrency. Once cryptocurrencies are transferred to China or other foreign jurisdictions, retrieving the money becomes nearly impossible. Another method for moving fraudulent funds involves fictitious export and import activities, where inflated prices are paid for goods.
“We have alerted all relevant agencies, including the Enforcement Directorate and the Reserve Bank of India, about these shell companies,” says Pankaj. Meanwhile, the EOW team is preparing to question actor Govinda to understand the nature of his endorsement. They also hope to alert celebrities to do due diligence before promoting online schemes.
Alert: If you suspect any cyber fraud, call the 24x7 helpline number at 1930.
