Indore: 20 held for misleading investors, fraudulent data collection

Indore police Tuesday claimed to have unearthed a major scam involving a city-based investment consultancy firm which allegedly duped investors by promising fixed and high returns, and opened Demat accounts in their name without their knowledge.

As many as 20 persons associated with the firm, Trade India Research, have been arrested since Monday night, a senior police officer said.

What makes the matter more serious is the fact that the firm possesses a database of 25 lakh people, allegedly acquired by creating fake social media profiles, according to the officer.

Senior Superintendent of Police (SSP) Ruchivardhan Mishra told reporters that the arrested persons contacted people through tele-calling. "In violation of the SEBI (Securities and Exchange Board of India) guidelines, these people were allegedly promising high and assured returns to those who were willing to put their money in stock market through the firm," Mishra said.

The investors were asked to deposit funds in the bank accounts of the firm, which then opened Demat accounts by using documents of investors without their knowledge. A Demat account allows investors to hold their shares in electronic form.

The Demat accounts were being operated by Trade India Research and most of the investors were not aware of the stocks in which their money was invested.

The SSP said that a call centre of 300 employees was set up for committing this fraud. Over the last three years, calls were made to more than seven lakh people in various parts of the country through this centre, and about 26,000 people invested their money, she said.

The duped investors hailed from Delhi, Haryana, Punjab and Jammu and Kashmir, the SSP said. "During initial investigation, we found that 21,000 people dissociated themselves from the firm after they suffered losses in the stock market, while 5,000 people are still investing through this firm," Mishra said.

The SSP said the firm possesses a database of 25 lakh people with their mobile phone numbers. "Most of this data has been acquired by creating fake social media profiles. These include Facebook accounts having fake identities with the pictures of attractive girls," she said.

The lid on the fraud was blown after a case was filed by Rajinder Singh, a resident of Jammu and Kashmir, alleging that he was duped of Rs 23.66 lakh. While six of the arrested accused were Tuesday remanded in police custody till July 14, remaining 14 are in judicial custody till July 22.

Search is on for five others who are absconding. All of them have been booked under various sections of the Indian Penal Code (IPC) for cheating, breach of trust, the IT Act, and under a special law to protect interests of investors in Madhya Pradesh.