Cash deposits of Rs six crore in a bank account set income tax sleuths on the trail of a Noida-based company and led to the busting of a Rs 3700-crore internet scam, investigators said on Friday.
Uttar Pradesh police, who had launched simultaneous investigations, on Thursday arrested three employees, including the CEO and director of Ablaze Info Solutions Limited that allegedly duped nearly seven lakh people who were promised handsome returns by clicking on web links.
The three accused -- company’s director Anubhav Mittal, CEO Shridhar Prasad and technician Mahesh Dayal – are in jail on a 14-day remand.
Income Tax department officials said the company deposited the large amount in bank after the government’s November 8 announcement recalling 500 and 1000-rupee notes.
The case is likely to bolster the BJP-led government’s argument that the demonetisation exercise was aimed at sucking out illicit cash from the system. It is also likely to give ammunition to the BJP to target the ruling Samajwadi Party ahead of the seven-phase polls in the state. The SP has been critical of the demonetisation move.
“Prime facie it seems the agency was not doing any sort of business. In the name of multi-layered promotions on social media it lured investors and kept rotating the investors’ money,” said Praduman Kumar Singh, a deputy commissioner in the income tax department who is leading the probe.
“Our investigation has just started it will take long time in concluding it.”
Sources said a team on I-T sleuths led by Singh will analyse sheaves of documents and computer hard drive seized from the company’s office Noida’s Sector 63.
The company ran a website that promised would-be subscribers a chance to earn five rupees each time they clicked or liked web links sent to their mobile phones.
The unsuspecting investors each paid thousands of rupees into the company’s bank accounts to join the scheme. Police said some of the investors even got some money which helped bring in more people into the racket.
The Enforcement Directorate – India’s financial crime probe agency -- is also likely to launch a separate probe as the company’s director is believed to have laundered a part of the money he collected from the investors and kept in two accounts in Axis Bank and Canara Bank.
“Post-demonetisation, that is by December-end, he stopped paying to many of his investors, who started lodging complaints. In mid-January, he had more than Rs 650 crore in his two bank accounts. But now he has Rs 524 crore because he laundered money. The ED will probe to verify how exactly he is involved in money laundering,” an official of the UP’s special task force said.
He added that documents including passports seized from the company office indicated Mittal was about to leave for Australia, the official added.
Police received one complaint on January 31 and another on February 1.
Officials said Mittal recently purchased a Rs 7-crore villa in Jaypee Greens, a posh residential address in Greater Noida. He has also spent money in buying luxury cars and real estate property.
Mittal, however, used to stay in his ancestral house at Pilkhuwa in UP’s Hapur district, about 45km from Noida.
IT officials said his annual turnover jumped to of Rs 3,700 crore in 2016-17 from just Rs 26 crore a year earlier.
“Papers show that in 2015-16, Mittal saw a turnover of Rs 48 crore but he showed only Rs 26 crore to I-T department. He has admitted to accepting investments in cash. He claims to provide technical solutions on its website. But in reality there was no business as he was rotating investors funds to dupe them,” said IT official.
Mittal had rolled out a plan under which people could invest money under different slabs of Rs 5,750, Rs11,500, Rs 28,750 and Rs 57,500. For example, a daily return of Rs 625 was promised on an investment of Rs 57,500.
The investors were entitled to a daily return for one year based on the money deposited. They were promised a return of the principal amount at the end of one year.
The company reached out to people with its scheme through social networking websites and other web portals.
All members of the Social Trade scheme were sent 125 links every day that they were supposed to like to stay invested.
Registered members were promised a commission on bringing more members under the scheme.
“The company used to return money for some days and later it would stop paying promising to pay at a later date,” said.
No official from his company was available for comments. A posse of security personnel guarded the office of Ablaze Info Solutions Limited. But the signboard outside had a different name -- 3W Digital Private Limited. A testimony to the company’s allegedly dubious identity.
(With agency inputs)