A saga of shell companies, instant loans, blackmail and suicides

Updated on Sep 15, 2022 01:29 PM IST

Investigators told HT that through a network of companies with Chinese links, Luo set up call centres that were used to extort money from those who took loans through instant loan disbursal apps.

Gurugram, India - Sept. 12, 2022: Police personnel sit at the reception of "Jilian Consultants India Pvt Ltd" office at Unit No. 408, 4th Floor, Time Tower, MG road in Gurugram, India, on Monday, September 12, 2022. (Photo by Vipin Kumar/ Hindustan Times) (Story by Leena Dhankhar) (Hindustan Times) PREMIUM
Gurugram, India - Sept. 12, 2022: Police personnel sit at the reception of "Jilian Consultants India Pvt Ltd" office at Unit No. 408, 4th Floor, Time Tower, MG road in Gurugram, India, on Monday, September 12, 2022. (Photo by Vipin Kumar/ Hindustan Times) (Story by Leena Dhankhar) (Hindustan Times)
ByRajeev Jayaswal, Leena Dhankhar and Hemani Bhandari, New Delhi/gurugram/mumbai

The office of Jilian Consultants India Pvt Ltd, in a mall off Gurugram’s prime MG Road bore a sombre look on Monday morning. Two policemen from Gurugram Police stood guard outside it, even as news trickled in that its director Dortse Luo was arrested by Bihar Police and Serious Frauds Investigation Office (SFIO) investigators from Gaya in Bihar for allegedly running a scam which involved a network of shell companies effectively owned by Chinese companies and multiple loan apps built to defraud and harass people who sought to avail instant online loans.

The Gurugram premises offered a hint of the nature of the scam, with concerned visitors arriving at the office through the day. “Since September 8, frequency of visitors to that (Jilian’s) office has shot up. Today itself, more than 50 people have visited the office,” said a liftman, who ushered people up to the company’s office on the fourth floor.

For Jilian’s employees, the arrest has come as a shock, and they insist that they were unaware of the alleged fraud. “We believed that we used to work for a China-based finance company,” one of the employees said, asking not to be named.

On September 8, the day Luo was arrested, Gaya senior superintendent of police (SSP) Harpreet Kaur said, “Acting on an input from the central agency, police verified Dortse’s current location and detained him from Maya Heritage Hotel. Two cellphones and an Aadhaar card were recovered from his possession.” The Aadhaar card mentioned his address as Suja Chautran in the district of Mandi, Himachal Pradesh. Himachal Pradesh Police said they were verifying these credentials. It is believed that Dortse is a Chinese national from Tibet.

Jilian Consultants said in a Sunday statement that since 2017, it has incorporated 189 companies in businesses such as trade, precision equipment, cellphone accessories, logistics and others industries. “All of them belong to the entity companies and firmly comply with Indian laws and corporate compliance; they are not shell companies,” the company added.

Investigation so far

Investigators told HT that through a network of companies with Chinese links, Luo set up call centres that were used to extort money from those who took loans through instant loan disbursal apps. Apart from Luo, four others identified as Deepak, Sakshi Mehta, Ankit Kumar and Divyansh Kumar, who were running these call centres in Gurugram’s Udyog Vihar and Noida, have also been arrested.

Jasvir Singh, inspector Gurugram Cyber Police station (West) and investigating officer in the case, said that when unsuspecting customers downloaded the apps for instant loans, permission was sought for access to contact lists, and photo galleries. As soon as permission was granted, all their data was transferred to Chinese servers.

“Once this process was completed, the suspects immediately got the loan amount transferred in the victim’s bank account. Within a few days, calls were made to repay the loan. Even after repaying, the accused used to extort more money from the loan seeker by threatening to share morphed photos showing the person in a compromising position, with family, relatives, colleagues and friends of the victims,” Singh said. The money used to be transferred into bank accounts of those running the racket in China, Hong Kong, and Singapore, he added.

“Deepak and Divyansh were also appointed as dummy directors in Tyto Network Pvt Ltd run by Jilian Consultants India Pvt Ltd and were offered 64% and 16% shares of the company, respectively, with the remaining being held by a Singapore-based company,” he said. The officer said both men landed the job through a prominent job site. “They were asked to pay 1 lakh as job processing fee. Both of them had some experience in finance and were therefore offered these jobs,” he added.

Police said Jilian Consultants India used to find Indian directors for foreign companies to start operations in India, mostly to run these loan apps, and provided “logistics” for opening these companies, including certifying documents as required by the corporate affairs ministry. “Basically, our investigations showed that Jilian Consultants was running a racket to help Chinese groups open companies in India and transfer money through hawala to Chinese nationals,” Singh said.

The ministry of corporate affairs said in a statement that Dortse and a Chinese national identified as Wan Jun are the two directors in Jilian Consultants India. “Based on inputs and the investigations carried out, it was gathered that Dortse fled from Delhi NCR to a remote place in the state of Bihar and was attempting to escape India through the road route,” the statement said.

Victim tales

The SFIO investigation is the tip of the iceberg in a larger edifice of fraud and harassment, that has seen the deaths of at least 15 people this year due to alleged harassment by mobile recovery agents in Bihar (3), Madhya Pradesh (6), Andhra Pradesh (2), Maharashtra (1), Karnataka (1) and West Bengal (2). Hundreds of cases have been filed with state police agencies with requests to have their morphed obscene pictures deleted. “The fear of defamation has driven people to death,” said a central government investigative agency officer, who is probing the organised network of mobile applications run by people such as Luo.

In Mumbai, Dattaguru Koregaonkar, a resident of Malad (east), has been making frequent trips to the police station since April, asking police to share information about the men who compelled his brother Sandeep to end his life. Sandeep died by suicide in April, unable to face the prolonged harassment by loan app recovery agents despite not having taken a loan. He continued to be extorted and harassed even after he registered an FIR. He was driven over the edge when the accused sent morphed obscene photographs to his female colleagues.

“I wait for a phone call from Kurar police every day, telling me they have got the culprit,” said Koregaonkar. Since May, Kurar police have registered 10 cases of harassment by loan app agents – all of which remain unsolved.

A Mumbai cyber wing police officer said their analysis of technical details of these apps shows permissions sought extended way beyond media and contacts. “An app was programmed to access the target’s calendar, Bluetooth, location, internet, calling feature, battery status, phone status and camera. It could also turn on and off the target’s WiFi. The app was found to be partly owned by a company headquartered in China,” the officer said.

Deputy commissioner of police, cyber wing of the Delhi Police, KPS Malhotra, whose team has arrested 160 people using these apps to cheat and harass people, said these applications are hosted on Google Play Store, and offer the promise of instant loans as small as of 1,000 with little or no verification. Most borrowers overlook the host of permissions the apps ask for before they are installed, and customers unwittingly give them access to their media gallery and contacts list.

According to data shared by Delhi Police, over 100 such apps have been banned and it’s a continuous process, investigators said. Mumbai Police said that they have identified 150 such apps. Dortse, according to the statement by Julian Consultants, floated 189 companies even though the ministry of corporate affairs claimed that he ran more than 500 such companies.

On August 23, a 35-year-old tower mechanic died by suicide after poisoning his wife and two children in Banganga area of Indore district, police said. In the suicide note, he blamed the recovery agents of the mobile app from where he had taken loan of 1.5 lakh, Indore police commissioner Harinarayan Chari Mishra. “In the note, he mentioned he was not able to take the harassment anymore,” Mishra said.

The death trail extends to Andhra Pradesh, where a couple died by suicide due to harassment by recovery agents of a loan application on September 7. The couple borrowed 30,000 from these applications and were being harassed, even though they had paid an instalment of 2,000. “Their morphed pictures were shared with relatives after which the two died by suicide,” a police officer said. The couple is survived by two daughters, aged four and two.

While no death has been reported because of harassment from mobile loan application recovery agents in Delhi, a police officer familiar with the investigations said there have been cases of acute depression and recalled a case of a 26-year-old professional from Delhi. “The person took a loan of 1 lakh from an app called ‘Cash Advance’ and repaid the loan in three months. After that, she and her family started getting WhatsApp messages of her morphed pictures with demand of more money. She used to cry for hours seeing the messages and came to us after a family member counselled her,” the officer said.

Pan-India fraud

Several federal investigative agencies are looking into the complaints against Chinese companies for running operations illegally in India and extorting money through loan apps, which the Reserve Bank of India (RBI) has termed illegal as they are not authorised by the Central bank. In the past year, RBI has received close to 7,000 complaints regarding such loan app companies whose business model revolves around high-interest, blackmail, and extortion. In July, search engine giant Google said that it has removed more than 2,000 loan applications from Play Store in India since January this year for violating terms, misrepresenting information, and questionable behaviour.

The corporate affairs ministry statement alleged that Dortse was the “mastermind of the whole racket” and was incorporating a large number of shell companies with Chinese links in India and providing dummy directors. “Boxes filled with company seals and digital signatures of dummy directors have been recovered. The Indian employees were in touch with the Chinese counterparts through a Chinese instant messaging app,” the statement said.

Jilian Consultants said in a statement that it is cooperating with the ministry’s investigations and their business of guiding investors was “legitimate” in India. “We also provide corporate service, such as company register, tax report, HR service globally to all investors, including Indian people to invest [in] China, Russia, US, Canada, European and so on. We are always in compliance with local laws in each country,” the statement said.

Besides Jilian Consultants, at least three dozen Chinese entities are under the scanner after the Union government’s crackdown against shell companies and online loan-sharks having links in China, the ministry statement said. According to a report in HT on September 4, offices of online payment gateways – Paytm, Razorpay and Cashfree – were raided by the Enforcement Directorate in connection with its probe into illegal instant smartphone-based loan apps controlled by Chinese entities.

On Monday, Chandigarh police arrested a Chinese national, Wan Chengua, 34, and 20 others from five states – Delhi, Rajasthan, Bihar and Jharkhand, Uttar Pradesh – for running these apps and cheating a large number of people. Chengua’s visa expired in 2020, said Ketan Bansal, superintendent of police, Chandigarh’s cyber crime investigation cell. The Chinese man hired 60 unemployed Indian men for call centre jobs and trained them to blackmail people through online loan applications. He used to run online loan applications such as Hugo Loan, Cashfree, Fly Cash, Cash coin, and AA Loan, Bansal said.

Superintendent of police Sanjay Shintre, Maharashtra Cyber Division, said that the best recourse for those being harassed was to immediately register a complaint. “Today, we have a mechanism that helps us work with the banks and recover money that is lost to cybercrimes. If a complaint is registered promptly, we can alert the concerned banks, freeze the transaction and reverse it,” Shintre said. Yadav said people must verify the credentials of the app developer and read reviews online before downloading the application. “There are 577 companies listed by RBI which can give loans. A person must check the website before agreeing to take loan through a mobile application,” Yadav said.

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