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Mumbai gang caught in illegal forex fraud scam

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A gang in the major Indian city of Mumbai have been arrested on suspicion of large-scale foreign exchange fraud, police in India have confirmed.

The scam, which is believed to have led to investor losses of around INR 50m, equivalent to over half a million British pounds, or over USD $700,000, was uncovered by police in the region around Hyderabad, which is located about an hour’s flight from Mumbai.

Four people were arrested as part of a tech-focused investigation which involved evidence based on mobile phone tower locations. Nawaz Ansari, Shahnawaz Abdul Rehman Lakhani, Niket Shetty and Alok Pawar were all found in the same call centre in Mumbai.

As part of the scam, Shahnawaz Abdul Rehman Lakhani was believed to have launched his own trading company and used the framework of this firm to open correspondence with potential victims.

Local media have reported that the scammers told victims that an investment of 10,000 rupees, equivalent to around USD $145, would lead to a 30% profit.

Police said that there were approximately 200 victims. One is believed to have been a woman studying at a college in the town of Rajendra Nagar.

As is common in forex fraud cases around the world, the crime was largely gang-based. In this instance, the police investigation has focused on two separate gangs – one based in Mumbai, and the other in the commercial city of Surat in the state of Gujarat. A police official from Cyberabad, an agency which is part of the area’s police force, said that most targets were actually experienced traders.

“The modus operandi of these gangs is to collect client data of share marketing from various data providers and send bulk messages promising huge profits in online forex trading in a short time,” the official told local press.

“They mostly target clients who have experience in the share market. They promise to handle the trading on their behalf and give them profits,” they added.

The method of the scam focused on Metatrader 4, a platform which many legitimate forex brokers offer as a tool for understanding market performance data. However, in the scam, the fraudsters instead led the victims to believe that they were placing profitable trades on their behalf – before running away with their victims’ cash.

“Using these applications, a forex online account can be created and the live market trend can be observed. Trading can be done only by licensed forex brokers. Any trader should create an account through them and trade,” police said.

“Clients can only view the account operated by the suspects, and they cannot directly trade. Initially, they are shown some profits. Later, after collecting huge sums from them, the gangs delete the account and cheat them.”

In order to help prevent future incidents, the police in the area have now contacted a major Indian regulatory body to relay the details of the crime. The Securities and Exchange Board of India, or SEBI, has been made aware of the scam.