Assam’s fraud epidemic: How financial scams continue to trap unwary investors

Like a creeping vine, the online trading scam in Assam has spread its tendrils into every corner, choking off all in its path. Drawn by the promise of quick riches, many fall victim to elaborate financial traps, ignoring the glaring signs of deceit. Assam, in particular, has become a hotbed for both online and offline financial fraud, despite persistent warnings.

As the Assam Police intensifies its crackdown on the Rs 2,220 crore online investment and stock trading scam, with the state CID now taking charge of the investigation, more culprits are expected to surface soon. Chief Minister Himanta Biswa Sarma hinted on Thursday at the possible formation of a Special Investigation Team to dismantle the growing fraud “nexus” and bring the perpetrators to justice. This move follows a surge in fraudulent online investment schemes across the state.

Recently, Chief Minister Sarma revealed that 38 individuals have been arrested in connection with a major online trading scam, with authorities now pursuing additional suspects. Among those apprehended are notable figures such as Bishal Phukan, Swapnanil Das, Ranjit Kakati and Hemen Rabha, whose lavish lifestyles and extensive fraud schemes have captured significant attention.

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Phukan, hailing from Dibrugarh, is accused of scamming investors by guaranteeing a 30 per cent return within 60 days, using falsified documents to support his claims. He faces serious charges under sections 316 (Criminal Breach of Trust) and 318 (Cheating and Deceit) of the Bharatiya Nyaya Sanhita.

The investigation has also targeted Assamese choreographer Sumi Borah and her husband, Tarkik Bora, both of whom are currently evading arrest. Authorities are also on the lookout for her brother Rajib Bora and his wife. Additionally, Swapnanil Das, the owner of Trading For A Living (TFAL), is implicated in a scheme that siphoned off crores through fraudulent trading activities.

On September 4, Kakati was arrested by Dibrugarh Police for allegedly defrauding several victims through the Trading FX online platform. Rabha, from Sonitpur, was detained on the same day for running a Rs300 crore scam through a fictitious trading company named Gini Capital, which had offices in both Guwahati and Tezpur.

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In another incident, police arrested nine individuals in Sonitpur related to financial fraud involving Fino Payment Bank, Ujala Amrit Nidhi Ltd, and the Tridix trading app. They are among the 38 arrested so far.

The scams have claimed many victims. In August, a Guwahati doctor lost Rs 2 crore to a Facebook-based scam, tricked over three months into paying ’taxes’ on fake returns. Scammers eventually cut off contact, leaving the doctor to report the case to Guwahati’s Cyber Police Station.

Earlier, in June, 10 individuals were arrested in Morigaon district for financial frauds involving fake SIMs, PAN cards and Aadhaar cards. Over the past 18 months, Morigaon has become a hub for financial scams, with over 225 arrests made.

This alarming surge in financial fraud in Assam reflects a broader trend driven by the rise of digital transactions, which has opened new avenues for cybercriminals to exploit vulnerable individuals. In 2023, Assam reported 7,621 complaints of financial fraud, amounting to Rs34.42 crore. The Citizen Financial Cyber Fraud Reporting Management System, launched under I4C, aims to provide immediate reporting and intervention to curb fraud.

A long history of financial fraud

Assam is all too familiar with the anguish caused by financial frauds.

Despite the arrests and ongoing investigations, the persistent issue of financial fraud in Assam highlights a deeper systemic vulnerability. These investigations are symptomatic of a larger problem rooted in both online and offline fraudulent activities.

Before the rise of digital transactions, offline scams devastated countless individuals and households, preying on the hopes of those seeking a better life. The unscrupulous enriched themselves through deceitful means, draining innocent people of their hard-earned money, whose only fault was daring to dream of a brighter future for their families.

These scams capitalise on the promise of quick riches, targeting individuals who often lack financial literacy and a clear understanding of risk. The infamous Ponzi schemes, such as Saradha and Rose Valley, highlight a persistent pattern of deception that has haunted Assam for years. The failure to curb these frauds stems in part from gaps in financial education and sluggish regulatory responses. The ongoing surge in fraud cases underscores the pressing need for stronger financial literacy initiatives and more effective safeguards to protect vulnerable investors.

According to a report in The Sentinel, even before digital platforms became the core for financial transactions, thousands of unsuspecting investors in Assam have been left lamenting their losses after chit fund companies such as Jeevan Suraksha, Rangdhali, Unipay 2U, Rising East, Mudra, Daffodil and Basil Intertiol abruptly closed their operations and vanished. The fact that these dubious, fly-by-night agencies could operate unchecked in Assam—flouting RBI and SEBI regulations with impunity—is astonishing.

A few years ago, the infamous Saradha chit fund scam defrauded thousands of small investors in Assam and other states, siphoning off Rs2,500 crore. Although the Saradha scam is primarily associated with West Bengal, it had significant repercussions in Assam as well.

In Assam, the Saradha Group lured a large number of investors with promises of high returns. Many individuals were drawn to the scheme, investing substantial sums. When the group failed to deliver on its promises, it left investors facing considerable financial losses, leading to widespread disillusionment and hardship.

The scam’s impact even spilled into the political arena. Allegations surfaced that local politicians and officials in Assam may have been involved in either facilitating or turning a blind eye to the operations of the Saradha Group.

Another Ponzi scheme that shook Assam was the Rose Valley Group scam, which allegedly defrauded over one lakh small investors of more than Rs 10,000 crore. Led by Gautam Kundu, the Rose Valley scam had a devastating impact on Assam, similar to the earlier Saradha scam. The Rose Valley Group enticed a significant number of investors in Assam with promises of high returns. Many individuals, lured by the prospect of lucrative gains, invested substantial sums of money. However, when the group failed to fulfill its promises and defaulted on payments, the investors in Assam faced severe financial losses, triggering widespread distress and outrage.

The Rose Valley Group launched several fraudulent schemes, including one called ‘Ashirwad,’ which promised small investors a plot of land, and a ‘Holiday Membership’ plan, where instalments were collected for stays at group hotels. These schemes were orchestrated through a vast network of around 880 branches, funnelling collections to 21 regional offices and four divisional offices, with the group’s headquarters in Kolkata overseeing operations.

The scandal also had significant political and administrative ramifications in Assam. Allegations surfaced that certain local politicians and officials might have been involved in either facilitating or turning a blind eye to the activities of the Rose Valley Group.

Even before that the Sahara Ponzi scheme, led by Subrata Roy, turned out to be one of India’s most notorious financial scandals, significantly impacting states like Assam. The Sahara group illegally collected over Rs24,000 crore from millions of small investors across the country, including Assam, by offering debentures and bonds with promises of high returns. These financial products were sold without proper regulatory approval, attracting a large number of investors, particularly from rural and semi-urban areas.

SEBI intervened, ordering Sahara to refund the money to investors with interest. The Supreme Court of India upheld SEBI’s order, leading to the seizure of Sahara’s assets. However, the implementation of the court’s orders has been slow, leaving many investors, particularly in Assam, in financial distress. Reports from the region highlighted tragic incidents, including cases where some investors allegedly committed suicide due to the losses incurred. Despite legal orders, many investors in Assam are still waiting for refunds.

Too little, too late

Despite the Assam Police’s efforts to tackle financial fraud, the issue remains widespread. Chief Minister Sarma has urged the people of Assam to stay vigilant and avoid falling prey to fraudsters and illegal share market schemes that jeopardise their hard-earned money.

At the heart of the problem is a significant lack of financial literacy. While the internet has made financial services more accessible, it has also facilitated a rise in fraudulent activities. Unless individuals actively educate themselves and take steps to protect against financial scams, and unless the government implements more proactive measures, the world of financial fraud in Assam will continue to operate unchecked and efficiently.