2.2.17

Social Trade Scam: Noida man dupes 6 lakh people of Rs 3,700 crore

NOIDA: A 26-year-old BTech graduate tricked more than 6 lakh people into giving him their money through a Ponzi scheme that promised big returns for hitting 'likes' online. In a little over a year, Anubhav Mittal's Social Trade perpetrated a fraud of Rs 3,700 crore.

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The scheme operated through a maze of dubious URLs (online links) sent to phones of subscribers that they were asked to click. Cheekily, these would sometimes be links to Facebook or Twitter profiles of other subscribers. A fake server was set up where these links would terminate.

The scam surfaced with the arrest of Mittal and his two aides — 40-year-old Shridhar Prasad, an MBA, and 25-year-old Mahesh Dayal, who served as tech support — from an office in Noida's Sector 63 on Thursday.

They had floated a fake company called Ablaze Info Solutions Private Limited that operated from there.

The STF team that raided the office found 250 passports, purportedly of some high performers and employees of the fraudsters, who were to be rewarded with a trip to Australia.

The investigation also led police to Rs 520 crore deposited in 12 accounts of the company registered in Canara Bank, Kotak Mahindra Bank, Yes Bank and Axis Bank. The officials are investigating the company's balance sheet, investors' information, and bank accounts to which money was transferred.
Noida has seen a series of call centre fraud busted over the past couple of years but this is the first racket to come to light that used 'like-trading' for a Ponzi scheme and perpetrated a fraud of this scale. Buying likes is common practice among companies that want to look better on social media.

That is what Mittal's Social Trade used to spin its yarn — investors were told the company got business from a third party to increase the latter's online hits on digital platforms. The investors were given 25, 50, 75 and 125 URLs on their phones every day, based on the 'subscription plan'.
Amit Pathak, senior superintendent of police, STF, said the trio had launched Social Trade as a pyramid scheme in 2015, telling people they could earn sitting from home. "They enrolled people with subscription money ranging from Rs 5,750, Rs 11,500, Rs 28,750 and Rs 57,500. The investors were given a user ID and password and told they would get random URLs on their phone and would be paid Rs 5 per like," Pathak said.

For this purpose, they used Ablaze, which rented a four-storey building in Sector 63 for its office. Investors were told that they would receive monthly payments in their registered bank accounts. They were also told if they brought in more subscribers within 21 days, their income would increase. This process was called a 'booster' and, like any other Ponzi scheme, helped build a pyramid of investors. Till Thursday, the number of subscriptions had reached around 6.5 lakh.

As the numbers soared, so did the risks. Most people did not receive the payments they were promised and began complaining. Some went to the police. An FIR was registered at Surajpur police station on January 31 and another FIR on February 1 at Phase III police station. The case was handed over to the STF. It emerged during the probe that around 1 lakh people had filed complaints on emails and text messages to Ablaze for non-payment of dues.

"We found there was no business from any third party for getting online hits. The probe shows the accused had set up a fake server in Ghaziabad and the URL links terminated on the same server," Pathak said.

The trio also shifted the domain name of their website frequently to hoodwink police. The Social Trade website — socialtrade.biz — was transferred to freehub.com in December 2016. Ten days later, it was shifted to intmart.com. On January 27, the business was shifted to frenzzup.com. Last week the accused had also changed the company's name and put up a board of W-3 Company.
Ablaze paid monthly rent of Rs 7 lakh for the office. Mitta took home a 'salary' of Rs 5 lakh a month while Shridhar received Rs 1 lakh. Police said subscription money was their only revenue and the scheme was doomed to fail.

What is a Ponzi scheme?

A Ponzi scheme is a fraudulent investment operation where the operator promises and pays initial investors short-term returns that are far higher or unusually consistent compared to other investment options available in the market — not from profit earned from legitimate business, but from new capital collected from newer investors, enticed by the promise of high returns.

It's named after Charles Ponzi, who became notorious for using the technique in the US in 1920, borrowing from an idea present in novels such as Charles Dickens' Martin Chuzzlewit and Little Dorrit.

Hundreds of investors gathered outside the office of Ablaze Info Solutions Private Limited in Sector 63 on Thursday when they came to know that the money they had invested in the company disappeared. However, it was a bizarre situation with a group of investors protesting in support of accused Anubhav Mittal and his company while another group protested against the company.

The investors started reaching the office since morning and enquired about the issue from the guards and other staff. A group of investors claimed they were getting the returns as promised by the company officials and the crackdown was not justifiable. The investors started a protest and also raised slogans in support of Mittal. "I invested Rs 57,500 in the company and also got the return as promised. The police action is not good," said Sanjeev Kumar, an investor.

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