Madhya Pradesh police bust dabba trading racket

The network, parallel to MCX & NCDEX, operated through mobiles; CBI other central agencies being roped in the probe

The Madhya Pradesh police has arrested eight persons for allegedly operating a ‘dabba trading’ racket in commodities and currencies. The police say thousands of crores of daily illegal trade was being done.

Dabba trading is not on any recognised exchnage’s platform, with no payments in cheques or taxes.

The arrests were made in Indore’s Chhota Sarafa locality. The racket was being operated through mobile phones. Acting on a complaint, the cyber cell of the state police began a probe; the arrests were late last month. Since the nature of the activity in question was found to be much wider than initially thought, the case was transferred to the criminal investigation department (CID).

Nandan Dubey, the state police chief, asked the government two days earlier to forward the case to the Central Bureau of Investigation (CBI). Sources said the other central entities being involved in the probe are the enforcement directorate, income tax department, Reserve Bank of India, Securities and Exchange Board of India (Sebi) and Forward Markets Commission.

Police sources said, “They had created parallel commodity exchanges of the Multi Commodity Exchange (MCX) and the National Commodities and Derivatives Exchange (NCDEX), using a mobile application software, ‘Metatrader 5’, obtained illegally. They were luring investors by promising high returns and falsely claiming the platform was linked with MCX and NCDEX. They always were on the hunt for innocent or aged investors, with less of liquidity and more of properties, so that in case of a ‘default’, they could take possession of the property. Priliminary investigations reveal they obtained the software from Dubai.”

According to the cyber police, the kingpin and prime accused, Amit Soni, had committed a similar crime in Pali town of Rajasthan and had been detained by the police there. Said a a CID source, “They were exposed when a fight was triggered among them and they tried to dupe each other. An investor filed a complaint when denied a return against his investment.”

“Since they were operating the fake exchange through mobile phones, it has become a multi-locational crime. We are looking to find if there is any violation of the rules on foreign exchange, Sebi rules, RBI rules, tax law and other rules and Acts, besides cyber crime. We will have to also see from where they got the software. So, it has become necessary to seek support of various investigation agencies. The CBI has multi-locational presence and can investigate the case better,” Rajiv Tandon, the state police’s additional director-general, told this newspaper. “We will also take the support of MCX and NCDEX officials.”

Police investigations have revealed a similar racket was operational in Nagpur some years earlier and there could be links between the two cases.