2,000 ghost customers: How a Rs 150 cr loan fraud unfolded in Mizoram

Mizoram DGP Anil Shukla said the scam, involving five local car dealers, operated over four years

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At least 11 people were arrested on charges of defrauding Rs 150 crore from a private non-banking financial company in Mizoram, a top police officer said on Friday. Mizoram DGP Anil Shukla said the scam, involving five local car dealers and 2,000 'ghost' customers, operated over four years.

The Mizoram fraud case involved a massive scam related to vehicle loan approvals. Here's a breakdown of the key details:

Type of Fraud: Loan fraud

Amount: Estimated Rs 150 crore (approximately USD 18.3 million)

Perpetrators:

Jakir Hussain, former area business manager for Mahindra & Mahindra Financial Services Ltd (MMFSL) - mastermind

Several branch employees

Car dealers

Modus Operandi:

The accused created over 2,000 fake loan applications using forged documents for non-existent customers ("ghost customers").

These fake applications were approved for vehicle loans.

Instead of delivering the vehicles to these fictitious customers, the accused allegedly sold them to other individuals at discounted prices.

A fake bank account resembling "Mahindra Finance Limited" was opened at the Mizoram Rural Bank's Khatla branch to receive and manage the defrauded money.

Impact:

Financial loss for MMFSL, a non-banking financial company.

How did the fraud unfold?

In 2020, some employees from Mahindra and Mahindra Financial Services Limited (MMFSL) set up a fake bank account, using forged documents at the Khatla branch of Mizoram Rural Bank. The account was in the name of Mahindra Finance Limited.

According to Hindustan Times, Jakir Hussain, MMFSL's area business manager in Mizoram, and his aides Edenthara and Lalthankima sanctioned loans to over 2,000 non-existent customers and directed money from actual car dealers into this fake account. Dealers involved allegedly included Rafael Nissan, AIDU Motors, National Business Executive, CK Cars, and Standard Motors.

Hussain, the mastermind, impersonated a high-ranking company official to deceive the bank.

To maintain the illusion of legitimacy, payments were regularly made from this fraudulent account to cover the fake loans, ensuring they didn't appear as non-performing assets, which would have raised alarms.

According to the police, when audits were due, Hussain would remove the fabricated files from the office and hide them at Sunar’s house.

“The accused used the loopholes in the company's oversight process, KYC verification process, auditing, tele-verification, and supervisory mechanism to continue their activities over a long period,” said DGP Shukla.

How did the scam come to light?

On March 20, MMFSL filed a complaint at Aizawl police station against Hussain, a resident of Tejpur in Assam. The case was registered under sections 408, 467, 468, and 34 of the Indian Penal Code (IPC).

Subsequently, on March 29, another case under sections 408, 419, 466, 467, 472, 471, 477A, 120B, and 34 of the IPC was registered at the crime and economic offense wing of Mizoram Police on the complaint of Chanpreet Singh, business head at MMFSL, according to HT.

Action taken

On March 29, police arrested Hussain and seized his laptop and several mobile phones. On April 2, Lalthankima and Edenthara were arrested after interrogation.

“So far, we have arrested 11 people in connection with the financial fraud amounting to Rs 150 crore,” the police said.

The police seized seven sacks containing 549 files for the years 2022, 2023, and 2024, and 25 forged stamps were recovered, following which Sunar was arrested on April 3.

Additionally, 26 bank accounts, totalling Rs 2.5 crore, were frozen, with five suspects in police remand and the others in judicial custody.

About Rs 3.47 crore has been returned by car dealers directly to MMFSL and 15 cars valued at over Rs 3 crore have been recovered.

Other recoveries include three laptops, 10 mobile phones, 549 ghost customers' files, 25 forged seals, 30 SIM cards, two personal diaries, and various other documents.