Hundreds duped by Kerala con scheme

Thiruvananthapuram: Hundreds of people in Kerala have fallen victim to a school dropout's alleged con scheme promising huge interest on deposits, police say.

Sabarinath allegedly duped hundreds to the tune of billions of rupees through a financial institution that went by the name Total4U, authorities say.

Reports differ on how much money the 21-year-old managed to take out of his unsuspecting patrons, but different estimates put the total amount swindled by him between Rs300 million (Dh27.2 million) and Rs 2.1 billion.

Sabarinath was picked up by Kerala police from a hideout in Tamil Nadu this week and has since been remanded to custody. His arrest, too, came after much drama, with local media reports stating that a gang of thugs had taken him hostage after his company failed to repay somebody's deposit with interest.

Sabarinath, a Class XII drop out with some experience in the insurance business, had a simple but effective plan to dupe his clients: His firm offered interest at 30 per cent on deposits for 30 days.

A good number of depositors parked large amounts with him, and several of them kept deposits to the tune of more than Rs10 million with him.

Old clients

Police say Sabarinath was paying interest to old clients from the new deposits that he was getting, but somewhere along the line the chain broke and it became impossible for him to repay his depositors.

Part of the reason for the failure was his alleged craze for fancy cars. He is said to have invested millions in buying cars of all latest models made in India to a new Volkswagen model.

Sabarinath was also in the process of setting up a massive tourist resort when his firm hit financial speed breakers. As wary investors queued up for interest and principal, there was a run on the firm and Sabarinath himself fled to Tamil Nadu, or was taken hostage there.

Police have disclosed precious little about his modus operandi and there are reports that some bigwigs in the police may also have been associated with him. Some of the losers in the episode have heart-rending stories to tell. According to reports, one investor was a cancer patient who invested money in Total4U in order to raise funds for his medical care. Another woman, who broke down in front of TV cameras, said she had put all her savings in the firm hoping to raise funds for her daughter's wedding in November.