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Quote:Indian Citibank 'fraudster' arrested

The alleged $20m fraud came to light earlier this month
Police in India have arrested a Citibank employee accused of defrauding clients out of millions of dollars.

Shivraj Puri, 32, who is expected to appear in court later, told an Indian newspaper he was innocent.

The alleged fraud was discovered earlier this month in a branch of the global bank in Gurgaon, a wealthy suburb of Delhi.

The bank has said duped investors were promised quick, high returns from a bogus financial scheme.

It is alleged that Mr Puri funnelled the money into accounts controlled by three relatives.

'Truth will out'
Mr Puri reportedly handed himself in on Thursday, a day after police said he was wanted for questioning.

The accused told the Times of India newspaper after his arrest: "I have already given full details to the police. I have full faith in the judiciary. Truth will come out."

The alleged fraud came to light earlier this month when a client mentioned the scheme to a senior bank manager.

Citibank has not publicly put a figure on the sums involved, but investigators have said at least $20m (£13m) was stolen.

According to a police complaint filed by Citibank, and seen by the BBC, funds were transferred suspiciously at the bank's branch in the Delhi suburb from October 2009.

Then we have a more detailed and altogether more interesting report from the Telegraph of India:

Quote:Fraud case team to visit city


SHIVRAJ PURI
New Delhi, Jan. 1: A Gurgaon police team is expected to travel to Calcutta next week to question close associates of Shivraj Puri, the Citibank relationship manager accused of masterminding a fraud on rich clients.

“We have got some leads after interrogating him and our teams will go to Calcutta, Mumbai and Nainital to track down his associates. A probe revealed that he has links in the three places and have properties there as well,” a senior police officer said.

Puri, who grew up in Calcutta and studied in St James School before moving to the capital, was arrested on Thursday and was remanded in police custody for a week.

“He has been charged with fraud, criminal conspiracy, forgery and cheating,” the officer said.

“The bulk of the money collected (around Rs 300 crore) by Shivraj Puri went to two brokerage firms,” the officer added.

Puri allegedly persuaded wealthy clients to invest in an unregistered scheme by promising them annual returns ranging from 18 to 24 per cent.

He allegedly came up with a forged letter to suggest that the scheme had the clearance of Sebi, the securities markets watchdog, and then funnelled the money into 81 accounts, all opened in various banks in the names of his relatives. The money was then allegedly transferred to three brokerage firms — Religare Securities, Bonanza and Okaya.

“We have not ruled out the possibility of the involvement of some corporate executives and other employees of the bank,” said the police officer.

Bank officials have told the police that all assistance would be provided to probe the case.

Another officer said the police might take the help of Delhi police’s bank fraud cell to crack the case. “Our officers are not adept at investigating white-collar crimes like this and they do not have the expertise. We will take assistance from our counterparts in Delhi,” he said.

Government officials in Delhi said stocks and other investment instruments bought using the funds of Shivraj’s alleged victims would eventually be sold and the proceeds be returned to the clients. The amount they will get back will depend on the market price at the time of the sale, which will be decided after investigations are completed.

However, the RBI has the power to direct the bank involved, in this case Citibank, to give interim compensation to clients in case of fraud, an official said.

A banking division official said that although the matter was still being probed by Gurgaon police, “we understand that the value of stocks picked by Puri had initially jumped, giving him and his accomplices high returns, but have since fallen in value.”

The revenue intelligence department will also step in, if Gurgaon police find leads that suggest tax evasion or illegal investments abroad. “Till now, this looks like a scam which used funds to play the stock market and not a case where funds were siphoned off abroad,” officials said.

(my emphasis)

Imagine that. "Corporate executives and other employees of the bank" could be involved. Meanwhile, I wonder what the term "investment instruments" is not meant to convey?

Why is it so often Citibank that is involved in these affairs. sigh.