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All About SCAMS1noun1.aconfidencegameorotherfraudulentscheme,especiallyformakingaquickprofit;swindle.verb(usedwithobject)2.tocheatordefraudwithascam.Scandal noun- Satyam scandal1adisgracefulordiscreditableaction,circumstance,etc.2. anoffensecausedbyafaultormisdeed.3. damagetoreputation;publicdisgrace.4. defamatorytalk;maliciousgossip.5. apersonwhoseconductbringsdisgraceoroffense.Origin:11751225; What is the scam?It involved manipulation of the primary marketread initial public offers (IPOs)by financiers and market players by using fictitious or benaami demat accounts.While investigating the Yes Bank scam, Sebi found that certain entities had illegally obtained IPO shares reserved for retail applicants through thousands of benaami demat accounts.They then transferred the shares to financiers, who sold on the first day of listing, making windfall gains from the price difference between the IPO price and the listing price.> What is an IPO?An IPO is the first sale of an entity's common shares to public investors. When an entity wants to enter the market, it makes its share available to common investors in form of an auction sale.Each application for an IPO has to be within a cut-off figure, which is eligible for allotment in the retail investors category. But in this case, financiers and market players illegally cornered these retail investors' shares.> When was the scam detected?The IPO scam came to light in 2005 when the private 'Yes Bank' launched its initial public offering. Roopalben Panchal, a resident of Ahmedabad, had allegedly opened several fake demat accounts and subsequently raised finances on the shares allotted to her through Bharat Overseas Bank branches.The Sebi started a broad investigation into IPO allotments after it detected irregularities in the buying of shares of YES Banks IPO in 2005.> What triggered the Sebi probe?On October 10 last year, an Income Tax raid on businessman Purushottam Budhwani accidentally found he was controlling over 5,000 demat accounts. Sebi finds this suspicious.On December 15, Sebi declared results of its probe, how a few people cornered a large chunk of YES Bank IPO shares.On January 11 this year, Sebi discovered huge rigging in the IDFC IPO.Roopalben Panchal was found to be controlling nearly 15,000 demat accounts.It was found that once they obtained these shares, the fictitious investors transferred them to financiers.The financiers then sold these shares on the first day of listing, reaping huge profits between the IPO price and the listing price. The Sebi report covered 105 IPOs from 2003-2005.The Sebi probe covered several IPOs dating back to 2005, 2004 and 2003 to detect misuse. These included the offerings of Jet Airways, Sasken Communications, Suzlon Energy, Punj Lloyds, JP Hydro Power, NTPC, PVR Cinema, Shringar Cinema and others. A lot more dubious accounts across several IPOs are expected to tumble out in the next few days.It also detected similar irregularities in the IDFC IPO, in which over 8 per cent of the allotment in the retail segment was cornered by fictitious applicants through multiple demat accounts.> Who is Roopalben Panchal?Roopalben Panchal of IndiaBulls Securities is allegedly the mastermind of the scam. Finance Ministry officials are expected to act against her soon.> How is this different from Harshad Mehtas scam?The securities scam involved price manipulation in the secondary market, read stocks. Whereas in this case, the manipulation happened in the primary marketeven before the shares (IPOs) entered the stocks market.This time, fraudsters targeted the primary market to make a quick buck at the expense of the gullible small investors.Direct Participants (DPs) used retail applicants shares for reaping benefits in the stock market.> How big is the scam?Apart from the YES Bank fraud, Sebi reportedly has definite data about two IPOs where retail allotments were rigged, but market observers believe the scam is far bigger. The Yes Bank and IDFC cases are only a tip of an iceberg, say analysts.The Sebi probe has identified more operators and some market intermediaries involved in the misuse of the initial allotment process in public offerings dating back to 04-05.The Income-Tax Department in Ahmedabad has found that two major accused, Panchal and Sugandh Investments, have together made Rs 60.62 crore in 18 months.Role of Depository Participants> Suzlon Energy IPO: Rs 1,496.34 cr (September 23-29, 2005)Key operators used 21,692 fictitious accounts to corner 3,23,023 shares which is equal to 3.74 per cent of the total number of shares allotted to retail individual investors.> Jet Airways IPO: Rs 1899.3 crore (Feb 18-24, 2005)Key operators used 1,186 fake accounts for cornering 20,901 shares which is equal to 0.52 per cent of the total number of shares allotted to retail investors.> National Thermal Power Corporation IPO Rs 5,368.14 crore (Oct 7-14, 2004).12,853 afferent accounts were used for cornering 27,50,730 shares representing 1.3 per cent of the total number of shares allotted to retail investors.> Tata Consultancy Services IPO: Rs 4,713.47 crore14,619 'benami' accounts were used to corner 2,61,294 shares representing 2.09 per cent of the total shares allotted to retail individual investors.

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Abdul Karim Telgi: Rs 500 croreHe paid for his own education at Sarvodaya Vidyalaya by selling fruits and vegetables on trains.He is today famous (or infamous) for being he man behind one of India's biggest scams.The Telgi case is another big scam that rocked India. The fake stamp racket involving Abdul Karim Telgi was exposed in 2000. The loss is estimated to be Rs 500 crore (Rs 5 billion), it was initially pegged to be Rs 30,000 crore (Rs 300 billion), which was later clarified by the CBI as an exaggerated figure.In 1994, Abdul Karim Telgi acquired a stamp paper license from the Indian government and began printing fake stamp papers.Telgi bribed to get into the government security press in Nashik and bought special machines to print fake stamp papers.Telgi's networked spread across 13 states involving 176 offices, 1,000 employees and 123 bank accounts in 18 cities.41

The Jharkhand medical equipment scam Rs 130 croreMajor irregularities were alleged in the UPA government's free healthcare services programme in Jharkhand.Other notable scams include:Punjab's City Centre project scam in 2006: Rs 1,500 croreTaj Corridor scam of 2006: Rs 175 croreState Bank of Saurashtra scam in 2008: Rs 95 croreRice export scam of 2009: Rs 2,500 croreOrissa mine scam in 2009: Rs 7,000 croreMadhu Koda mining scam of 2009: Rs 4,000 crorePreferential allotment scam of 1995: Rs 5,000 croreYugoslav Dinar scam of 1995: Rs 400 crore42

Cobbler scam: Rs 1,000 croreSohin Daya, son of a former Sheriff of Mumbai, was the main accused in the multi-crore shoes scam. Daya of Dawood Shoes, Rafique Tejani of Metro Shoes, and Kishore Signapurkar of Milano Shoes were arrested for creating several leather co-operative societies which did not exist.They availed loans of crores of rupees on behalf of these fictitious societies. The scam was exposed in 1995. The accused created a fictitious cooperative society of cobblers to take advantage of government loans through various schemes.Officials of the Maharashtra State Finance Corporation, Citibank, Bank of Oman, Dena Bank, Development Credit Bank, Saraswat Co-operative Bank, and Bank of Bahrain and Kuwait were also charge sheeted.43

Dinesh Dalmia: Rs 595 croreDinesh Dalmia was the managing director of DSQ Software Limited when the Central Bureau of Investigation arrested him for his involvement in a stocks scam of Rs 595 crore (Rs 5.95 billion).Dalmia's group included DSQ Holdings Ltd, Hulda Properties and Trades Ltd, and Powerflow Holding and Trading Pvt Ltd.Dalmia resorted to illegal ways to make money through the partly paid shares of DSQ Software Ltd, in the name of New Vision Investment Ltd, UK, and unallotted shares in the name of Dinesh Dalmia Technology Trust.Investigation showed that 1.30 crore (13 million) shares of DSQ Software Ltd had not been listed on any stock exchange.44

Virendra Rastogi: Rs 43 croreVirendra Rastogi, chief executive of RBG Resources, was charged with for deceiving banks worldwide of an estimated $1 billion.He was also involved in the duty-drawback scam to the tune of Rs 43 crore (Rs 430 million) in India.The CBI said that five companies, whose directors were the four Rastogi brothers -- Subhash, Virender, Ravinder and Narinder -- exported bicycle parts during 1995-96 to Russia and Hong Kong by heavily over invoicing the value of goods for claiming excess duty draw back from customs.45

The UTI scam: Rs 32 croreFormer UTI chairman P S Subramanyam and two executive directors -- M M Kapur and S K Basu -- and a stockbroker Rakesh G Mehta, were arrested in connection with the 'UTI scam'.UTI had purchased 40,000 shares of Cyberspace between September 25, 2000, and September 25, 2000 for about Rs 3.33 crore (Rs 33.3 million) from Rakesh Mehta when there were no buyers for the scrip. The market price was around Rs 830.The CBI said it was the conspiracy of these four people which resulted in the loss of Rs 32 crore (Rs 320 million). Subramanyam, Kapur and Basu had changed their stance on an investment advice of the equities research cell of UTI.The promoter of Cyberspace Infosys, Arvind Johari was arrested in connection with the case. The officals were paid Rs 50 lakh (Rs 5 million) by Cyberspace to promote its shares.He also received Rs 1.18 crore (Rs 11.8 million) from the company through a circuitous route for possible rigging the Cyberspace counter.46Uday Goyal: Rs 210 croreUday Goyal, managing director of Arrow Global Agrotech Ltd, was yet another fraudster who cheated investors promising high returns through plantations.Goyal conned investors to the tune of over Rs 210 crore (Rs 2.10 billion). He was finally arrested.The plantation scam was exposed when two investors filed a complaint when they failed to get the promised returns.Over 43,300 persons had fallen into Goyal's trap. Several criminal complaints were filed with the Economic Offences Wing.The company's directors and their relatives had misused the investors' money to buy properties. The High Court asked the company to sell its properties and repay its investors.47

Sanjay Agarwal: Rs 600 croreHome Trade had created waves with celebrity endorsements.But Sanjay Agarwal's finance portal was just a veil to cover up his shady deals. He swindled a whopping Rs 600 crore (Rs 6 billion) from more than 25 cooperative banks.The government securities (gilt) scam of 2001 was exposed when the Reserve Bank of India checked the accounts of some cooperative banks following unusual activities in the gilt market.Co-operative banks and brokers acted in collusion in a bid to make easy money at the cost of the hard earned savings of millions of Indians. In this case, even the Public Provident Fund (PPF) was affected.A sum of about Rs 92 crore (Rs 920 million) was missing from the Seamen's Provident Fund. Sanjay Agarwal, Ketan Sheth (a broker), Nandkishore Trivedi and Baluchan Rai (a Hong Kong-based Non-Resident Indian) were behind the Home Trade scam.48