During the fag-end of 2024, a 45-year-old man from Kerala lost a staggering Rs 4.05 crore over a two-and-a-half month period to a cyber scam.
The victim, hailing from Tripunithura, was approached via WhatsApp by a scamster who promised huge profits through share trading. The victim made payments to the fraudulent app believing the investment would generate incredible returns. Unfortunately, it took a while before the man realised that he had been royally duped.
Earlier, in September 2024, a scamster hailing from Rajasthan cheated a Kozhikode doctor to the tune of Rs 4.08 crore. The scamster convinced the doctor with make-believe stories and swindled the amount through nearly 200 bank transactions.
It was all in keeping with a trend.
Kerala police said that during the year 2023 (we don't have cumulative figures for 2024 yet), a total of 23,753 people in the state lost Rs 201 crore to online financial frauds alone.
Not only online, Kerala has seen big scams being pulled off offline too like the latest one which the state has fallen for.
This time around, the lure was a dream offer -- scooters and laptops at half price, supposedly funded by the Corporate Social Responsibility (CSR) initiatives of major corporations.
The scam, which initially surfaced with a suspect named Anandhu Krishnan, a 28-year-old, has now raised questions about the involvement of prominent figures, including a retired judge. Complaints and cases have been filed in large numbers across districts. Preliminary estimates suggest a fraud worth Rs 1,000 crore, with even top leaders under suspicion.
From such Ponzi schemes to fake antiques, Keralites have consistently found themselves at the receiving end of multiple elaborate frauds. God's own country, it seems, is also fraudsters' own country. But why?
According to professor of psychiatry at Government Medical College, Arun B Nair, the psyche of the average Malayali is to blame -- fuelled by the competitive spirit, they lack discipline and show a tendency to fall for get-rich schemes.
"Keralites engage in comparison from a very early age and resort to quick and easy ways to get rich in order to show off. Despite being highly educated, we often exhibit a herd mentality when it comes to financial investments. If a friend or a neighbour vouches for a scheme, they tend to believe it without independently verifying it," he said.
This was evident in the CSR scam that Anandhu pulled off, where word-of-mouth endorsements played a major role in drawing thousands of victims.
Arun also highlighted the 'fear of missing out' (FOMO) as another factor.
"When a scheme offers quick and seemingly assured returns, people rush to invest before properly assessing its legitimacy,” added the psychiatrist.
As old as the trees
It was seen in one of the earliest organised financial scams in the state called 'Aadu Thekk Mangium' that revolved around promises of profits from goat farming and the cultivation of teak (thekk) and mangium trees. Investors were promised five times their money in five years.
Some of the fraudsters promised to invest the money in goat farms while others baited the gullible with 'high-yielding trees'. Those who committed the fraud even identified some farms and took the investors there.
However, the end result was only that they slipped away with many lakhs of rupees. Thousands fell for it, only to realise later that the promised returns were a mirage.
Then came Total 4 U.
Sabarinath, the mastermind behind Total 4 U, managed to pull off a Rs 200 crore investment scam at the age of just 19 by offering a 20% return to investors. Again very few asked how.
His companies, including Tot Total and I-Nest, lured thousands with the promise of unrealistic returns before collapsing spectacularly. His first ventures were Ernest, SJR and Total Solutions which were opened at the Medical College in Thiruvananthapuram, Capital Towers, Statue and Punnapuram.
Investors were promised that their money will be doubled in jiffy and a 20% commission was offered. After the business collapsed, Sabarinath was arrested from Nagercoil on August 1, 2008.
Next came the Highrich Online Shoppe Pvt Ltd scam that resulted in the embezzlement of Rs 1,693 crore.
Around 1,69,000 people were deceived after they invested Rs 10,000 each hoping of high returns. The case also uncovered a massive tax evasion worth Rs 126 crore. As part of its money chain operation, the company rolled out digital coupons. The coupons could be bought for either Rs 700 or Rs 10,000. By adding more people to the chain, investors received a commission.
Money collected was mostly utilised for redistribution to members as incentive/commission in the typical Ponzi scheme format. The rest of the money was siphoned off as profit by the company and its promoters.
Then there was the Popular Finance Scam, in which Rs 1,000 crore was swindled from investors. Thomas Daniel, managing partner of Popular Finance, had routed the deposits of the public through hawala channels to Dubai and Australia on the pretext of financing imports. The imported items included old computers, Chinese mobile phones, health drinks and shrimps for which no documentary evidence was available.
He also used the funds to buy 50 per cent shares worth Rs 1.7 crore of a Dubai-based company, Carry Cart Trading LLC. The payment of Rs 1.7 crore was made through hawala channels.
High literacy rates not of much help
"Many scams succeed because they are endorsed by political leaders, religious figures, or well-known personalities. Once a trusted figure vouches for an initiative, people rarely question it. The promise of high returns with minimal effort remains an irresistible bait. Many victims are middle-class people looking for a quick way to multiply their savings. Despite the state's high literacy rate, financial literacy, legal literacy, cyber literacy and mental health literacy remains relatively low," added Arun B Nair.
People fail to recognise the hallmarks of a Ponzi scheme or an investment scam. Many scamsters operate for years before they are caught. By the time legal action is initiated, much of the stolen money has already disappeared.
A senior officer from the state police's economic offences wing, who requested anonymity, pointed out that scammers in the state are becoming increasingly sophisticated.
"Unlike older scams that relied purely on verbal assurances, modern fraudsters use social media, fake legal documents, and endorsements from celebrities and politicians to add credibility to their schemes," he said.
The officer also noted that many scam victims hesitate to file complaints initially.
"People often wait too long, hoping they will eventually get their money back. By the time they realise they have been duped, the scam has already expanded to other regions," he added.
The root causes range from blind trust and herd mentality to the lure of easy money. Unless there is a collective effort to address these vulnerabilities, scams will continue to flourish in Kerala is what experts say.
The next time a scheme that seems too good to be true surfaces, it then perhaps is worth rewinding and remembering the state's long history of financial frauds.
