The noose of the law has been completely tightened against the leader of the famous syndicate, Sameer Joshi, who embezzled crores of rupees by making fake and cloned checks in the name of the country's largest and most trusted life insurance company 'Life Insurance Corporation of India' (LIC). The special court under Prevention of Money Laundering Act (PMLA) has convicted the main accused Sameer Joshi on the basis of strong digital evidence, bank trail and forensic reports presented by the Enforcement Directorate (ED) and sentenced him to rigorous imprisonment of 3 years 6 months (3 and a half years) and heavy fine. This decision is being considered a big precedent in the cases of fraud and money laundering with public sector financial institutions (PSUs). According to the investigating agencies, Sameer Joshi was not just an ordinary fraudster, but he was the key architect of an interstate gang running organized check-cloning and banking clearing fraud, which caused huge financial losses by duplicating checks issued from the official accounts of LIC. Who is Sameer Joshi? Sameer Joshi, a cunning mind who takes advantage of the loopholes in the banking and clearing systems, has been a long-time player in the network of financial frauds, forgery of banking documents and shell companies. He had a deep technical understanding of the inner workings of banking clearing houses, check truncation systems (CTS) and claim settlements of insurance companies. Joshi did not commit any single crime, rather he had created a well-planned nexus involving chartered accountants, printers preparing fake documents and bank account brokers. Criminal profile and network of Sameer Joshi: Expert in hiding identity: Joshi never did any direct transaction in his name. He had opened dozens of dummy bank accounts of daily wage laborers, economically weaker persons and on fake IDs. Operator of an organized gang: He used different henchmen for printing cheques, making deposits in banks and making immediate cash withdrawals so that the investigating agencies could not reach the main kingpin if he was caught. Prior criminal record: Even before this case, several complaints of fake drafts, bank guarantees and fraud were registered against Joshi with the police and Economic Offenses Wing (EOW) of various states. How did you play the fraud game? Know the complete modus operandi of encashing fake checks of LIC. Investigation revealed that Sameer Joshi and his associates had adopted a very clever method (Modus Operandi) to penetrate the payment system considered to be the most secure in the country. This entire fraud was carried out in several stages: 1. Receipt of check numbers and legal details: The gang would first collect confidential information of the actual checks issued by various circles and branches of LIC to the policyholders for surrender value, maturity amount or payment of death claims. 2. Identical Cloning and Fake Check Creation: Identical counterfeit checks of LIC's official bank accounts were created using high quality scanners, magnetic ink (MICR) printers and special security paper. Watermark, bank logo, account number and check number were printed on these checks so clearly that even at first glance the bank employees could not differentiate between real and fake. 3. Bank accounts in the name of fake firms: The gang had opened fake current and savings accounts in various nationalized and private banks on the basis of fake PAN cards, Aadhar cards and bogus rent agreements. The names of these accounts were kept similar to the names of the real beneficiaries of LIC. 4. Deposit of checks in clearing and quick clearance: The fake checks prepared were deposited in the clearing house (CTS). As soon as the amount was credited to these bogus accounts after clearing from the original LIC account, Joshi's team became active. They used to transfer (layer) the entire amount to several small accounts on the same day through RTGS, ATM and check and finally withdraw the cash. ED's investigation: From CBI's FIR to an impenetrable case of money laundering. The whole matter started with FIRs registered by the Central Bureau of Investigation (CBI) and the state police under sections 420 (cheating), 467, 468 (forgery) and 120B (criminal conspiracy) of the Indian Penal Code (IPC). Since the case involved embezzlement of funds of a government insurance company and organized crime, the Enforcement Directorate (ED) took over the financial investigation by filing an Enforcement Case Information Report (ECIR) under the Prevention of Money Laundering Act, 2002 (PMLA). Big revelations made in ED investigation: Proceeds of Crime: Sameer Joshi had invested the money looted from LIC through fake checks in Hawala network, purchase of gold and benami immovable properties instead of keeping it directly with himself. Seizure of assets: ED froze several bank accounts linked to Joshi and his associates during the investigation and provisionally attached properties acquired from the proceeds of crime under Section 5 of the PMLA. Digital and forensic evidence: In the court, the ED's special prosecutors presented the handwriting analysis report of the Central Forensic Science Laboratory (CFSL), seized printers, check papers and a detailed money trail of bank transactions, against which the defense arguments could not stand. Final decision of the court: The evidence was so strong that the fraudster could not escape. After a long debate of both the parties and taking cognizance of the statements of the witnesses, the special PMLA court found Sameer Joshi directly guilty of money laundering. The court remarked that defrauding public financial institutions, especially an institution like LIC, where the hard-earned money of crores of common citizens of the country is deposited, is a serious economic crime which damages the credibility of the country's economy. The court sentenced Sameer Joshi to rigorous imprisonment for 3 and a half years along with a fine and also ordered him to compensate the proceeds of crime from the attached properties. In case of non-payment of fine, the accused will have to remain in jail for additional period. Tough lesson for LIC and banks: Why has it become easy to stop such frauds now? After the Sameer Joshi scandal came to light, the Reserve Bank of India (RBI) and LIC have made major structural changes in their payment security system: Positive Pay System (PPS): 'Positive Pay' has now been made mandatory for all large checks of ₹50,000 and above. Under this, the check issuer (like LIC) has to provide electronic information to the bank in advance like the check number, date, name of the beneficiary and the exact amount. Unless this information matches with the bank's system, the check is not cleared. 100% Direct Bank Transfer (NEFT/RTGS): LIC has now stopped 99% of the traditional practice of issuing checks for claims, maturity and loan payments. Now all payments are transferred electronically via NEFT directly into the policyholder's verified bank account. Enhanced CTS 3-Verification: The digital image of the check is now automatically tested against magnetic ink and ultraviolet (UV) security standards during clearing, thereby detecting duplicate checks created by fraudsters like Sameer Joshi at an earlier stage. This punishment given to Sameer Joshi gives a clear message that no matter how carefully the documents are fabricated in financial crimes, in the digital age the money trail never disappears and the hands of the law reach the criminals even if late.
