Fake gold loan scam busted in Shivamogga; Kingpin Rahul arrested

Police said the accused opened bank accounts under different names, including Rahul, Lokesh, Sudha and Rajesh, and pledged the fake jewellery at several financial institutions across Shivamogga.

Shivamogga: Police have busted a major fake gold loan racket in Shivamogga that allegedly cheated nationalised banks and cooperative institutions of lakhs of rupees by pledging counterfeit gold ornaments. Days after arresting one of the accused, Lokesh, Doddapete police have now apprehended the alleged kingpin, Rahul, while efforts are underway to trace the remaining accused.

According to police, Rahul and his brother Lokesh, both residents of Baggodi village in Thirthahalli taluk, masterminded the fraud by pledging fake gold ornaments to secure loans from banks and cooperative societies. Investigators said the ornaments contained only 10 to 30 per cent real gold coating, making them appear genuine during preliminary inspection. To avoid suspicion, the accused allegedly affixed fake BIS hallmark stamps on the ornaments, enabling them to obtain loans without raising doubts among bank officials and appraisers.

Police said the accused opened bank accounts under different names, including Rahul, Lokesh, Sudha and Rajesh, and pledged the fake jewellery at several financial institutions across Shivamogga. These included branches of Punjab National Bank, Indian Overseas Bank, DCC Bank branches at Gopal and Vidyanagar, Siri Souharda Society at Alkola, Saraswathi Cooperative Society and Annapoorneshwari Jewellery.

Preliminary investigation has revealed that nearly 700 grams of counterfeit gold ornaments were pledged, enabling the accused to fraudulently obtain loans worth between ₹40 lakh and ₹50 lakh. Police suspect that the money was used to fund a lavish lifestyle.

Investigators have also uncovered what appears to be an interstate network behind the scam. Police believe Sharath, a native of Mrigavadhe in Thirthahalli, is the mastermind who sourced the fake gold ornaments from Amritsar in Punjab and transported them by air to Karnataka. Instead of personally approaching banks, Sharath allegedly remained behind the scenes and used Rahul and Lokesh to execute the fraud.

The scam came to light after irregularities were detected at Punjab National Bank, prompting the branch manager to lodge a complaint with Doddapete police. A detailed investigation subsequently exposed similar fraudulent transactions at multiple banks and cooperative institutions.

Police have so far arrested Lokesh and Rahul and are subjecting them to intensive interrogation. Investigators have confirmed that Rahul alone pledged 165 grams of fake gold at Saraswathi Souharda Society and obtained a loan of ₹10.68 lakh. He also allegedly secured an additional loan of ₹50,000 by pledging fake ornaments at Annapoorneshwari Jewellery.

Shivamogga Superintendent of Police Nikhil B. said efforts are continuing to trace absconding accused Sharath and others involved in the racket. He added that more cases of bank fraud could surface once the remaining accused are arrested and questioned.

Police are also examining whether the same network operated in other districts and whether additional financial institutions were targeted using similar methods. The investigation is ongoing.