India, Aug. 25 -- A former hotel manager, a former bar singer, an ex-banker and three unemployed youths were allegedly brought together in a carefully staged operation designed to make victims believe they were facing a genuine CBI raid.

The seven-member gang arrested by Delhi Police allegedly selected wealthy targets, obtained information about their homes and assets, assembled men to pose as federal investigators, wore jackets bearing the CBI insignia and carried fake identity cards. When confronted, they allegedly used threats and psychological pressure to force victims into submission.

Police believe the gang may have carried out two or three similar fake raids in Delhi, Mumbai and Jammu and Kashmir, with digital evidence showing it...