AHMEDABAD, Nov. 2 -- A Gujarat-based digital payment application that promised attractive returns and referral commissions allegedly collected more than Rs 1,200 crore from investors across the country, with police uncovering an extensive multi-level marketing network involving lakhs of bank accounts and dozens of agents.

The alleged fraud, linked to the SD Pay and Apna Pay applications, has led to the arrest of 12 people, including promoters and company directors, while at least 18 FIRs have been registered across Gujarat, Rajasthan, Maharashtra and Tamil Nadu. Investigators found that 6,52,831 bank accounts had collectively invested Rs 1,211 crore through banking channels. The actual amount involved could be higher, as police suspect that substantial investments were also collected in cash.

The applications, promoted by Gujarat-based businessman Dhaval Patel and his associates, attracted users by promising daily returns ranging from 0.15 to 0.30 per cent, along with commissions for introducing new investors.

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According to investigators, SD Pay was launched in 2024 as a digital wallet application offering services such as mobile recharges and bill payments. However, its promoters subsequently introduced investment schemes promising unusually high returns.

Police alleged that the companies generated little or no genuine business revenue and instead used money collected from new investors to pay returns to earlier participants, following a structure commonly associated with Ponzi schemes. The promoters also introduced a multi-level referral system, offering commissions of up to 30 per cent at the first level and smaller percentages further down the network. Investors were encouraged to recruit relatives, friends and colleagues, helping the scheme expand rapidly across several states.

Investigators said the application attracted approximately 15 lakh users through referrals and aggressive promotional campaigns, including seminars, online meetings and social media outreach.

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Among those affected was a 48-year-old schoolteacher from Vadodara who invested Rs 9.5 lakh obtained from selling her apartment. Her digital wallet eventually displayed a balance of approximately Rs 50 lakh, but she was unable to withdraw the amount after the application stopped functioning. The woman subsequently introduced 31 relatives and colleagues to the scheme, who together invested another Rs 42 lakh. She later discovered that hundreds of additional investors had joined through the referral network originating from her account.

In another case, a Surendranagar resident allegedly borrowed Rs 60 lakh through personal and gold loans to invest in the application, hoping to generate enough returns to build a house. He has been unable to recover even his original investment. Police said the victims included teachers, farmers, banking professionals and a former IAS officer.

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The scheme began showing signs of financial distress in March 2026 when investors stopped receiving the promised daily returns. Investigators alleged that the promoters subsequently offered notional shares in their companies, claiming that an initial public offering would soon allow investors to recover their money. Some investors were allegedly pressured to accept these shares instead of cash repayments.

L Amreli Superintendent of Police Sanjay Kharat said one arrested promoter, Santosh Pathak, had recruited approximately one lakh investors and accumulated a displayed wallet balance of Rs 16 crore. Police said the shares offered to investors had no established market value, while the promised public listing had not materialised.

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The investigation gathered momentum after complaints emerged in Amreli district earlier this year. On September 2, the district cybercrime police registered a case against the promoters and directors under provisions relating to cheating, criminal conspiracy, unregulated deposit schemes and information technology offences. The arrests included alleged principal promoter Dhaval Patel and associate Hiren Shah, who were apprehended by a joint team of Gujarat and Odisha Police on September 12.

Two other key suspects, Narendrasinh Jhala of Gujarat and Mukesh Lodhi of Rajasthan, remain absconding.bInvestigators have identified approximately 95 major agents operating across Gujarat, Rajasthan, Maharashtra, Delhi, Madhya Pradesh and Chandigarh. Police have also traced 38 bank accounts associated with six corporate entities and another 72 accounts operated by company directors.

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Despite the scale of the alleged scheme, investigators have so far seized assets worth only Rs 1.86 crore. By October 31, as many as 876 complainants had approached Amreli Police, reporting combined losses of Rs 37.42 crore. Officials clarified that these complaints represented only a portion of the overall funds traced through the banking system. Police are examining additional properties and financial transactions linked to the accused and intend to seek court approval for attaching assets to facilitate recovery. The authorities have also secured the removal of the application from the Google Play Store and informed the Reserve Bank of India about their findings.

Investigators said the complex referral network had made it difficult to distinguish between victims and those who knowingly promoted the alleged fraud for commissions. The investigation is continuing across multiple states, with police expecting further complaints as more investors come forward.

Published by HT Digital Content Services with permission from Millennium Post.