Chandigarh, Sept. 4 -- An American citizen wanted by the Federal Bureau of Investigation for a $600,000 welfare scam in Washington state has been caught in Punjab, where local police say he was operating an illegal travel agency to hide from international law enforcement.

Manjeet Singh Bedi, 65, was tracked down and arrested near Paragpur by a team from the Jalandhar Commissionerate. He had been fleeing US federal authorities since April, using Canada as a transit route to slip back into India.

Bedi had quietly set up shop in his hometown, taking money from young locals looking to go abroad without registering his business. He was booked at the Rama Mandi police station under fraud and breach of trust charges under the Bharatiya Nyaya San...