A co-working space in Bengaluru and a Delhi-based facilitator have emerged as the common links between two separate investigations pursued by the Serious Fraud Investigation Office (SFIO) and the Enforcement Directorate into predatory loan lending apps that use shell companies to allegedly launder money.
At least three companies under investigation are registered at the address of the co-working space, named BricSpace, which has now written to the Ministry of Corporate Affairs requesting the removal of certain company addresses registered at their location, alleging that “unscrupulous entities have misused" the co-working space. The letter was sent after agencies initiated criminal investigations. BricSpace has also alleged that certain entities have registered themselves using the address based on just one-year contracts.
PART 1 | India May Ban 300 Apps to Plug the ‘Sleaze Route’ of Predatory Lending
The thread starts with a person named Dortse, who was arrested by the SFIO as part of its crackdown on Chinese shell companies last week. Dortse has also been booked by the Gurugram Police under Section 66D of the IT Act which deals with cheating by personation by means of any communication device or computer resource. The Gurugram Police case is based on a complaint filed by officials from the Ministry of Corporate Affairs, which says Dortse uses only one name and hails from Himachal Pradesh.
The second link in this thread is Dortse’s co-accused, a Chinese national named Wan Jun who is currently absconding. Wan Jun is the director of two companies — Jillian Consultants India Private Ltd, which he started with Dortse, and another one named Fininty Private Limited.
PART 2 | Illegal Lending Apps Rely on Tangle of Shell Companies, Cryptocurrency to Lie Low
Fininty Private Limited is registered at the BricSpace address in Bengaluru — 4th Cross Road, HRBR Layout, Kalyan Nagar. Two other companies under investigation are registered at the same address — Yellow Tune Technologies and Mudmate Technologies. More than a 1,000 companies are reportedly registered at the BricSpace address.
Companies under the scanner for money-laundering, running illegal loan apps and other violations had approached the co-working space through a common facilitator based in south Delhi. BricSpace claimed that a common client approached them for giving space to these companies, apart from 22 others. The facilitator helped these companies under the scanner in finding an office address in Bengaluru. The contract started commenced from March 2 and 3, 2021, valid for one year.
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The Enforcement Directorate had frozen the assets of Yellow Tune Technologies worth Rs 370 crore in a separate case. The company has been under the scanner of various state and central agencies for allegedly running illegal loan lending apps and converting the money into cryptocurrencies to be laundered.
In a special series recently, News18 had exposed how predatory loan lending apps masterminded by Chinese nationals were entrapping Indians, driving some to suicide, and posing security risks with access to data. The series had revealed how thousands of companies were found to be operating from one address in Bengaluru. The series also exposed how the BricSpace address and those of other co-working spaces were used to hoodwink the authorities.
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What BricSpace Has to Say
When contacted, the management of BricSpace told News18 that a complaint against “fraudulently registered" companies had been filed with the Ministry of Corporate Affairs. BricSpace reportedly approached the ministry after the Odisha Economic Offences Wing and other agencies came knocking on its door as part of other such investigations.
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An authorised representative of BricSpace told News18 that companies used “loopholes" in the system and got themselves “illegally" registered at the address. “We have given a list to the Registrar of Companies of (around 1,200) firms that are illegally using our address," said the representative over phone.
The representative added that no one from Yellow Tune Technologies or Mudmate Technologies ever visited their office and that a Delhi-based company that counts the above mentioned firms as clients helped mutual references.
PART 7 | ‘We Are Victims Too’: Bengaluru’s Co-working Space Provider Under Scanner Over Chinese Loan App Scam
According to BricSpace management, this Delhi-based company referred 25 firms to them of which three are now under investigation.
The Dortse Connection
“After simultaneous search and seizure operations conducted by the Ministry of Corporate Affairs on September 8 2022 on the offices of Jillian Consultants India Private Ltd, a wholly owned subsidiary of Jilian Hong Kong Ltd., at Gurgaon, Fininty Pvt Ltd at Bangalore and Husys Consulting Ltd, an erstwhile listed company at Hyderabad, the Serious Fraud Investigation Office (SFIO) has arrested Mr Dortse," the Ministry of Corporate Affairs had said on Sunday.
Dortse is on the board of Jillian Consultants India Private Ltd and has emerged as the mastermind of the racket wherein large number of shell companies with Chinese links are incorporated in India and dummy directors appointed to their board. Dortse has claimed to be a resident of Mandi in Himachal Pradesh as per the records filed with the Registrar of Companies.
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