Mangaluru: A massive fake gold loan racket has surfaced across Karnataka, where fraudsters have been pledging counterfeit gold ornaments to secure loans worth crores of rupees from co-operative societies and finance institutions.
The fake ornaments, sourced from Mumbai, Uttar Pradesh, and Visakhapatnam, are allegedly distributed through a network of local agents who operate on commission. The jewellery appears identical to genuine gold but contains only 20–30% real gold, crafted using an iron base layered with gold plating to mimic authenticity.
The scam came to light after the arrest of three persons in a ₹6.24 lakh fraud at the Atmashakthi Co-operative Society in Panjimogaru, Mangaluru. Another case involving ₹9.25 lakh has been reported at the Odiyoor Co-operative Society in Puttur.
How the Racket Works
Fake ornaments are supplied to agents across Karnataka, who then identify individuals in need of cash to pledge the jewellery at co-operative societies or private finance firms. The borrower receives around 10% of the loan amount as commission, while the rest is split among the agents and masterminds behind the scam.
Gold Appraisers Under the Lens
The role of gold appraisers in co-operative societies has come under scrutiny. Though regulations require pledged gold to be cut and tested before certification, many institutions reportedly skip this step to speed up loan approvals. In some cases, appraisers have allegedly colluded with fraudsters to certify fake ornaments as genuine.
Wider Impact
Defrauded co-operative societies often seek insurance compensation, resulting in financial losses for insurers as well. Multiple cases have been reported across the state, including in Beltangady, Ujire, and Puttur, with investigations underway to trace the entire network.
Police said they are probing links between gold suppliers, local agents, and appraisers suspected of facilitating the scam.