The Stamp Paper Scam or The Telgi Scam of 2003, is another scam that revealed the fragile nature of the Indian economy. The Telgi Scam spread across 18 states of India, and authorities estimated its worth to be around Rs. 20,000 crore. This scam was a big blow to the police system, politicians, regulatory bodies and bureaucrats. This stamp paper scam is another biggest national scam after the Scam of 1992 (Harshad Mehta Scam).
Mastermind Abdul Karim Telgi
Abdul Karim Telgi, mastermind of the Stamp Paper Scam, emerged from humble beginnings. Starting as a seller at Karnataka Stations, he pursued early education at Sarvodaya Vidyalaya and earned a B. Com degree from Gogte College of Commerce. Telgi then worked as a Sales Executive at Fillix India and later managed Kishan Guest House before moving to Mumbai for employment.
During the 1980s, Telgi spent 7 years in Saudi Arabia. His pursuit of quick wealth led him into a realm of illegal activities, initially involving counterfeit passports and documents. Gaining confidence and powerful connections, Abdul Karim Telgi ultimately became India’s foremost stamp paper fraudster, etching his name into history.
Telgi was a convicted Indian counterfeiter who printed counterfeit stamp paper. The multi-crore phony stamp paper case, which came to light in 2004, is said to center around him. He faced conviction in 2018.
The following section will provide a detailed discussion of how one man orchestrated a scam involving stamp papers to deceive both Indian officials and the public.
Beginning of the Scam
After returning from Saudi Arabia, Telgi started a travel agency named Arabian Metro Travels at New Marine Lines as a corporation to export labor to Saudi Arabia. Telgi started the counterfeiting business and focused on phony passports. He also created fake documents that allowed workers to navigate airport security seamlessly, even if their passports had issues like ECR (emigration check required) stamps or other concerns for immigration officers. Labor exporters termed this activity “pushing” in their language.
Utilizing his connections in Saudi Arabia, Tengi actively participated in the unlawful transportation of labor to the country through the forgery of passports and other documents. His first run-in with the police came in 1991 when the Mumbai Police detained the man – now identified as Karim Lala – on forgery and cheating allegations.
Alliance with Ratan Soni
In the year 1994, Telgi discovered an accomplice, another fraudster, Ratan Soni, in what would eventually become his future scheme, bogus stamp papers. A stamp paper is pre printed paper with a revenue stamp. This paper is widely used around the world to collect taxes on documents requiring stamping, such as leases, agreements, receipts, court documents and many others. This scam was related to the printing and making of fake stamps and stamp papers. Stamp papers were perpetually in low supply all across the country and hence in high demand.
In 1994, Telgi returned to the public after completing his sentence and obtained a permit for the enterprise. He subsequently initiated the production of stamp papers using equipment that the Nashik Security Press had deactivated. Using equipment identical to those purchased at government auctions, Telgi built up a business to create fake stamp papers. He continued this over the course of the following 7-8 years.
He then provided these counterfeit stamp papers to institutional buyers at significant discounts. Other related items including judicial court fee stamps, notarial stamps, and even share transfer certificates. The clients of Telgi included financial institutions like banks, insurance providers, and brokerage houses.
When he started to counterfeit stamp paper, Telgi had advanced to more complicated forgery. He had hired 300 people to work as agents. These agents distributed the counterfeit goods to large-scale buyers like banks, insurance corporations, and stock brokerage houses. This swindle was worth over 100 billion (US$1.3 billion).
Reason for “ Stamp Paper Scam ”
The essence of the Telgi Scam lies in the counterfeiting of stamp paper and its extensive utilization, to the extent that it compromises the credibility of legal documents. The stamp paper, back then, was an integral part of government or any legal operations. Abdul Karim Telgi was able to understand the loophole lying in these stamp paper operations. The major loophole Abdul Karim Telgi exploited was the absence of a centralized system for using and tracking the stamp paper in India.
Telgi understood that there was no proper mechanism to track the distribution of stamp paper. There were certain authorized vendors to print, issue and sell stamp papers but there was no centralized system to distribute and track the flow of the direction of stamp paper. No proper system and lack of standardization of stamp paper distribution encouraged Telgi to produce counterfeit stamp papers and use it as genuine ones.
Abdul Karim Telgi, along with his strong network, designed and distributed the fake stamp papers with undistinguishable characteristics. Telgi and his close associates use such counterfeit stamps to validate various proper deals, business transactions and other legal tenders.
This perfect and well coordinated scam of fake stamp papers led the government and businesses to lose crores of rupees over the period of scam. Lack of standardization and uncoordinated stamp paper operation were the reasons for the scam.
How did Telgi manage this scam ?
In 1994, Telgi and Soni leveraged their connections to secure a license as authorized stamp vendors. This propelled their business’s growth through various fraudulent stamp paper activities. During the 1980s, there was substantial demand for these papers for legal use. With limited supply and robust demand, the product’s regulation by the government was inadequate. Exploiting this scenario, they capitalized on the opportunity.
Telgi combined genuine and counterfeit stamp papers, selling the mixture for significant gains. After amassing wealth from the fake stamp business, he established multiple side companies. Soni and Telgi forged connections with politicians, ministers, bureaucrats, and influential individuals to sustain their operations.
After Telgi and Soni parted ways in 1995, Telgi faced legal issues when Mumbai Police took action against him for selling fake stamps, resulting in license cancellation. However, he gained knowledge to establish his press. Through connections and hiring influential people, Telgi set up his press on Mumbai’s Mint Road in 1996, acquiring machines and later purchasing equipment for his own operation.
Telgi built an extensive network involving politicians and vendors, offering substantial commissions. His operation swiftly expanded to various cities, attracting participants for the fraudulent stamp trade. Aggressively, Telgi and Soni extended the business to 13 states, 74 cities, and over 170 offices with 900 employees. Many also filed insurance and real estate documents. By the late 1990s, Telgi’s enterprise generated substantial revenue.
The scam hinged on officials’ cooperation in various government agencies. Telgi satisfied them while accumulating substantial wealth, owning homes nationwide. Involvement of numerous police officers and government personnel, like Nikhil Kothari, raised concerns. Despite a 9,000 (US$110) monthly income, an Assistant Police Investigator had a net worth of nearly 1 billion (US $13 million). Multiple police officers were involved.
The Arrest and Demise
In November 2001, Telgi was apprehended by police in Ajmer. His arrest happened after two guys got caught in Bengaluru in 2000 selling bogus stamp papers. The fraud had been discovered as a result of their arrest. The CBI eventually took control of the case. According to reports, Telgi allegedly owned 36 houses around the nation and more than 100 bank accounts in 18 significant cities.
2003 saw the filing of a lawsuit against Telgi by social activist Anna Hazare. The enormity of the scandal, which was estimated at a staggering Rs 20,000 crore, shocked the entire country. The other estimations ranged from 3,000 to 30,000 crores of rupees.
In the end, Telgi and a number of his friends were given a 30-year prison term and a punishment of Rs 202 crore in 2006. In October 2017, Telgi passed away at the age of 56 due to multiple organ failure in a public hospital in Bangalore.
Ironically, the Nashik Sessions Court absolved Telgi and six other defendants in the bogus stamp paper case a year after his passing since there wasn’t any “strong evidence” against them.