A criminal gang that swindled 3.7 million yuan (US$604,000) from members of the public in an elaborate telephone scam has been busted, local police said yesterday.

A total of 21 people — 16 from Taiwan and five from the mainland — were detained earlier this month following a joint operation by police from Shanghai, Guangdong and Taiwan.

According to police, the gang, led by a man surnamed Xiao, contacted people who had purchased items online and told them there had been a mix up with their transactions. The unwitting consumers were then guided through an elaborate process of transferring funds to the fraudsters — via ATM machines — while under the impression they were rectifying a payment error.

In one case, a woman surnamed Zhang received a call from a person claiming to be from jd.com. The person said there was a problem with her account that needed to be rectified at an ATM.

She then received a call from another gang member — posing as a China Merchants Bank clerk — who explained what she would have to do. This involved Zhang selecting the English-language instructions on the ATM and pressing buttons in a specific order. She agreed to the strange commands and as a result instead of resolving a non-existent processing error transferred a sum of money to the swindlers.

Shanghai police began to investigate the alleged fraud after their records showed that similar incidents had been reported in 16 districts.

After noticing that the ill-gotten gains were mostly being withdrawn from banks in Taiwan, Shanghai teams worked with police on the island and soon identified two members of the criminal gang, surnamed Yang and Wu.

These then guided officers to a woman surnamed Lu, who was the gang's accountant, who in turn led police to Xiao, who was based in Dongguan, south China's Guangdong Province.

Known fugitive

Xiao, 30, who is also wanted by police in Taiwan in connection with an attempted murder, was soon identified as the gang's ringleader and detained on November 12. His 20 associates were also rounded up.

Police seized a large number of cellphones, bank cards and computers from Xiao's home, as well as a Mercedes-Benz car that was allegedly purchased with his ill-gotten gains.

Police said Xiao later confessed to purchasing personal data about online shoppers, which he used as the basis for the fraud. They did not say, however, from whom he bought the information.

Xiao allegedly first set up a call center in Vietnam and recruited people to call people living in China's mainland.

After being busted by Chinese police in July, he fled to Dongguan where he resumed his criminal activities.

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