Author: Payoshni Patil, Vasantrao Pawar Law College, Baramati, Pune.
To The Point
The landscape of white-collar crime in India has undergone significant transformation, moving away from traditional scams associated with politics and bureaucracy to more unconventional frauds led by charismatic spiritual figures and unregulated cryptocurrency innovators. These “outlier scams” possess a distinct structure—they take advantage of blind faith, digital illiteracy, and delays within institutions. Unlike standard financial crimes, these cases blur the lines between religious authority and economic deception, making legal accountability more complex. Individuals like Asaram Bapu and Gurmeet Ram Rahim Singh leveraged their cult-like status to manipulate followers, often masking criminal activity under the veil of faith. Similarly, Amit Bhardwaj’s Gain Bitcoin Ponzi scheme capitalized on the absence of cryptocurrency regulations to deceive thousands, leaving enforcement agencies grappling with jurisdictional and evidentiary challenges. These scams not only highlight the psychological hold such figures have over the masses but also expose the gaps in India’s existing legal apparatus. Laws like the Indian Penal Code (IPC), the Information Technology Act, and the Prevention of Money Laundering Act (PMLA) were never designed to deal with frauds embedded in religious devotion or emerging technologies. In many cases, enforcement is hindered by lack of specific legislation, political protection enjoyed by the accused, and the slow pace of judicial proceedings. This article aims to legally dissect these outlier scams, questioning whether India’s legal system can truly cope with hybrid frauds that weaponize both belief and innovation.
Use of Legal Jargon
This article strategically employs legal terminology to analyse the intricate nature of outlier scams in India. For example, the notion of Mens Rea—the guilty mind—is crucial for comprehending the criminal intent associated with Asaram Bapu’s conviction for rape under Section 376 of the Indian Penal Code (IPC), where the intentional abuse of spiritual authority exposed a premeditated motive.In a similar vein, fraudulent misrepresentation, which is a fundamental aspect of financial and contractual fraud, was central to Amit Bhardwaj’s Gain Bitcoin scheme. Through this scheme, he misled thousands of investors by guaranteeing fictitious cryptocurrency returns. His actions also constituted money laundering under Section 3 of the Prevention of Money Laundering Act (PMLA), 2002, as he disguised illicit earnings as legitimate cryptocurrency gains.
In cases of spiritual fraud, the concept of a constructive trust—where an individual possesses property or funds for the benefit of others and exploits that authority—pertains to many religious trusts that have been charged with financial mismanagement. The doctrine of ultra vires, which pertains to actions taken beyond an individual’s legal authority, is pertinent when religious organizations such as Dera Sacha Sauda engage in activities that fall outside the boundaries of their charitable purposes, resulting in legal infractions. Moreover, many enforcement agencies face jurisdictional incompetence when it comes to prosecuting cyber frauds or religious scams, particularly because such crimes often transcend geographic and legal boundaries outlined under the Information Technology Act, 2000. Finally, legal principles such as res Ipsa loquitur, which translates to “the thing speaks for itself”, assist courts in deducing liability in circumstances where the inherent characteristics of the act—like systemic abuse under religious coercion—strongly indicate the guilt of the accused, despite the scarcity of direct evidence.
The Proof
Asaram Bapu: In 2018, a court in Jodhpur found him guilty under various sections of the IPC—including 370(4) (trafficking), 376(2)(f), 376(d) (aggravated rape), 342 (wrongful confinement), 354A (sexual harassment), 506 (criminal intimidation), 509 (insulting modesty), and 120B (criminal conspiracy)—as well as provisions from the POCSO and Juvenile Justice Acts. He was sentenced to life imprisonment for the rape of a 16-year-old disciple at his Manai ashram in August 2013. Despite more than twelve applications for bail, each was denied, with the courts affirming the gravity of his offenses. His conviction was achieved through the dedicated work of the police, which included the submission of a Zero FIR in Delhi, and the unwavering prosecution led by Special Public Prosecutor Poonam Chand Solanki, even amidst threats aimed at the investigators.
Gurmeet Ram Rahim Singh: The leader of Dera Sacha Sauda was found guilty in August 2017 under IPC sections 376 and 506 for the sexual assault of two female followers, resulting in a 20-year prison sentence. In January 2019, he was sentenced to life imprisonment for the murder of journalist Ram Chander Chhatrapati, which occurred in 2002. Amit Bhardwaj: The architect of the ₹20,000 crore Gain Bitcoin Ponzi enterprise (launched in 2015), Bhardwaj exploited the bullish crypto climate and regulatory ambiguities to offer investors fabricated schemes promising 10 % monthly returns. He collected approximately 80,000 Bitcoins (~₹20,000 crore at its peak) before payouts were covertly switched to illiquid MCAP tokens in 2017. Multiple FIRs from states like Maharashtra, Delhi, and Punjab were later consolidated by the Supreme Court and handed over to the CBI. In early 2025, the agency conducted coordinated raids across 60 locations tied to the scam. These large-scale scams were fuelled by political protected, prolonged pre-trial processes, and jurisdictional challenges, especially in spiritually strong networks and across digital and transnational financial markets, all of which complicated timely intervention.
Abstract
This article examines some of India’s most unusual frauds, carried out by spiritual leaders and digital entrepreneurs, and explores the legal difficulties posed by these hybrid scams. It evaluates the shortcomings of existing legal frameworks in tackling crimes disguised under the guise of religious authority or financial technology innovation. Initially, the study examines spiritual fraud, where religious leaders exploit faith and constitutional protections—highlighted in historical precedents like the 1862 Maharaj Libel Case—to evade criminal liability under secular norms. It examines the manner in which the judiciary applies the essentiality doctrine (derived from the Shirr Mutt and Ayodhya rulings) to differentiate between protected religious activities and secular behaviors that are subject to punishment. Subsequently, the document examines Ponzi schemes from the cryptocurrency era, including the ₹20,000 crore Gain Bitcoin scam orchestrated by Amit Bhardwaj. The text underscores that the lack of regulation regarding digital assets has enabled the proliferation of these schemes on a global scale, thus complicating enforcement under the IT Act and PMLA. Subsequently, the article assesses India’s legal framework—including the IPC, IT Act 2000, PMLA, and Companies Act—highlighting significant loopholes and enforcement shortcomings that hinder the prosecution of hybrid frauds. It further critiques the sluggish judicial processes and excessive leniency in cases involving religious aspects, which can postpone justice and weaken accountability. Ultimately, through a socio-legal perspective, the article interrogates whether India’s legal system is adequately prepared to address hybrid frauds—frauds that merge spiritual influence with financial deception. It advocates for immediate reforms: the formulation of comprehensive crypto-legislation, the restriction of spiritual immunity, and the improvement of inter-agency collaboration among organizations such as the CBI, ED, and CERT-In.
Case Laws
1. State of Rajasthan v. Asaram Bapu (2018, Jodhpur Sessions Court) In a landmark decision, the self-styled godman Asaram Bapu was convicted of sexually assaulting a 16-year-old girl at his ashram located in Jodhpur. He was convicted under Sections 376 (rape), 342 (wrongful confinement), and 506 (criminal intimidation) of the Indian Penal Code, as well as pertinent sections of the POCSO Act. The court sentenced him to life imprisonment, emphasizing the gravity of the crime and the exploitation of spiritual power.
2. State v. Gurmeet Ram Rahim Singh (2017 & 2019, CBI Court, Panchkula) Gurmeet Ram Rahim Singh, the leader of Dera Sacha Sauda, received a 20-year prison sentence for the sexual assault of two female devotees. He was found guilty under Sections 376 and 506 of the Indian Penal Code. In a different case from 2019, he was given a life sentence under Section 302 for the murder of journalist Ram Chander Chhatrapati. These incidents exposed the manner in which religious authority was exploited to stifle opposition and perpetrate atrocious acts.
3. ED v. Amit Bhardwaj (Gain Bitcoin Case)
Amit Bhardwaj, a prominent figure in India’s cryptocurrency circles, is being prosecuted under the Prevention of Money Laundering Act (PMLA), 2002. He allegedly defrauded investors of over ₹6,000 crore through the Gain Bitcoin Ponzi scheme by promising unrealistic crypto returns. Investigations revealed how digital assets were manipulated to launder money and bypass regulatory oversight.
Conclusion
India’s most unconventional scams—whether carried out by self-styled godmen or digital finance experts—reveal significant weaknesses in the nation’s legal and regulatory systems. These fraudulent activities flourish not only due to gaps in the law but also because of profound psychological manipulation, widespread devotion, technological ignorance, and the inertia of governmental institutions. The sluggishness of judicial proceedings, combined with a deficiency in technical knowledge among enforcement bodies, frequently permits these offenders to function without oversight for extended periods, occasionally with political or institutional backing. Although laws such as the Indian Penal Code (IPC), the Prevention of Money Laundering Act (PMLA), and the Information Technology Act (IT Act) offer crucial legal foundations for prosecution, they were never intended to address the hybrid nature of contemporary frauds. For example, spiritual scams—disguised under the guise of religious immunity—necessitate new legal instruments that can tackle the exploitation of trust and moral authority. Likewise, cryptocurrency-based Ponzi schemes require a regulatory revamp, including dedicated legislation to oversee blockchain financial systems, enforce transparency, and safeguard retail investors from digital fraud.
India must now adopt a progressive approach. The law needs to adapt to acknowledge that faith and fintech, when weaponized, transform into realms of unregulated power. Legal reform should prioritize the establishment of specialized investigative units, the introduction of stricter governance codes for non-profits, and the training of the judiciary and law enforcement in digital forensics and behavioural economics. Most importantly, the law must declare that no belief system, no digital promise, and no social influence can supersede constitutional accountability. In this age of indistinct lines between religion, finance, and technology, India’s justice system must not remain merely reactive—it must evolve to be anticipatory. Enhancing institutional resilience against such atypical crimes is not only a legal necessity but also a democratic obligation. Faith must not shield fraud, and innovation must not outpace regulation. Only then can justice prevail in both temples and terminals.
FAQS
Q1: Are spiritual leaders recognized as public figures under Indian law?
A: Although Indian legislation does not specifically categorize “spiritual leaders” as public figures, the judiciary frequently regards them as individuals who possess considerable sway over public opinion and trust. In numerous instances involving figures such as Asaram Bapu and Gurmeet Ram Rahim Singh, the courts have invoked principles like the “public trust doctrine” and the “position of dominance or authority” as outlined in Section 376(2) of the IPC, recognizing their capacity to manipulate and take advantage of susceptible followers. As a result, their behaviour is under heightened legal scrutiny akin to that of public officials.
Q2: Is cryptocurrency legal in India, and what is its connection to fraud cases such as Gain Bitcoin?
A: In India, cryptocurrencies are not deemed illegal; however, they operate within a legal grey area due to the lack of comprehensive legislation. The Reserve Bank of India (RBI) lifted its prohibition on cryptocurrency trading in 2020, following a ruling by the Supreme Court, yet regulatory clarity is still insufficient. The Gain Bitcoin scam exemplifies how this uncertainty complicates the prosecution of crypto-related Ponzi schemes under existing fraud laws. Enforcement agencies generally apply the Prevention of Money Laundering Act (PMLA), 2002, along with provisions from the Indian Penal Code (IPC) concerning cheating and criminal breach of trust, but there is an urgent need for a specific regulatory framework for cryptocurrencies to effectively tackle the evolving landscape of digital financial fraud.
Q3: What reforms are needed to combat religious and fintech scams?
A: Tackling these scams requires a multi-faceted reform approach: 1. Crypto Regulation: Establish laws for cryptocurrency to protect investors, ensure wallet traceability, and license exchanges. 2. Charitable Trust Oversight: Form independent agencies to audit religious and charitable organizations, enforcing financial transparency. 3. Judicial Reform: Speed up trials for cases involving spiritual leaders or large-scale fraud to maintain public trust and prevent evidence tampering. 4. Digital Forensics Training: Equip law enforcement and judiciary with skills in blockchain analysis and forensic accounting for complex cases. 5. Media Responsibility: Enforce media ethics and hold platforms accountable for spreading misinformation or promoting cults without verification.
Q4: Can spiritual frauds be prosecuted as financial crimes in India?
A: Yes, Indian law allows prosecution under IPC sections like 415 (cheating), 420 (dishonest property inducement), and 376 (rape under spiritual authority). For financial misappropriation, Section 406 (criminal breach of trust) and relevant Income Tax Act and PMLA sections apply. However, cultural sensitivities often lead to delayed investigations and political interference.
