The alleged mastermind behind a Rs.400 million (over $9 million) rupee SMS fraud that duped at least 50,000 people has been arrested here in Mumbai along with an associate more than two months after the scam was unearthed.

Jayanand Nadar, 30, and Ramesh Gala, 26, were arrested late Monday from a hotel in Mira Road in the western suburbs. Nadar, a first year college dropout, along with his brother Jayaraj had allegedly duped at least 50,000 people of Rs.400 million, said officials in the city police's Economic Offences Wing (EOW).

The two brothers along with Gala allegedly took help of SMS technology and launched the first-of-its-kind SMS fraud in India.

According to EOW sources, in August 2006 the duo launched an aggressive and catchy advertisement campaign in the print media that read: "Nothing is impossible. The word itself is: I M Possible."

As part of the attractive scheme, the Nadar brothers messaged random numbers, asking people interested in "earning Rs.10,000 per month" to contact them.

"The modus operandi adopted by the brothers was alluring," an EOW official said Tuesday.

"Interested 'subscribers' were asked to deposit Rs.500 each. The conmen duo claimed to be working with a US-based company named Aropis Advertising Company, which wanted to market its client's products through SMS'," senior inspector A. Thakur told IANS.

"The brothers even put up a website (www.getpaid4sms.com) to promote their scheme. Subscribers who registered with them received about 10 SMS' every day about various products and were 'promised' handsome commissions if they managed to rope in more subscribers by forwarding the messages," Thakur said.

In return, the Nadars promised to pay Rs.10,000 over 16 months to the investors. The amount was to be paid in instalments of Rs.1,000 every few months.

The brothers are said to have told the subscribers that their American clients wanted to conduct a study about local response to their advertisement and were using SMS as it was the latest medium of communication.

The duo invited people to become 'agents' and get more members for the scheme. Gala reportedly looked after the accounts.

Initially, the brothers paid up small amounts. But when cheques and pay orders of larger sums issued by the duo were not honoured, the 'agents' got worried. The SMS' too suddenly stopped.

On Nov 30, one of the duped agents approached the D.N. Road police station and lodged a complaint after a bank failed to honour a pay order amounting Rs.2.17 million issued by the Nadar brothers.

Then suddenly, the Nadars and Gala disappeared, leaving their agents and investors in the lurch.

By December, the police were flooded with similar complaints. The D.N. Road police station registered a case against the brothers and Gala and later transferred it to the EOW.

"By December 2006 the scheme had an over 50,000 membership in Mumbai alone. And we suspect that hundreds of thousands from across the country were also hooked to the scheme, thanks to a massive agent network and a door-to-door campaign carried out by the firm's now duped agents," Thakur said.

"We suspect that the fraud amount may be over Rs.1 billion. With the extent of the scam spread across the country, we are still trying to get the details."

During investigations, the EOW came to know that the Nadars, residents of the upmarket Juhu-Tara Road here, owned a fleet of imported sport utility vehicles (SUVs) and sedans.

"The brothers led an extravagant life. They would stay in top five star hotels, throw massive parties for investors and were also known faces in the city's Page-3 circuit," Thakur revealed.

"We are now looking for Jayaraj, who has eluded arrest. Gala, who is believed to have looked after the accounts, and Jayanand have been remanded to police custody till March 5."