Gujarat Congress chief arrested in ₹4.90 crore 'terabyte space' investment fraud
Synopsis
A sitting district Congress president is behind bars in Gujarat after a 'terabyte space' investment scheme — promising fixed rental returns for fake data storage — allegedly defrauded at least 13 investors of ₹4.90 crore. A police SIT is now probing the full network, with officials warning the actual exposure could be far higher.
Key Takeaways
Arun Patel , Aravalli District Congress president, arrested on 23 May in a multi-crore investment fraud case in Gujarat .
The scheme sold fictitious 'terabyte space' through Shoutspace Digital Private Limited , promising fixed monthly returns for up to 84 months .
Total reported losses stand at approximately ₹4.90 crore across at least 13 investors ; officials say actual exposure may be higher.
Funds were allegedly diverted to associated firms Cloudji Digital Private Limited and Hari Hospitality and Leisure Limited .
A Special Investigation Team (SIT) formed under DIG Virendra Singh Yadav made the arrests; Sachin Patel , zonal manager of Shoutspace, was also held.
Case registered under the Bharatiya Nyaya Sanhita 2023 , the Gujarat Protection of Interest of Depositors Act 2003 , and the Banning of Unregulated Deposit Schemes Act 2019 .
Arun Patel, president of the Aravalli District Congress, has been arrested by Gandhinagar Police in connection with a multi-crore investment fraud allegedly orchestrated through Shoutspace Digital Private Limited, a firm that sold fictitious 'terabyte space' as an investment product to dozens of victims across Gujarat. The arrest, confirmed on Saturday, 23 May, marks a significant political dimension to what investigators describe as a structured financial scam.
How the Fraud Operated
The scheme was run out of an office at WTC Complex in Ratanpur village under the limits of Dabhoda Police Station. Investors were reportedly offered fixed monthly rental returns for up to 84 months in exchange for purchasing units of so-called 'terabyte space' — a data storage product that investigators say lacked any credible server infrastructure to back it.
The company allegedly issued digital agreements, circulated misleading advertisements, and displayed fabricated profit projections to attract funds. Returns were positioned to resemble interest or dividend income from regulated financial institutions — a framing that, according to investigators, lent the scheme an air of legitimacy it did not deserve.
Key Arrests and Accused
A Special Investigation Team (SIT), constituted under instructions from Gandhinagar Range Deputy Inspector General Virendra Singh Yadav, arrested two individuals: Arun Patel, identified as a board director of associated entity Cloudji Digital Private Limited, and Sachin Patel, a zonal manager of Shoutspace Digital Private Limited. Investigators say Arun Patel's full role and responsibilities are still under examination.
Scale of Alleged Losses
The primary complainant alleged that he and his family were induced into investing ₹32.75 lakh for 84 terabytes of space, lured by promises of fixed rental income and foreign travel incentives. Of this, ₹20.97 lakh was reportedly paid out as rental and commission between February 2025 and March 2026 before payments abruptly stopped.
Investigators have identified at least 12 other investors, with total reported losses standing at approximately ₹4.90 crore. Officials believe the actual exposure could be significantly higher as the probe widens.
Fund Diversion and Legal Sections
A portion of the collected funds was allegedly routed to associated entities — Cloudji Digital Private Limited and Hari Hospitality and Leisure Limited — as part of a broader diversion mechanism. Police say false invoices were created and used as genuine financial documents to facilitate fund collection.
The case has been registered at Dabhoda Police Station under Sections 396(5), 318(4), 336(2)(3), 338, 340(2), and 61(2) of the Bharatiya Nyaya Sanhita, 2023, along with Section 3 of the Gujarat Protection of Interest of Depositors Act, 2003, and Sections 21 and 23 of the Banning of Unregulated Deposit Schemes Act, 2019.
What Happens Next
The SIT is continuing its investigation to trace further accused, map the full network of associated companies, and recover diverted funds. With a sitting district Congress president now in custody, the case is expected to attract heightened political scrutiny. The total financial exposure, according to officials, likely exceeds the ₹4.90 crore confirmed so far.
Point of View
Create paper trails with fake invoices, then divert funds before the scheme collapses. The involvement of multiple shell-adjacent entities — Cloudji Digital and Hari Hospitality — suggests a deliberate structuring to obscure the money trail. With investigators acknowledging that ₹4.90 crore is likely an undercount, the SIT's ability to freeze assets quickly will determine how much victims can recover. Gujarat has seen a string of such deposit-scheme frauds; the pattern of regulatory gaps enabling them deserves as much scrutiny as the individuals now in custody.
NationPress
14 Jul 2026
Frequently Asked Questions
Who is Arun Patel and why was he arrested?
Arun Patel is the president of the Aravalli District Congress in Gujarat. He was arrested on 23 May by a Gandhinagar Police SIT for his alleged role as a board director of Cloudji Digital Private Limited, an entity linked to a multi-crore 'terabyte space' investment fraud.
What is the 'terabyte space' investment fraud in Gujarat?
It is an alleged financial scam run through Shoutspace Digital Private Limited, where investors were sold units of 'terabyte space' — purportedly data storage — and promised fixed monthly rental returns for up to 84 months. Investigators say the firm lacked the server infrastructure to support such a product and used fabricated profit projections to attract funds.
How much money was lost in the Shoutspace fraud?
Reported losses across at least 13 identified investors stand at approximately ₹4.90 crore. Investigators believe the actual exposure could be significantly higher as the probe continues.
Which laws have been invoked in the Shoutspace case?
The case is registered under Sections 396(5), 318(4), 336(2)(3), 338, 340(2), and 61(2) of the Bharatiya Nyaya Sanhita 2023, Section 3 of the Gujarat Protection of Interest of Depositors Act 2003, and Sections 21 and 23 of the Banning of Unregulated Deposit Schemes Act 2019.
What is the SIT doing next in the investigation?
The Special Investigation Team, formed under Gandhinagar Range DIG Virendra Singh Yadav, is continuing to trace additional accused, map the network of associated companies, and recover diverted funds. The investigation is ongoing and further arrests have not been ruled out.
