RT Nagar police arrested four men who forged documents and availed education loans through the website of Karnataka Minority Development Corporation (KMDC).
Police suspect the accused might have siphoned off Rs 1.70 core.
The arrested are Imran Khan (30), a KMDC employee and a resident of RT Nagar; MD Multhni Iftikhar (23), a resident of HRBR Layout; Sultan Pasha (25); and Mohammed Iqbal.
The accused are suspected to have embezzled Rs 1.70 crore so far. The police seized gold jewellery worth Rs 82 lakh, Rs 8 lakh in cash and some bank seals from them.
Police said Imran Khan was a contract employee with the KMDC, while Sultan Pasha recently left the job at the department. The other two are their friends. Iqbal claimed he was a human rights activist running an organisation.
The KMDC gives education loans between Rs 10,000 and Rs 75,000 to minority students. Since Imran was an employee, he had access to its website. The accused forged documents of students and transferred KMDC funds to fake educational institutions created by the accused.
They had purchased laptops and made fake seals of institutions to carry out the operation.