Malappuram: The gold appraiser at the Valanchery branch of state government-owned KSFE (Kerala State Financial Enterprises) was arrested for his involvement in the Rs 7 -crore scam where fake gold ornaments were pledged to embezzle funds.

After recording the arrest of the appraiser Rajan (67), a native of Kolathur, the Valanchery Police are probing the alleged involvement of four others -- Abdul Nishad (35), Muhammad Sharif (40), Panangattuthodi Rasheed Ali (37) and Parathottam Muhammad Ashraf (34). They are accused of pledging fake gold equivalent to 221 sovereigns.

The alleged scam took place between October 28, 2022, and January, 2023. The appraiser is responsible for ensuring the purity of the gold pledged at the institution. After having alrted by other employees, the branch manager filed a polic complaint alleging fraud.

It is understood that those who are suspected of the fraud have been long-standing customers of KSFE and have done transactions worth crores of rupees. It is learned that fake ornaments were pledged under 10 accounts at the branch.

"The appraiser was arrested in connection with the case and the investigation is on. We are checking branch documents," said Tirur DySP KM Biju. The police are also probing the possible involvement of more employees.