Visakhapatnam: The arrest of a man who had allegedly siphoned off Rs 15 lakh from ATMs at Samalkot on Tuesday exposed a bigger scam in which seven employees of Scientific Security Management Services Pvt Ltd were found to be involved.

The company loads cash into 128 ATMs of SBI, HDFC and other banks here. The gang siphoned off about Rs 74 lakh in cash in Rs 100 and Rs 2,000 denomination currency notes. They allegedly short-filled ATMs and used the money siphoned off to exchange demonetised notes for the new ones for a commission. All seven, including the manager of SSMS, and three others were arrested by the city police on Thursday.

The police managed to recover Rs 35 lakh from the gang. The investigation revealed that the gang has in the past two years stolen about Rs 1 crore by short-filling ATMs in Visakhapatnam city and by manipulating the machines.

The arrested were identified as D. Srinivas, B. Rambabu, P.V. Dora, R.G.V. Gowtham, L. Ma-noj Kumar, P. Nookayya-setty and K. Deepak Kumar, all employees of SSMS and residents of Vizag. S. Mahesh Babu, B. Satish Kumar and V. Kesava, who were hired to identify customers wanting to convert their black money into white, were also arrested.

DCP (Law and Order, Zone-I) Navin Gulati said that after demonetisation, the seven persons siphoned off Rs 74 lakh by short-filling the ATMs. Rs 39 lakh in the new currency was exchanged for old notes for a commission. To provide Rs 15 lakh in new notes, the gang demanded Rs 20 lakh.

The crime came to light on Tuesday when personnel of the RPF at Samal-kot in East Godavari district searched Dasari Srinivas and found `15 lakh in new `2,000 notes. The Task Force Police and MVP Police investigated the case and found the larger scam.

The gang used their technical knowledge to filch the money. They took advantage of the fact that ATMs do not count the money deposited, unlike at the time of disposing of the cash. The DCP said banks failed to check the ATMs.