Criminal Liability For Illegal Online Fundraising

01 Nov 2025 --
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🔷 1. Concept Overview: Illegal Online Fundraising

Definition

Illegal online fundraising refers to raising money via digital platforms (social media, crowdfunding sites, UPI, or crypto wallets) without complying with laws regulating charitable collections, money laundering, or fraud.

It typically violates one or more of these laws:

Indian Penal Code (IPC), 1860 – cheating (Section 420), criminal breach of trust (Sections 406–409), or criminal conspiracy (Section 120B).

Information Technology Act, 2000 – misuse of electronic means, impersonation (Section 66D), or computer-related fraud (Section 66C).

Foreign Contribution (Regulation) Act, 2010 (FCRA) – for receiving foreign donations without registration.

Prevention of Money Laundering Act (PMLA), 2002 – if funds are laundered or linked to unlawful activity.

🔷 2. Key Legal Principles of Criminal Liability

Criminal liability arises when:

Mens rea (intent) to deceive or misappropriate funds is proven.

Actus reus (action) – actual solicitation or receipt of funds via illegal or deceptive online means.

Causation – victims or donors suffer loss or are deceived.

Jurisdiction – even if done digitally, Indian courts can take cognizance under Section 4 of IPC (extraterritorial jurisdiction).

🧾 CASE LAW DISCUSSIONS

⚖️ Case 1: Ketto Online Ventures Pvt. Ltd. v. Union of India (2020, Delhi High Court)

Facts:

The online crowdfunding platform Ketto was accused of hosting campaigns collecting money under “COVID-19 Relief” without FCRA registration.

The Ministry of Home Affairs (MHA) flagged that some fundraisers received contributions from foreign donors through online payment gateways without mandatory clearance.

Issue:

Whether an intermediary platform can be held criminally liable for illegal online fundraising conducted by third parties.

Judgment:

The Court held that if the platform merely acts as an intermediary, not actively promoting or controlling the campaigns, it cannot be held criminally liable under IPC or FCRA.

However, if it knowingly facilitates illegal fundraising, criminal liability under Section 120B (criminal conspiracy) and Section 420 (cheating) may arise.

Principle:

“Knowledge and intent to defraud or violate statutory prohibitions are essential to impose criminal liability on digital intermediaries.”

⚖️ Case 2: State of Tamil Nadu v. R. Rajesh Kumar & Ors. (2021, Madras High Court)

Facts:

The accused created a fake charity organization “HelpIndia Foundation” and used social media to collect money for “COVID-19 orphans.”

Investigation revealed that funds were diverted to personal accounts and spent on luxury items.

Legal Provisions Invoked:

Sections 420 (cheating) and 406 (criminal breach of trust) of IPC

Section 66D of the IT Act – impersonation and deception using electronic means.

Judgment:

The accused were found guilty. The Court emphasized that digital crimes involving deception for charitable causes attract enhanced moral and criminal culpability.

Key Observation:

“Online fundraising without verification or transparency is a modern form of public deception that must be curbed through strict penal consequences.”

⚖️ Case 3: People for Better Society v. State of Maharashtra (2022, Bombay High Court)

Facts:

NGO collected funds through Facebook and UPI for tribal welfare but failed to maintain FCRA registration and misrepresented use of funds.

Complaint was filed by donors alleging misappropriation.

Judgment:

The Court held:

Lack of FCRA compliance + misrepresentation = Criminal breach of trust under IPC Section 409 (as funds were received in fiduciary capacity).

The NGO’s trustees were individually liable.

Legal Principle:

“Trustees and directors of NGOs bear personal criminal liability when they solicit public funds online under false pretenses or without statutory compliance.”

⚖️ Case 4: Enforcement Directorate v. NewsClick Portal & Others (2023, Delhi)

Facts:

ED alleged that NewsClick, a digital media platform, raised foreign funds illegally via online transfers from U.S.-based entities in violation of FCRA and PMLA.

Funds were allegedly disguised as payments for “services” but used for political and media activities.

Charges:

FCRA, 2010 violations

PMLA, 2002 – money laundering

Section 120B IPC – conspiracy

Court’s Observation:

The Delhi Court allowed investigation to continue, recognizing that digital transactions and foreign remittances can constitute “fundraising” if intent and benefit to the accused are established.

Highlighted the role of digital forensics and online payment tracking.

Principle:

“Digital modes of transferring foreign funds under the garb of donations or subscriptions can trigger both money laundering and illegal fundraising liability.”

⚖️ Case 5: United States v. GoFundMe Scam (Bob Kraft Case) (U.S. Federal Court, 2019)

Facts:

A couple created a GoFundMe page for a homeless veteran, claiming he needed money for housing.

They raised over $400,000, but investigation showed the story was fabricated.

Legal Outcome:

The accused were charged with wire fraud, conspiracy, and money laundering under U.S. federal laws.

They received prison sentences and restitution orders.

Relevance to India:

Even though foreign, this case shows that misrepresentation online + collection of funds = criminal fraud, regardless of jurisdiction.

🧩 Summary of Legal Position

Offence Type	Relevant Law	Penalty
Cheating via online donation	Sec. 420 IPC	Up to 7 years imprisonment + fine
Breach of trust (misuse of funds)	Sec. 406–409 IPC	Up to 10 years imprisonment
Cyber fraud using fake websites or impersonation	Sec. 66C/66D IT Act	Up to 3 years imprisonment
Illegal foreign funding	FCRA, 2010	Imprisonment + cancellation of registration
Laundering or concealment of proceeds	PMLA, 2002	Up to 7 years imprisonment