Police on Sunday arrested another fugitive involved in the Capital Merchant Banking and Finance Limited (CMBFL) scam.

The Central Investigation Bureau nabbed Madan Bahadur Karki, 60, of Budhanilkantha for inflating his land valuation that was used as a collateral for a loan given to a fake company by the CMBFL.

The Patan Appellate Court on July 14, 2009 convicted Karki of wrongdoing, slapping on him a jail term of three years and a fine of Rs70 million. Karki was presented before the Kathmandu District Court and sent to the Central Jail, Sundhara.

With the arrest, the CIB has nabbed a total of six persons involved in the fraud amounting to Rs2.5 billion. The arrestees include Arun Kumar Maratha, Nawaraj Khatri, Tulasa Kumari Dhamala, Bhai Krishna Khadka and Kiran Keshar Nepal—bank officials involved in the fraud.

However, the CIB is yet to arrest Pawan Kumar Karki, the managing director of the company, who is the main culprit. Although police had found that Pawan was living in the United States in 2011, he is yet to be extradited. 

A red corner notice was issued against him on January 29, 2012. In the final hearing by the Patan Appellate Court on May 12, 2014, Pawan was convicted of banking fraud, with a fine amounting to Rs1.2 billion. He was also found to be involved in illegally transferring the earnings of Nepali workers in South Korea to the US.

“Since Pawan is the prime convict, we are working with the concerned offices to bring him back,” said Superintendent of Police Mira Chaudhary, spokesperson for the CIB.

Capital Merchant had landed in trouble after loans granted to promoters against the norm were not repaid. According to the Nepal Rastra Bank, 44 borrowers related to Karki have to pay back Rs2.5 billion, out of the total loan of Rs3 billion.

The finance company landed in trouble as a majority of the loans were released to the relatives of Pawan.