Gurgaon, Jan 03 (Agencies): The Rs 300-crore Citibank fraud on Monday took a new turn with police arresting Hero Group's senior official Sanjay Gupta who allegedly invested Rs 250 crores of various group companies with Shivraj Puri, the alleged mastermind of the scam.

"Gupta had invested around Rs 250 crore from different Hero Group companies and their promoters. For this, Gupta had formed two finance companies -- BG Finance and G2S, and took a commission of Rs 20 crore from Puri for investing the amount," Gurgaon Police Commissioner S S Deswal told reporters here.

Gupta, an Assistant Vice-President with Hero Group, was arrested today and later produced before a local court which remanded him in police custody for five days. Last week, he was questioned by the police after Puri, a relationship manager with  Citibank's Gurgaon branch, was arrested.

Later in the day, police froze two accounts opened by Gupta with Axis Bank which were having Rs 4-5 crores of the alleged commission money he got from Puri for investing corporate funds.

Most of the funds that Gupta had allegedly invested through Puri were believed to have been diverted in derivative instruments in stock markets.

Although police sought Gupta's custody for 10 days, the Chief Judicial Magistrate D N Bhardwaj allowed only five-day remand.

"Puri had admitted that Gupta was aware of the forged SEBI letter, on which the amounts were lured from high networth clients," Deswal said.

However, Gupta's counsel C L Kakkar pleaded before the court that he is not the accused, but a victim, and he could turn a witness if required.

Puri used to sell investment products by showing a forged letter of the market regulator SEBI with a claim that they would generate very high return of 18 per cent.

He was arrested last week and sent to police custody for a week.

Last week, Brijmohan Lal Munjal-led Hero Group had admitted that its exposure to the fraud was to the tune of Rs 28.75 crore.