The 12 members of the gang, including four women, were arrested yesterday, Deputy Commissioner of Police Sandeep Diwan said.
Acting on a complaint filed by one of the victims, police laid a trap and sent a policeman as a decoy customer in Dwarka area of Nashik yesterday to strike a deal with the fraudsters.
Police sub-inspector Bajirao Mahajan, posing as a decoy customer, sought dollars in exchange of his gold chain and bracelet at Dwarka circle.
Two of the fraudsters, who had come to strike the deal, took him to a nearby alley and offered dollars. At that time, the other police personnel, hiding in plain clothes, nabbed the duo.
Police got a tip-off regarding the fraud going on in the city from one Akbarbhai, who had been allegedly duped by the gang last week.
He had complained to police that when he approached the gang for dollars in exchange of Rs 2.5 lakh for going on Haj, the cheats handed him a parcel which contained only two dollars and rest all blank card sheets stacked in bundles, and fled with his money.
He also provided police the cellphone numbers of the cheats whom he had contacted.
Based on the information provided by the two accused, police then raided a 'chawl' in Gangapurgaon area of Nashik city and arrested 10 other gang members, including four women of whom one is a Bangladeshi national. The other three women hailed from West Bengal and Bihar.
During the raid at their rooms in Gangapurgaon, police also seized some dollars, blank card sheets and eight cellphones from the accused.
The identity of accused was being ascertained, they said.
An offence has also been registered against the chawl owner for providing rooms to the accused on rent without seeking their detailed information and verifying their whereabouts, they added.