Each victim is believed to have paid between RM180,000 and RM280,000 to get honorific titles such as "Datuk Sri" and "Datuk".
Prior to that, they also reportedly had to pay between RM20,000 and RM30,000 as membership fees to join a state honorific awards "club".
Police have since Oct 27 received 13 reports against the club from victims who claimed to have been cheated of a total of RM1.34 million.
The club is said to be active in Muar and Batu Pahat.
Johor police chief Comm Datuk Mohd Khalil Kader Mohd told a press conference yesterday that police had on Oct 30 arrested two suspects, aged 57 and 40, who are believed to have set up the "club" to attract potential buyers of their fake awards.
It is learnt that one of the suspects is allegedly a community policing leader, but police declined to confirm this.
"In order to convince these potential buyers, the club operators showed them fake photos of some Datuks being greeting by members of royal families," Mohd Khalil said.
Police also seized eight fake royal emblems and certificates that go with the Datuk and Datuk Sri titles, some photos and a special dress and songkok.
He said some of the victims lodged police reports after they realised they had been cheated when the promised invitation from the respective palaces never materialised or when their award ceremony did not take place.
Mohd Khalil yesterday urged other victims of the scam to come forward and lodge reports. Police believe at least 40 people may have been victims of the scam.
The crime is being investigated under Section 420 of Penal Code for cheating, Section 15(2) Offences on Award Act, Section 471 of the Penal Code for using fake documents, and Section 45(1) Societies Act 1966.
Mohd Khalil said: "Money cannot buy a Datukship. I have served the police force for nearly 30 years and only just got a Datuk title."
Meanwhile, police are looking for one Mohd Faizal Abd Rahman from Kuala Lumpur, who is in his 30s, to assist investigations into the case.
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