A senior police official said that four of the extortionists were serving prison terms at Welikada for narcotic offenses and robbery.

The Colombo Crime Division (CCD) is likely to take them to custody on detention orders to facilitate the investigation, he said noting that the suspects had used mobile phones from within the prison and this couldn’t have been done without the knowledge of prison officials.

Several others living in the city and its suburbs had been involved in the extortion, the investigator said.

"We trapped one of them in late June and on information elicited from him arrested five others," he said. Among them were two women and the son of one of the four suspects who directed the gang from Welikada.

The police said that of the six persons in their custody, one was shot dead while making an attempt to grab a weapon from a police officer. The suspect led investigators to a place at Maligawatte where he handed over two magazines.

"From there, we were on our way to another location where we were promised a T-56 assault rifle (when the weapon grab was attempted)," he said.

Investigators believe that the gang had operated an account at a Colombo branch of a leading private bank. Declining to comment on the circumstances in which the police made their initial breakthrough, he said that once had they got court authority to probe transactions through a bank account operated by the gang, they expect more leads on deposits made under threat.

The police said that the gang had warned their victims that they had received contracts to assassinate them and their lives could be spared only if they parted with the amount promised by those seeking their elimination.