In a half-page advertisement in newspapers across India, the controversial QNet has tried to disassociate itself from agents who it claims have indulged in mis-selling and misleading the public. It claims that 'stern legal action' has been initiated against such sellers, including its independent representatives. Will it work?
QNet, the controversial, Hong Kong-based multi-level marketing (MLM) operator with multiple names (GoldQuest, QuestNet, QNet, QI Ltd and QI group are the better known names), has now come up with half page advertisements in newspapers across the country, in an attempt to shift the blame on "unauthorised" persons that include its independent representatives. The company, which is embroiled in court cases under several laws, including the Maharashtra Protection of Interest of Depositors (MPID) Act and has several officials arrested, is clearly trying to contain the damage to its reputation.
The Advertisement says Vihaan Direct Selling (India) Pvt Ltd is its sub-franchisee. However it adds, "...some individuals, unauthorised by the company (and in some cases of Vihaan, notwithstanding their authorisation to represent the company), have been misrepresenting/ misleading the public while promoting the business, resulting in reputational loss to the company and loss of money in certain cases to innocent purchasers." The advertisement itself documents the kind of dubious business practices that have been going on it its name, when it proclaims. "The company DOES NOT - Solicit Investments, Take Deposits, Promise Fixed Returns, Sell Shares of the Company, Sell or offer jobs through intermediaries, offer any sub-franchisee opportunities".
The activities mentioned above fall foul of several regulators including the Reserve Bank of India (deposit taking) and the Securities and Exchange Board of India (SEBI). This is in addition to the large number of complaints about the products that it sells, which are already under investigation.
According to reports, on Sunday, a team led by Jithendranath KN, Deputy Commissioner of Police, Central Crime Branch, has arrested six people, Avinash Shah, Nikunj Kumar, Ankith Kandel, Ankit Soni, Ashok Sharma and Rakesh Makkarlal for organising mass event in a marriage hall at Byappanahalli in Bengaluru for QNet. They also charged Rs2,500 each from the attendees for attending the MLM seminar, the report says.
The QNet advertisement, an act of self-protection, has probably been triggered by these arrests as well as rejection of anticipatory bail of five accused in the multi-crore scam by a special court in Mumbai. Last month, the special Maharashtra Protection of Interest of Depositors (MPID) Court rejected anticipatory bail applications of Srinivas Rao Vanka and Magaral Veervalli Balaji, both directors of Vihaan Direct selling (India) Pvt Ltd, Suresh Thimiri, director of Transview Enterprises India Pvt Ltd, Malcolm Nozer Desai, who is 20% stakeholder in Vihaan and Michael Joseph Ferreira, former world champion of billiards and 80% stakeholder in Vihaan.
In 2007, APLI, the direct selling Association of Indonesia, considered GoldQuest or QuestNet as a pyramid scheme.
Coming back to QNet, the Economic Offences Wing (EOW) of Mumbai Police, which is probing the case, had invoked the stringent MPID Act against controversial multi-level marketing (MLM) company QNet, which has denied any wrongdoing on its part.
In the advertisement, published in newspapers, QNet claims that it, through Vihaan, "compensates its independent representatives (IRs) through whom the sale is facilitated, on the basis of 'products' only."
One of the products being marketed by the company is the Amezcua Bio Disc (also spelled BioDisc and BioDisk) which the company claims can "redefine and harmonise the energy of water, greatly maximising its positive affect on the human body". These and other detailed claims of often miraculous properties have been widely denounced as fraudulent by various scientists, media commentators and watchdog organisations. Critics have noted that the claims are based on thoroughly debunked pseudoscientific concepts such as hexagonal water and that they have never been validated by a peer-reviewed process.
In India, QNet's MLM operations were controlled by QuestNet Enterprises (India) Pvt Ltd, a company registered at Chennai till 13 April 2012. From next day, it shifted all its registered agents, database and business to Vihaan Direct Selling Pvt Ltd, company registered in Bengaluru.
The EOW had booked several accused including the former world champion of billiards and five companies related with QNet, under the MPID Act. This means all the cases against QNet, Vihaan and all those involved in the MLM scam would be heard before the special MPID Court. Until now, the accused were being investigated for cheating and forgery under the Prize, Chits and Money Circulation Schemes (Banning) Act 1978, and for money laundering by the Enforcement Directorate (ED).
In February 2014, the ED registered a case under the prevention of money laundering act (PMLA) against QNet, Vihaan Direct Selling, Ferreira and QNet founder Vijay Eswaran and three other independent representatives (IRs) of the MLM operator.
Gurupreet Singh Anand, a computer consultant from Lokhandawala, Andheri in his first information report (FIR) stated that his wife was duped for Rs30,000 by some people who had introduced themselves as the independent representatives (IRs) of QNet. Anand told the police, "They (IRs) had said that one of the bio-products my wife bought could be used to treat my 12-year-old son's brain-related diseases."
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