QNet: Supreme Court rejects anticipatory bail applications of five including Michael Ferreira, Suresh Thimiri
The Supreme Court on Wednesday rejected anticipatory bail applications of five accused in the multi-crore QNet scam. This includes, 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 a 20% stakeholder in Vihaan and Michael Joseph Ferreira, former world champion of billiards and an 80% stakeholder in Vihaan.
While accepting Maharashtra's standing council Nishant Khatneshwarkar's argument that the accused have failed to join the investigation and the charges are serious, a bench headed by Justice PC Ghose directed the five to surrender within a week.
Earlier in May, the Bombay High Court had also rejected bail plea of these five associates of QNet. While rejecting anticipatory bail applications of five accused the HC had observed that "the deceit and fraud is camouflaged under the name of e-marketing and business". This scheme is undoubtedly a multi-level marketing (MLM) activity and a pyramid structure of such scheme is prepared so that the members are promised to get money on purchase and sale of products, the Court had said.
In a hard-hitting order on 6 May 2016, Justice Mridula Bhatkar of the Bombay HC
had said, "The motto of the company (QNet) 'sell more, earn more' appears very attractive and innocuous. However, this motto is fully camouflaged. The company stands on a basic statement that people can be fooled. Thus, the true motto is 'sell more earn more' by fooling people. In fact it is a chain where a person is fooled and then he is trained to fool others to earn money. For that purpose, workshops are conducted where study and business material is provided with a jugglery of words, promises and dreams. Thus, the deceit and fraud is camouflaged under the name of e-marketing and business."
"It has very grave and serious impact on the economic status and mental health of the people on a large scale. On considering parameters of section 438 of the Code of Criminal Procedure, I am not inclined to protect the accused. It won't be out of place to mention that such circulation is required to be stopped. It is necessary for the prosecution to take injunctive steps against this business activity, which is prima facie, illegal. Though by stopping this business, a large group of people may get financially affected, however, it will save larger groups of people from becoming prey of this activity," the Bombay HC said.
"I have gone through the plan which is given by QNet to every individual representative (IR)," Justice Bhatkar had said. "I have gone through the statements of many witnesses, who claimed that they have been cheated under the scheme launched by QNet. I have also considered the conclusive report of Serious Fraud Investigation Agency (SFIO) under the Company Act) SFIO Prima facie, there is material to hold that the business conducted by Qnet is covered under PCMC Act and also under Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954."
"However," the Bench added, "the things are not as straight as they are perceived on the surface. Assuming that the scheme was launched with a noble object to give benefit to maximum people to make money quickly and easily by selling products of the company, however, after going through the material placed before me including the statements of the witnesses, I am of the view that in the midway, the intention of the applicants/ accused, who are the directors and shareholders of the company, became dubious. They had knowledge that more members are suffering financial losses and they are not satisfied with the products. The claim that the wellness products i.e., Biodisk and Chi Pendent are medicinal and spiritual products, are after all, a matter of faith. However, the applicants/ accused have launched these wellness products with ulterior motive and with correct judgment of vulnerability of the people. The holiday packages, which were sold or offered, without any choice left to the buyers. The entire business was Internet based and, therefore, the persons who are responsible i.e., the top brass i.e., the applicants/ accused, were not approachable to the persons who were aggrieved. The nature of the business was knitted in the interest of the Directors and shareholders in such a manner that the persons who are at the lower level of the pyramid cannot get any access to put up their grievances. The manner in which the persons were contacted, incentives offered, the workshops were conducted, are best examples of inducement."
Before that in February 2016, the special Maharashtra Protection of Interest of Depositors (MPID) Court had also rejected anticipatory bail applications of these five. 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.
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.
While arguing before the HC in person, he had contended that the illegal money circulation scheme is being conducted in India by changing names from GoldQuest to QuestNet to the current QNet.
Earlier, the SFIO in its detailed ‘secret’ report
on GoldQuest International Pvt Ltd and Quest Enterprises India Pvt Ltd has called multi-level marketing (MLM) schemes run by overseas operators as “a potential threat to national security”.
While investigating GoldQuest and QuestNet (previous avatars of QNet), the agency said twice it was provided wrong and fabricated data from the MLM operators. “The investigation did extensive and meticulous data analysis and has brought out clear cut falsification of accounts as both these data referred as old and new data do not match with the figures of the balance sheet. It seems the company has been paying the top of the pyramid promoters (TOPPs) by way of showing as the payments of commissions and getting the money from them apart from also making false entries in the payment of commissions. To avoid detection, the company has tried to mislead the investigations by playing with the data. Thus, the companies are not only conducting an illegal business contumaciously but are also keeping and submitting falsified documents to the regulatory agencies. Their business operations and conduct are thus totally unfair and prejudicial to the public interest. They are also a potential threat to national security as this scheme as well as such types of illegal schemes (eg. SpeakAsia) are being run by overseas operators…,” the SFIO report (seen by Moneylife) says.
QNet, the controversial, Hong Kong-based operator uses multiple names for its MLM scheme and GoldQuest, QuestNet, QNet, QI Ltd and QI group are some of its better known names.
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.
According to Gurupreet Singh Anand, the MLM scam may have cost the country about Rs7,000 crore since the money is being remitted abroad.