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Moneylife » Life » Public Interest » QNet, the MLM has resurfaced in India; will people be duped again?

QNet, the MLM has resurfaced in India; will people be duped again?

Sucheta Dalal and Yogesh Sapkale | 15/11/2012 05:47 PM | 

QuestNet and GoldQuest, which all but closed down in 2009, have emerged bigger and stronger as QNet.  But the hype and hard-sell by this MLM company to ensnare people into enrolling distributors and hawking lifestyle products such as watches, gold coins, bio-discs, herbal products and travel packages is worrying. Will it also go the SpeakAsia, Stockguru and NMart way while regulators do nothing?

QuestNet and GoldQuest, multi-level marketing (MLM) companies that had shut shop in 2009 following police action are back with a bigger bang. They now calls themselves QNet and is thriving in an environment where tens of thousands of Ponzis and MLM companies are able to lure people into believing that they have the formula to instant riches and a high growth career. 
While QuestNet and GoldQuest, which mainly sold numismatic gold coins (they claimed they were limited edition coins that whose value would increase over time) in 2009 were forced to shut shop in India, their new avatar QNet offers a broader range of lifestyle ‘enhancing’ products (holiday packages, diamond watches, bio-discs, Chi-Pendants and herbal products for anything between Rs30,000 to Rs7 lakh), which promise fabulously high returns so long as new distributors are enrolled rapidly. Its product brochure says, “With 8 ways to earn and up to 50% of the sales paid out in commissions, QNET offers the most dynamic and innovative compensation plan in the direct selling profession.”
Like SpeakAsia, QNet is also registered in Singapore and has been banned in many countries, including Iran. It has a Hong Kong-based founder Dato’ Vijay Eswaran, a Malaysian by birth and an Indian by ethnicity, who is photographed hobnobbing with the Prince of Saudi Arabia, in order to enhance its credibility in the Gulf. 
The last time around, QNet was being evangelised by former World Billiards champ Michael Ferriera, as well as some former national cricketers. This time, it is being hard-sold by senior corporate executives, including heads of multinational companies, who have been forced to quit in the 40s and 50s, having fallen off the career ladder. Moneylife has received emails from several worried readers asking us to bring the “QNet scam” to the attention of regulators before it dupes their friends and relatives already ensnared by the hard-sell.
One reader says, “QNet dealers are now targeting call centre employees, IT professionals and housewives on the promise of helping them earn extra income.” “QNet,” he says, “has small office, which it refers to as a “Grooming Centre” at Bandra in Mumbai. Its dealers and agents, however, rent out conference facilities for their rousing hard-sell which, like the Amway meetings, usually happens on a Sunday morning. To become member, you have to buy products—exquisite watches, holiday package, Chi-Pendants, gold and diamond jewellery—which are in the range of Rs1 lakh to Rs2.5 lakh and then to start earning commission; you have to make six other people to buy products”. But this is the simple option. The ‘packages’ go up to Rs6 lakh or more too. Also, there are apparently different schemes and packages being sold to different investors, rather than one clear product or service. 
For instance, Anil Mehta (name changed) a certified financial planner has this to say. “QNet is projecting that it can create over lakh billionaires through its Ponzi scheme. All you have to do is to invest once—say Rs5lakh and you will get back Rs 5lakh every week for the rest of your life. I know you will laugh, but this is exactly what they are projecting”. He says, since they claim to be a global company, they have managed to get bank managers, software professionals and insurance agents to get involved and evangelise this scheme. 
Manoj Arora (name changed), a chartered accountant and management consultant tells us how he decided to string along a QNet ‘operative’ to understand its modus operandi which promises to make you a millionaire in two or three years. 
He was scandalized at what he discovered and says, “QNet is just not about Amway-esque MLM but a Stockguru-type pyramid scheme. The premise is to get more and more people to invest Rs1 lakh to Rs6 lakh in an 'e-commerce' venture. They make you owners of QI group by selling three shares for every Rs1 lakh. How does that generate returns? The victims who are enrolled into the scheme, in turn hunt for newer victims to buy into the Ponzi. They are entitled to get 14% of share capital they or their victims raise. The scam is proliferating through social media like Linked-in to find newer targets. This reader had stored names and screenshots of people canvassing QNet from their profiles on Linked-in. 
Amrit (name changed), yet another reader wrote to say, “I was very recently approached by an ex-colleague with one wonderful scheme by QNet and he explained the products and plans of the company. I signed up for it on the basis of my trust in this friend. However, after joining I observed that the company is promoting its money-making plan by targeting the near and dear ones of those who has enrolled. I am now a suspicious about the activities of QNet and its functioning and skeptical about the manner in which they approach people. Can you tell me more about QNet?”
Well, the company had a chequered past. In 2008-09 it was making waves like it is today. At that time, it flaunted powerful political connections (at that time a GoldQuest executive, K Preetha had said that Nalini Chidambaram was a legal advisor. This was after we pointed out that that the connection was highlighted at its meetings to recruit/ensnare new agents). However, QuestNet virtually folded-up after the Chennai police arrested several employees and the business was in completely disarray. 
At that time, QNet’s Singapore-based Director of Corporate Affairs, Zaheer K Merchant had attempted to convince us that the business model was fair and in line with the activities of other direct marketing and MLM companies such as Amway, Tupperware and other multinationals which were members of the Indian Direct Selling Association. He also tried to explain the problems at Chennai.
Interestingly, QNet’s response was to organise a junket for journalists to Hong Kong to show that the company was not running a ‘scam’. This writer also received an invite, which we DID NOT accept. J Mayer, the Managing Director of QI Group had then written to say, “I believe that you are familiar with the names QuestNet and GoldQuest which have been in the media spotlight in Tamil Nadu and other areas of India for about a year or so.  Unfortunately, I am aware that the names QuestNet and GoldQuest do not have a positive image in the minds of either the media or the general public at this present moment.
Due to the legal challenges that both the companies have been facing, in India for over a year now it has unfortunately led to both companies being forced to halt their operations and temporarily close down their offices. However, the companies are by no means non-existent. Thus the MD of QuestNet India, Ms Pushpam Appalanaidu has not been in any position to make media statements or invite the media to an open forum to answer questions about the two entities.
As we continue to defend our case in the court of law to prove our legitimacy, we would like to take the opportunity to show you that QuestNet and/or GoldQuest are not a ‘scam’ or a ‘gold coin fraud’ company as it has often been portrayed in the press this past year.
QuestNet Ltd, the international company with which QuestNet India is affiliated is headquartered in Hong Kong and through representative and agent offices, has a presence in over 30 countries worldwide. The international company has been in the multi-level marketing business for about 11 years and caters to the needs of over 4 million customers in more than 100 countries worldwide who have taken advantage of the business opportunity provided by QuestNet to be a direct sales professional.
In order for us to show you the real face of QuestNet and share with you the story of the company that has changed millions of lives worldwide, we would like to invite you to visit our corporate headquarters in Hong Kong, where you can see for yourself our global infrastructure, meet with our multinational customer support team, go on a tour of our facilities including our warehouse from where thousands of products are shipped worldwide on a daily basis, meet with the senior management of QuestNet International  and learn about the investments the company has made in India with a view of long term commitment to the country”.
This time too, we reached out to QNet and Mr Merchant has agreed to answer all out queries. Accordingly, Moneylife has emailed several questions to QNet and we are awaiting answers which will be appended to this report. 
Since then, Moneylife has done extensive work on all MLMs and come to the conclusion that all of them fall foul of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978.  We have also made representations to the Prime Minister’s office to ban MLMs altogether or allow them to operate under a clear regulatory framework under a designated regulator. 
Today, while tens of thousand MLMs and Ponzis are cheating people no ministry or regulator is in charge. The ministry of corporate affairs (MCA) does not even require these companies to be incorporated in India. This ludicrous situation persists at a time when there is such heated debate about legitimate foreign direct investment in retail and insurance. 

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jitu moni

jitu moni 6 hours ago

Madras High Court
Gold Quest International Pvt. Ltd vs The State Of Tamil Nadu on 9 April, 2003
..... 25. Nothing is placed on record regarding the foundation of the petitioner companies and the aims and objectives of the companies to achieve and how they are beneficial or serving the ends of the society or the general public and therefore needless to mention that only to cover up cases of such nature, Act 43/78 has been legislated by the framers of law revealing thereby the legislative intent to cover up cases of such nature with schemes which are not based on any ideal relying on one's effort, hard work or putting in the intelligence etc. but on luck or chance of making quick or easy money by lazy or lethargic means of enrolling members into the scheme only to enrich the organisers at the cost of the general public which are glaring in the schemes and there is no wonder the respondents have issued proper directions to their subordinates to be on the alert and to avoid innocent general public from falling a prey to the ill-motivated designs or alluring tricks and tactics adopted by parties like the petitioners by using those who fall a prey early being used as their canvassing agents for enlisting more number of the general public to join the scheme ultimately to enrich themselves at the cost of the innocent public who are sure to be cheated ultimately and since many such instances have proved to be utter failures in the recent times giving way for the public to be cheated of their hard-earned life saving monies. Prevention is better than cure. The preventive and punitive measures taken on the part of the respondents cannot, under any circumstance, be termed as either irregular or illegal or infirm or in violation of the norms of law. The respondents have rightly exercised their jurisdiction conferred by law in registering such cases wherein such unlawful activities are reported or brought to the notice of the respondents thereby promptly registering the case either under the relevant provisions of the IPC such as 420 or under the penal provisions of the Special Act such as the Prize Chits and Money Circulation Schemes ( Banning) Act, 1978 and thus they have only acted in adherence to the requirements of law and no such directions or orders as sought for to be made in the above petitions need be necessary in the circumstances of the case.

26. So far as the judgments cited on the part of the petitioners are concerned, in the first judgment by the Honourable Apex Court it is clearly held that `in the first place, it must be proved that he is promoting or conducting a scheme for the making of quick or easy money and secondly, the chance or opportunity of making quick or easy money must be shown to depend upon an event or contingency relative or applicable to the enrolment of members into that scheme', which are the ingredients of the relevant provisions of the Prize Chits and Money Circulation Schemes (Banning) Act, which are laid emphasis by the Honourable Apex Court and the Honourable Apex Court would also hold that the `scheme has necessarily to be judged as a whole both from the viewpoint of the promoters and also of the members in order to find out whether it is a scheme for the making of quick or easy money and any event or contingency relative or applicable to the enrolment of members into the scheme'. Therefore, it is incumbent on the part of the respondents to study each and every such scheme floated and exercise their jurisdiction and proceed against, provided the transaction is not above-board and is secretive or clandestine in nature and if the transaction is considered to be a scheme for making quick or easy money.

27. So far as the case in hand is concerned, on a overall consideration of the facts and circumstances of the scheme floated on the part of the petitioners, the respondents in their considered view have rightly arrived at the conclusion to hold that they fall under the purview of Section 420 IPC and under Section 4 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and hence they have given positive instructions to the law enforcing machinery and the police to register the cases wherever such schemes are floated. Therefore, the actions and prosecutions initiated by the respondents and their subordinates could only be concluded as within the permissible limits of their powers to register such cases and not in violation of any law or rule or norms.

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jitu moni

jitu moni 23 hours ago

Egypt Business Directory | 14.01.2012
Faith Carnival 2: QNet's "unbelievable" path to Financial Freedom
Over 20,000 men and women strong, QNet has managed to build itself an army in Egypt through their team “Faith”.
The Cairo Hockey Stadium was almost filled, as Independent Representatives (IR) from all over the country stormed in, creating an atmosphere close to the spirit of football-fans, including drums, fireworks, and flags. They all came to attend the second Faith Carnival on Friday, the 13th of January 2012, which should mark the beginning of a new era in Team Faith, Network Marketing and QNet as a whole.

The focus of the carnival was the promotion of Network Marketing, the refutation of economic, social and religious criticism directed at QNet, and the motivation and inspiration of the team.

Almost equivalent to Morton Rhue’s 1981 Novel “The Wave”, the attendees chanted their slogan in such unity, fierceness and willpower that made the floor seemingly shake; screaming out: “The V, the V, the V, Faith!” while shaping the victory-sign with their fingers and holding them up. “The V” refers to the partner company of QNet.

The carnival offered a mixture of party, education, success stories and fun, and hosted international speakers, artists and public figures, such as Michael and Mark Ferreira (Founders and Backbones of Faith), Dr. Ezzat Abo Ouf (Actor), Dr. Sherif Abo ElNaga (Vice-President of 57357 Cancer Hospital), Chief Pathman Senathirajah (Managing Director of V), Dr. Ahmed Farouk Ghoneim (Professor of Economy - Helwan University), Dr. Rashad Abdellatif (Professor of Sociology - Helwan University), Amr Diab (Singer), besides various Egyptian QNet leaders.

Network Marketing depends on the direct selling method in which independent agents serve as distributors of goods and services and start recruiting their customers as their own sales-force.

All speakers were certain that sooner or later, the whole world would join QNet, even those who opposed the idea at the beginning. “If your friends and family do not join today, be patient with them. They will join eventually. We are the warriors of freedom that offer them financial freedom, and when Allah gives this message of hope and power to you, you must have the responsibility and the humility to pass it on,” Mark Ferreira explained during the carnival, confirming that Egypt is part of changing Network Marketing history.

Ferreira’s father Michael focused on the pros of Network Marketing in his speech, clarifying it was much more efficient than other marketing tools, not only because it included no distribution costs, but also because it brought upon societal change and job security. Claiming that it was in the hands of Faith to change the lives of others and the economy of the country, Ferreira Sr. said that Network Marketing was not only about selling products, but also about building a network and army like “this one”, pointing at the 20,000 attendees. “When you have an army, you have an asset that will give you residual income,” he added.

To refute the controversial topic of QNet being against the principles of religion, and especially Islam, the organizers displayed a video showing Sheikh Ali AbdelBaqi, the Manager of the Islamic Studies Advisory Department, and Priest Dr. Sameh Hanna. Both confirmed that the services offered by QNet are not taboo, as long as they go according to the Sharia and the laws and rules of the country.

A lot of effort has also been put into clarifying the economic side and benefit of QNet, underlining that it does not ruin the economy, but rather invests in Egyptians by providing teamwork and social skills, which should lead to a better, service-focused economy in the future. Additionally, QNet does not apparently lead to saturation of people and products, since people do not leave their jobs for Network Marketing and the marketed, imported products do not replace Egyptian manufactured goods.

In the concluding speech, Malaysian expert Pathman Senathirajah boost the confidence of the attendees one more time by stating: “My passport is Malaysian, but my heart is Egyptian, because you built this network, this family and you made it possible despite the great challenges in your country. When people in other countries tell me that it is difficult to build up a business, I tell them: Go to Egypt and learn from the Egyptians.” He was also confident that Faith Egypt would be the number one QNet team in 2012, if they worked as hard as they did till now.

Amr Diab paid a great deal of respect to the “QNet-ers” during his concert, and actor Dr. Ezzat Abo Ouf said: “You should be proud of yourselves, since you are raising Egypt’s name high. You are the hope and future of this country and seeing you makes me optimistic and sure that Egypt will be better. Whole Egypt should stand by your side.”

QNet was established in Egypt in 2009 by Khaled Obbeya, Mohamed Abdallah elGendy, and Mohamed Magdy Allam, 11 years after the original business started in Asia.

Today, QNet is present in over 160 countries with over 8 million employees and over 20 types of services.

Other speakers during the event:
- Ashley Williams – QNet Product Trainer
- Noha Salem and Mohamed Tarek
- Mai Abdel Moneim
- Mahmoud Ghanem
- Khaled Obbeya
- Mohamed Abdallah ElGendy
- Mohamed Magdy Allam

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jitu moni

jitu moni 3 days ago

Money Circulation Schemes, Direct Marketing, Multi-Level Marketing Schemes, Network Marketing

Money Circulation Schemes are being promoted in the name of Direct marketing (DM), Multi-Level Marketing schemes (MLM), Network marketing (NWM), Referral Marketing, Introduction Marketing, Chain Marketing etc.

These schemes are nothing but camouflaged Money Circulation Schemes. In the front end the promoters display products and services at the back end it is nothing but Money Circulation Schemes banned under the provisions of Prize Chits and Money Circulation Schemes (Banning) Act 1978.

To divert the attention of the public as well as the Law Enforcement Agencies and to cover up their illegal activity of Money Circulation Schemes they display products and services.

Product is only a bait but end result is Money Circulation Scheme

Money Circulation Scheme means any scheme by whatever name called where in the person has to enroll into the scheme through a already enrolled member by subscribing to the scheme by paying initial kit / member ship amount and purchasing goods and services, where in by this the introducer of the enrolled member will get benefits (easy money) and the company which promotes the scheme earns quick money. The enrolled member again has to enroll further members to get his amount back and also the benefits. By this the promoter of the company by just promoting the scheme gets benefits and the person who enrolls at the initial of the scheme reaps the benefits.

By enrollment into such scheme one would be getting back the initial paid investment and keep gaining financially by enrolling new members. So also, the second set of enrollers keep multiplying and gain financially, fascinating every onlooker to get engrossed into such dubious money circulation schemes. Such a system of chain to work endlessly to provide profit to everyone concerned would ultimately breakdown at some stage, resulting the financial benefit to some who joined the scheme at initial stages (they will be none than the promoters of the scheme), resulting in big financial loss to those who joined at a later stage. When a person fails to get his required clients or non-viability of the scheme but blame it as one’s personal failure. The gullible people are taken unaware when the real failure. The gullible people are taken unaware when the real picture of the money circulation schemes emerges. By the time the people realize that they were taken for a ride and cheated, it would be too late.

The promoters to promote their schemes through high profile campaign by using film stars, Government servants, Doctors, Engineers and well known personalities of the society in their meetings which are conducted in star hotels, Kalyanamandapams etc., with lot of fan fare. Public should refrain from attending such meetings.

Promoters of the scheme float their companies with attractive names like “Wonder World Co.” “Miracle Co” “Japan Life India” "Amway” “Gold Quest” “Ayerveda Life” “Herb Life” “Happy Life Co” “Magic Co.” “Nice Co.” “Mega Co.”, “eBIZ” etc.

They give attractive names to the enrolled members depending upon their enrollment like with attractive and stylish titles as “Silver member, Gold member, Diamond members, Platinum member, so on and so forth. They also call them as “Master Distributor, Super Distributor, Double Super Distributor etc,”, etc

They also use attractive slogans like “ Earn in rupees or dollars. Work from home ” “ Work four hours and earn Rs., 50,000 per month ” “ U R the boss of your business, so enroll immediately” “ Earn up to Rs.35,000/- + Monthly by just working 2 hours at home ” “ Do u want to earn extra by sitting at Home? The contact us ” “ Your pathway to Heaven ” “ Enroll with us for Healthy and Wealth life ” “ Do u want to lose your weight, then contact us ” etc.

These companies win over confidence of the members (victims) and maintain their image as charitable and benevolent, by offering donations to charitable, social and service oriented institutions by attracting publications, photographs of VVIP’s donating cheques. Likewise, they boost their image in a corporate style and try to gain mileage.

A single company will launch many sister companies to fool public as if to show that they are big group of companies. A single company renamed many a time attracts people of different places, takes its chameleon stride through colorful gifts, brochures, under case of cheating. Likewise, all innovative methods are put action to successfully grow them well and make money for themselves causing irreparable financial loss to the general public and society.

These companies results in exploitation of personal influence of each and every distributor or his close relative. If a Superior officer or his ward involved in MLM, the subordinates are forced to become members in the chain. Likewise if a close friend comes with a scheme, one finds it difficult to say “No” and if all the above get cheated also but they refrain from complaining to Police only to save their relationship/friendship.
If your close relative, friend, neighbor or your superior or colleague approaches you with a product / service which involves enrollment and further enrollment of members and meetings at high profile places / kitty parties then it is nothing but Money Circulation Scheme banned under the provisions of Prize Chits and Money Circulation Schemes (Banning) Act 1978.
The appeal to the public to not to enroll themselves into Multi Level Marketing Companies, Money Circulation Schemes, Network Marketing Companies and other such companies and such schemes and get cheated.
MLM schemes destroy the well knitted social fabric of our Indian society and make your house as well as your neighborhood a market.
It is an appeal seeking your co-operation with the Investigating Agencies to curb such menace and nip it in the bud before it engulfs the gullible Public.

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jitu moni

jitu moni 1 week ago

Press Information Bureau
Government of India
Ministry of Corporate Affairs
30-April-2013 17:52 IST

Curb on Fraudulent Mlm Companies

Multi Level Marketing (MLM) Schemes involving enrollment of a vertical chain of investors/agents constitute “Money Circulation” and are banned under the Prize Chits & Money Circulation (Schemes)Banning Act, 1978 which is implemented by the States. Giving this information in written reply to a question in the Rajya Sabha, Shri Sachin Pilot, Minister of Corporate Affairs, said that in order to facilitate effective control of MLM, a Group of Officers from Ministries of Finance, Corporate Affairs & Consumer Affairs along with representatives of Reserve Bank of India, Central Economic Intelligence Bureau (CEIB) and the Serious Fraud Investigation Office (SFIO) have prepared Model Rules called Money Circulation Scheme (Banning) Rules, to explicitly cover MLM under the said Act. Ministry of Finance (Department of Financial Services) has sent the rules for notification to the States.

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gurupreet 1 week ago

Vanamala/QNET runs away from Mumbai...

This is the message that was posted on recently...

Dear Members,

Due to service disruptions on our current hotlines, please refer to the following number should you have any queries: 0008006001144 or email us at

We apologize for any inconvenience.

Is it a 'Simple" Disruption or there is more then meets the eye..The truth is their offices were raided by the EOW..effectively shutting down the whole operations of Vanamala in Mumbai.

The last time this message was posted after Vanamala's Payment gateways were blocked..

Important Announcement regarding Payment Gateway - INR Payments
Dear members,

We are experiencing problems with our Payment Gateway system. As such, please refrain from using it with immediate effect.

To know the alternate modes of payment you can use, please contact our Customer Experience Ambassadors at
+91-22-6139-9500 and they will assist you accordingly. Thank you.

The above mentioned PRI Line number +91-22-6139-9500 has also become un-operational

How good these white collared criminals are at sugar coating the real truth...Raids become "disruptions"...blocking becomes "problems"...shame on you all white collared criminals, you all should be tried for treason for your anti national activities.

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