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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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440 Comments
jitu moni

jitu moni 2 days ago

http://pib.nic.in/newsite/PrintRelease.a...

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

gurupreet 5 days ago

Vanamala/QNET runs away from Mumbai...

This is the message that was posted on http://www.vanamala-india.com 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 customercare@vanamala-india.com

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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gurupreet

gurupreet 1 week ago

Cheap Pathman said in his video message to India.."We shook hands with the right people in India"

Wouldn't it be FUN exposing these "Right People" ;)

hehe

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gurupreet

gurupreet 1 week ago

Cheap Pathman said in his video message to India.."We shook hands with the right people in India"

Wouldn't it be FUN exposing these "Right People" ;)

hehe

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X
jitu moni

jitu moni 1 week ago

http://www.business-standard.com/article...

Police opposes former billiards champion Ferreira's bail plea
Press Trust of India | Mumbai
April 8, 2014 Last Updated at 20:14 IST


The Mumbai police's Economic Offences Wing (EOW) today objected to an anticipatory pre-arrest bail plea filed by former world billiards champion Michael Ferreira in connection with the Rs 425-crore QNet case.

On January 22 the court had directed Ferreira to appear before the investigation agency, which he had complied with and was grilled for four days by EOW sleuths.

"We filed our reply in the case and objected to his pre-arrest bail application," special public prosecutor Pradeep Gharat told PTI.

The court was told that Ferreira was associated with Qnet even after knowing that it was a scam, he said.

"We also told the court that Ferreira made crores of rupees from the scam," Gharat said.

So far, the EOW has arrested nine QNet team leaders for allegedly duping investors by offering to sell products like magnetic disks, herbal products and holiday schemes through fraudulent practices.

QNet has also been accused of using the banned binary pyramid business model for multi-level marketing (MLM) schemes to entice investors. The accused have been charged with cheating and forgery under relevant sections of the Prize, Chits and Money Circulation Schemes (Banning) Act 1978.

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