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Enforcement action accelerates against Ponzi and MLM schemes

A burst of enforcement action in the past fortnight raised hopes of crackdown against notorious Ponzi and MLM schemes

Ahuge burst of long overdue enforcement activity in the past fortnight raises hopes, for the first time, of some check on the mushrooming of dubious ponzi schemes, direct selling companies, collective investment schemes (CIS) and pseudo-chit funds. Consider this.

    On 22nd November, the Supreme Court, finally, clamped down on the personal freedom of Subrata Roy, founder of the strange Sahara group and barred him from travelling abroad or alienating assets.

    On the very same day, Mumbai’s Economic Offences Wing (EOW) arrested eight agents of QNet, a controversial, Hong Kong-based multi-level marketing (MLM) company promoted by a Malaysian. The police have already frozen the bank accounts of these ‘team leaders’.

    On 23rd November, Kunal Ghosh, a suspended member of parliament (MP) of the Trinamool Congress, was arrested for colluding and conspiring with Sudipta Sen, founder of the Saradha group which went bust and took down a few thousand crores of savings of poor and low-income people.

    On 28th November, Malabar Gold and Diamonds, the rapidly expanding jewellery chain from Kerala, was raided by officials of the Directorate of Revenue Intelligence (DRI) at Kozhikode. According to a report in The Hindu, the raid followed a statement from one of the accused involved in smuggling gold from the Gulf and selling it to the jewellery group. The group’s turnover has reportedly grown from Rs50 lakh to Rs22,000 crore in just 20 years!

    On 2nd December, the EOW, Mumbai, nabbed the alleged mastermind of SpeakAsia, Ram Niwas Pal, who has fraudulent cornered over Rs300 crore, according to the police. Moneylife was the first to report about this brazen and high-profile ponzi which went bust in October 2010 taking down over Rs2,000 crore belonging to 230,000 people. The key promoters of this Singapore-registered company are still absconding; nor have they been made to return the Rs900+ crore transferred to Singapore alone.

Some of the credit for this flurry of activity by other enforcement agencies probably goes to the Securities and Exchange Board of India (SEBI) which has used its recently acquired powers to crack down on a series of CIS including teak tree investment schemes and a time-share called Orient Resorts. It has also ordered the freezing of assets worth over Rs500 crore of companies involved in various irregularities. Clearly, regulatory overlap leads to better enforcement and action, if one of the regulators/agencies is willing to act decisively. A similar rush of activity is evident on the National Spot Exchange Limited (NSEL) scam where, again, Mumbai’s EOW is leading the crackdown and attachment of properties, rather than any independent regulator.  

But we have a long way to go before we even make a dent in the explosion of Internet-based scams and tricks (work-at-home scams, insurance scams, job scams, lost wallet scams, Nigerian scams) that are sucking up the savings of gullible people everyday. Topping the list are get-rich schemes targeting housewives and people laid-off from work which lure their victims promising high earnings from home-based work. Often, these are variations of the SpeakAsia survey fraud and would correctly be the domain of the Serious Fraud Investigation Office (SFIO). But SFIO is one agency that remains somnolent even after the new Companies Act 2013 has hugely enhanced its powers; it lists SpeakAsia and QNet as ongoing investigations with very little action.

User

COMMENTS

CHANDU CHARTIST

3 years ago

AMWAY IS ALSO MLM BUT RUNNING WITH LEGAL LOOP WHOLE

shyam sundar matham

3 years ago

It is Corporate Frauds Watch which filed the criminal case against speakasiaonline for the first time anywhere in the world.

REPLY

MDT

In Reply to shyam sundar matham 3 years ago

Mr Shyam Sundar Matham,
Thanks for posting your comment. We appreciate the efforts put forth by Corporate Frauds Watch. However, it was Moneylife who had exposed Speak Asia fraud first.
Anyway, the article is not about giving or taking credit. It merely states the facts and action taken by authorities against Ponzi and MLMs.
Thanks again,
MDT

Shyam Sundar Matham

3 years ago

To set the record straight, Vijayawada-based Corporate Frauds Watch filed the first criminal case against speakasiaonline which led to its burst. Give credit when it is deserved.

REPLY

MDT

In Reply to Shyam Sundar Matham 3 years ago

Mr Shyam Sundar Matham,
Thanks for posting your comment. We appreciate the efforts put forth by Corporate Frauds Watch. However, it was Moneylife who had exposed Speak Asia fraud first.
Anyway, the article is not about giving or taking credit. It merely states the facts and action taken by authorities against Ponzi and MLMs.
Thanks again,
MDT

Ramesh Bajaj

3 years ago

Dear Madam/ Sir,
I would highly appreciate if somebody could guide me how to recover investment from Suman Motels?

Thanking you
Yours sincerely,
Ramesh T. Bajaj
[email protected]

Ramesh Bajaj

3 years ago

Dear Madam/ Sir,
I would highly appreciate if somebody could guide me how to recover investment from Suman Motels?

Thanking you
Yours sincerely,
Ramesh T. Bajaj
[email protected]

MOHAN

3 years ago

Are gold fixed deposit schemes legal?

http://www.moneylife.in/article/are-gold...

MOHAN

3 years ago

Renowned gold merchants cheating people with illegal schemes

http://corporatefraudswatch.blogspot.in/...

Dev

3 years ago

I have heard Malabar Gold MD saying in a TV channel that raid is not a big thing as there were many such raids in past. He also denied having any links with Mohammed Asharaf T.V. According to him, Mohammed Ashraf is only an employee and not a group director as alleged by the DRI.
We have not heard anything from the DRI after the raid. Was it a routine one as claimed by the MD of Malabar Gold? I think 'RAID"; and "inspection" are different and raid is a very serious one. Were they any such raid in the past? If yes, what happened to such raids? Was any action taken after that? Is Mohammed Asharaf T.V is a group director of Malabar Gold or just an employee? Are they (DRI) continuing with their investigation?

DRI must clarify.

REPLY

MOHAN

In Reply to Dev 3 years ago


Former Miss South India quizzed in gold smuggling case:

http://www.thehindu.com/news/national/ke...

Kerala gold smuggling case: CBI quizzes model Shravya Sudhakar

http://www.deccanchronicle.com/131210/ne...


Gold smuggling case: CBI issues notice to Mythili


http://english.manoramaonline.com/Cgi-bi...

Raj

3 years ago

More news about Qnet - How it is cheating people can be viewed at

http://www.moneylife.in/article/qnet-whe...

REPLY

MOHAN

In Reply to Raj 3 years ago

Chain Money - A concern of economical drain


JUDGEMENTS AGAINST MULTI-LEVEL MARKETING (MLM) A CAMOUFLAGED ILLEGAL MONEY CIRCULATION SCHEME

http://anti-mlmfront.blogspot.in/

Raj

3 years ago

Let's hope that the Qnet cancer the eradicated from India. They are curse to the society...evading tax, spoiling relationships...

Vaibhav Dhoka

3 years ago

Moneylife is making all efforts to spread financial literacy.literacy. Congratulations.But it is equally important that everyone should lessen one own greed.

REPLY

swetank

In Reply to Vaibhav Dhoka 3 years ago

what financial literacy? look at the advertisement moneylife has put in the story...it is of speakasia...so on one hand they say it is ponzi scheme and on other hand it is earning money from them...which shows that the only reason they are doing this story is to blackmail people to advertise on the website...otherwise no one will bother to read this website...

Uday

In Reply to swetank 3 years ago

you are a lulu

MDT

In Reply to swetank 3 years ago

swetank,
Thanks for your comment.
Sorry to say, but you need to first learn and understand the difference between a picture used for explanation and an ad.
The Speak Asia image is used to show/warn readers about how these MLMs use advertisements to lure gullible investors like you.
Also when SpeakAsia is no more, who will pay for the ad? Use your brain.
Hope next time you will understand the issue before blindly posting your views and letting people know about your IQ.
Thanks again,
MDT

ramila

3 years ago

mam, very glad you have taken an initiative,also i understand its a long process,speak asia is a closed unit now,but with regards to qnet etc still working n rebuilding,more people getting sucked into ,n those in stuck to leave...whats govt's plan of action to curb all.
thanks n keep up your good work

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