Blundering in Finance

Moneylife Digital Team 19 April 2018

Economy & Nation

Rahul Dravid, nicknamed The Wall, is a legend for his studied and meticulous approach to the game of cricket—as a player, captain and coach. Prakash Padukone had a similar reputation. Wouldn’t you expect them to show the same approach to their hard-earned savings? So imagine our shock to find that Rahul Dravid was duped of Rs4 crore by a ponzi scheme, peddled to him by a sport journalist, Sutram Suresh, who clearly had his trust. Isn’t that like going to a dance class to learn cricket? Would Mr Dravid or Mr Padukone have made that mistake?

The key to this strange decision is in the quote by a police source reported by various newspapers. It says, the scheme promised a return of 30% to 40% and that made all the difference. Among the other victims was young Saina Nehwal, who had once said that her father handled her finances and invested them in insurance. As it happens, the journalist who conned these sports stars was also an insurance agent.

His company has allegedly scammed 800 people of around Rs300 crore and, on Mr Dravid’s complaint, scamster Raghavendra Srinath, the journalist Suresh, and many others have been arrested. But will the money come back? It rarely does, in ponzi schemes.

Anyone who has attended a Moneylife seminar knows our simple rule of thumb: if someone offers you a fixed-income return that is 3% above that of a bank term deposit, it is a red flag. Gifts and pass-backs from distributors/agents are also a red flag. We also say that the trick to luring people into a ponzi scheme is to make quick initial payments of the high returns that are promised. Here, too, Mr Dravid says that the scamster paid the promised returns, initially, but stopped paying after 2017. But that is exactly how ponzi schemes work. Strangely, Mr Dravid is related to luminaries in the financial world, but has apparently not bothered to seek guidance on investment.

Comments

User

Ashok Senniappan

7 years ago

Money is one of the most dangerous instrument thart if not handled properly
one will be pushed into the black hole.

Bapoo Malcolm

7 years ago

There was a time, in the 50s and 60s in Europe, when professional cyclists had a lot of money; compared to other sports. The investment of choice was restaurants and cafes. A la Tendulkar. Most lost a lot of money. The guys were not used to 24/7 attention to the business. Novelty, of shaking hands with the greats, would soon wear off, fewer footfalls would follow. There is a saying in Gujrati, "Kheti atelay paisa ni nyaast, Jaray kheydoot nahin hoy paas". Translated, Farming is money down the drain, When the farmer is not omnipresent. Entrusting money to salesmen, hoping for unearned fortunes, is the surest way to calamity. Obviously, The Wall did not take proper guard! Sad.

Salman Usman Qazi

7 years ago

3% fixed-income return is for a month or a year?

Abhishek Singh

Replied to Salman Usman Qazi comment 7 years ago

3% over FD rate...