After keeping mum for all these years the MCA has finally decided to hand over the probe of chit-fund, MLM, Ponzi and pyramid schemes to a special task force under the SFIO
After the collapse of Saradha group, the ministry of corporate affairs (MCA) in a face saving measure has decided to hand over probe of such chit-fund, MLM, Ponzi and pyramid scheme operators to Serious Fraud Investigations Office (SFIO).
“…in view of the larger public interest involved in these cases, and concerns regarding misuse/ laundering by such companies of the ill-gotten wealth, and the possibility that the promoters of these companies may strip these companies, it has been decided by the MCA to set up a Special Task Force in the SFIO to investigate the affairs of such companies. Accordingly, all investigations into such companies are being entrusted to SFIO with immediate effect,” the ministry said in a release.
The ministry said the probe has been ordered in view of a larger public interest involved in the issues, although the state governments are the appropriate authorities for regulation of such chit fund companies and schemes under the Chit Fund Act, 1982.
Moneylife has been continuously writing about the inaction by government and regulators regarding MLM companies, money circulation schemes, pyramid-marketing schemes and other similar companies that swindle the unwary public by offering them misleading inducements and depriving them of their hard-earned savings.
Here are some of the important stories written and representations made by Moneylife over the years…
Moneylife Foundation’s representation to PM, FM and RBI on MLM schemes
In May 2011, following the exposé by Moneylife on Speak Asia Online Pte Ltd and its MLM scheme, Moneylife Foundation sent a representation to prime minister Dr Manmohan Singh, (the then) finance minister Pranab Mukherjee, finance secretary Sushama Nath and Reserve Bank of India (RBI) governor D Subbarao urging them to ban all MLM companies and their schemes in the country, or to bring all MLM companies under the regulation of either the RBI or the Securities and Exchange Board of India (SEBI), to stop them ensnaring gullible people.
West Bengal’s ‘chit fund’ mess and inaction of MCA
The massive money, which is raised surely shows somewhere on the balance sheet of the company, filed regularly with the MCA. The primary recipient of the information about these companies is the MCA, and surprisingly the MCA is the least proactive in the entire process of bringing these perpetrators to regulatory focus, sooner before tonnes of money vanish.
Dubious pyramid schemes or money-circulation schemes are looting Indians across economic strata, finds Sucheta Dalal. This will continue since Central and state governments seem unconcerned.
Pyramid schemes: Daylight robbery
Pyramid marketing companies are looting the public easily, while the government watches. Many countries have banned them outright.
Ponzi Scheme: Is RBI Passing the Buck?
A strange deposit scheme that is proliferating in the states of Orissa, Chhattisgarh, Karnataka and Maharashtra has already collected almost Rs1,000 crore and is expanding virtually unchecked. The scam has elements of money-laundering and possibly the use of fake and forged currency as well; however, the banking regulator would like to pass off the investigation to the respective state governments for investigation under the antiquated Prize Chits and Money Circulation Schemes (Banning) Act.
An international network marketing scheme hawking expensive limited edition coins is attracting a huge following. Sucheta Dalal examines this strange quest.
Moneylife readers know how MLM schemes ensnare lakhs of people by promising extraordinary returns. We learn from the ministry of consumer affairs that the government is now waking up to the need for better regulation of MLMs and ponzis. At the same time, the powerful Direct Selling Association of the US is lobbying hard for an amendment.
‘Beware of deception by pyramid schemes, MLMs trying to lure people with promise of high returns’
Pyramids are pure fraud. Their business is unsustainable-they promise payment for goods or services of dubious value. The hallmark of these schemes is the promise of sky-high returns in a short period of time, for doing nothing other than simply handing over your money to them, and getting others to do the same.
Ponzi schemes: The fraudulent art of chain game
Even as India bans pyramid schemes under a statute called the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, the country continues to be a happy hunting ground for pyramids because our legislation is deliberately unworkable.
Investors losing money, or falling for dubious Ponzi schemes, is not a recent phenomenon; this has been happening for decades and it is not restricted only to India. Why is it that people repeatedly fall prey to such schemes in spite of being aware of the frauds perpetrated by conmen under different guises?
Set up inter-departmental group to curb MLMs
EAS Sarma, former power and finance secretary, said the ministry of finance, Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), and the investigating agencies should collectively tackle this problem without any delay, as every day of procrastination will only result in thousands of hapless families cheated by the promoters of these schemes.
How MLMs wave an annulled letter to claim legitimacy of their operations and con people
Spokespersons and dealers of multi-level marketing (MLM) schemes or network marketing schemes respond to questions about their legitimacy by brandishing a 2003 letter issued by the then secretary, ministry of corporate affairs (MCA). What they omit to mention is that the letter was subsequently annulled following complaints about its misuse. This means, the letter used by these scamsters is no more valid.
Pyramid and MLM schemes are scourge on people
While there are existing laws such as Indian Penal Code (IPC), the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 (PCMCS Act) and others under which concerned agencies could prosecute the culprits, there is no effective mechanism in place to ensure a coordinated approach to identify the fraudulent operators in advance and book them well before they destroy the livelihoods of thousands of households and launder the ill-gotten funds to unknown destinations.
MLMs now want to ‘invest’ money in India, really?
A set of powerful MLMs, which are part of an exclusive closed club, called the Indian Direct Selling Association or IDSA (on the lines of the Direct Selling Association of the US) has been lobbying hard to make a distinction between their operations and those of others, who they call, fly-by-night operators such as SpeakAsia and Ad Magnet.
QNet, the MLM company, has no answers to Moneylife’s simple questions
QNet, the controversial Hong Kong-based multi-level marketing (MLM) operator with multiple names (GoldQuest, QuestNet, QNet, QI Ltd and QI group are the better known names) refused to answer simple questions like how much money their independent representative (IR) earns on an average every month and why their products are priced so highly. Instead, it sent us a threatening and defamatory mail that raises more questions as to their real motive.
2011: A year dedicated to MLM and Ponzi scheme frauds
If 2010 was the year of great Indian scams, 2011 was rather of ponzi and multi-level marketing (MLM) frauds. SpeakAsia managed to top the chart, but soon many others joined the bandwagon, duping gullible investors for several thousand crores.
How to avoid 'get-rich-quick' schemes and scams
Nothing comes free in this world, especially money. The universal truth is you need to earn your money by hard labour all the time and there are no shortcuts to double it in the shortest span of time. Therefore, even if your near and dear ones tell you he/she will double, triple, quadruple your money within a few days/months, politely reply to them that it is not possible and what they are advocating is a pure 'get-rich-quick' type of scam.
Herbalife is a pyramid scheme worth zero dollars: Bill Ackman
Herbalife, a global MLM scheme also prevalent in India, is believed to be worthless according to hedge fund manager Bill Ackman, who made a detailed presentation on why consumers should avoid buying the company’s products and stay away from the MLM.
Inside story of the National Stock Exchange’s amazing success, leading to hubris, regulatory capture and algo scam
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Fiercely independent and pro-consumer information on personal finance.
30-day online access to the magazine articles published during the subscription period.
Access is given for all articles published during the week (starting Monday) your subscription starts. For example, if you subscribe on Wednesday, you will have access to articles uploaded from Monday of that week.
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opinion on topics being discussed.
Virendra Jain
I stand by my comments posted earlier regarding SFIO and do not wish to debate with you regarding their track-record or accountability/conduct of any of the ministries. Midas Touch takes up issues which it considers important and has the resources to do it. The rest does not relate to us. Frankly, i find such mails and their content a waste of time and big deterrent in participation in discussions.
Virendra Jain .
Noted.Thanx.
Regards,
For expeditious action, post investigation by SFIO, it may be desirable to put a detailed action plan well in advance so that precious months/years are not wasted after the SFIO submits its report to the ministry/appropriate authorities.
Virendra Jain
I was closely associated with Mr.T. A Pai, if you know who he was & what he stood for.
You write as VKJ, Prez, the site shows different VJ with his photograph on PC, of Delhi, you were empanelled in Arnab's telecast as from Mumbai Prez.
Kindly clarify the same & as well answer why you've not answered my earlier posts to you.If not answered it amounts to no answers. No must! you can trash it including this.
The fundamental aspect you miss is that SFIO is under which ministry? What teeth can it have? Which ministry can initiate action under financial scam?
You're investors association Prez, [no idea of Delhi or Bombay - Midas!] CAN YOU NAME ONE SINGLE SFIO case who has got culprits to book? Even if, monies evaporated apart from foot soldiers no one hanged.
Center has no role to play, it's the states subject, with sufficient legal provisions to monitor the schemes.
When the state politicians with their clout bless the swindlers why you can't highlight it? You only come to know when swindled & then say 'the swindlers had political backing'!? What you & the administration was doing?
You have never ever raised your voice about 'credit societies'duping in Maharashtra. Have you? Have you got relief for them?
With more than 20/30kCR at stake, the WB proposed laws [Bill to be introduced on 30th]will have positive impact, if model a law other states should also immdly enact the same. The 2009 aborted bill is now retrieved. The new provisions will encompass MCA aspects also. Further it will be with retrospective effect.
Now the center can't be just a spectator.
On Friday, the finance ministry in its reply stated that 27 co's were probed from the real estate sector across the country.SEBI found nine entities not involved in CIS, 2 are probed, other being probed by different agencies. It has not stated the amount lost & people duped in numbers!
Await your reply if any?
Regards,
Not only this now shifted operations to multi state cooperative society to continue to loot people and promote money laundering together.
Proposed ammendment in multistage cooperative society act is also isn't to cold storage by standing committe on agriculture headed by Acharya,all visible how all are participating to allow loot in the country.
Did registrar multi state cooperatives had taken any survey or study or investigation on the model on which multistage cooperative society are registered recently in last three years and their financial results are with registrar office.
By making member of multi state cooperative society money laundering and loot should not be allowed.
Money life may take lead to expose such societies to stop loot and money laundering.