Heera Gold, Still under Investigation and Litigation Attempts a Comeback with Digital Gold
Heera Gold, the ‘halal investment’ opportunity that was described as a ‘Ponzi-like’ scheme by the capital market regulator, is back at its old game of luring people with the promise of high returns. This time, the company and its founder are hawking ‘digital gold’.
 
Dr Nowhera Shaik, who calls herself the ‘CEO & Chairman of Heera Group of Companies, Bharat’, primarily targets the Muslim community which has fewer investment options due to religious restrictions. Out on bail after her arrest in 2018, she seems unfazed by simultaneous investigations by the police, the serious frauds investigation office (SFIO), the enforcement directorate (ED) and lawsuits at the Supreme Court (SC).
 
Although relatively smaller, Heera Gold’s marketing mirrors that of two mega Ponzis—the Sahara group cooperative societies and PACL or Pearls. Both duped people of well over Rs50,000 crore each, even while investigations and lawsuits were ongoing. Over time, Heera Gold could easily grow as big.
 
Digital Gold
 
The latest social media blitzkrieg, promotes the Heera Digital Gold app as a ‘glittering’ and ‘revolutionary’ investment opportunity, with the brazen assertion that “the value of digital gold has surged from just $2 to a dazzling $44, highlighting its incredible growth potential.” There are no details of the source or unit size of this astounding surge.
 
In a long promotional email on 11th September, Nowhera Shaik ([email protected]) promotes digital gold, claiming that it offers transparency, security and tracking of real-time value of holdings through its app. The gold, she says, “is stored in secure vaults, eliminating concerns about storage and safety,” with no details. The email steers clear of assuring any return which is a big contrast from the past when the claim of up to 200% returns had people selling assets and property to invest in Heera Gold. This time though, her message is being amplified through paid promotions and financial influencers on X (formerly twitter) and other media channels.
 
Now for some facts. Digital gold is merely a digital representation of physical gold stored in a secure vault and can be traded through online exchanges like other financial assets. While it offers convenience, the price moves in tandem with the physical metal.
 
Digital gold is also different from gold futures contracts traded on the Multi Commodity Exchange (MCX) and the National Commodity & Derivatives Exchange Limited (NCDEX). 
 
Gold prices have, indeed, been volatile over the past year; but the surge is nowhere near the kind claimed by Dr Shaik. This chart https://www.bankbazaar.com/gold-rate/gold-rate-trend-in-india.html provides historical gold prices for 10gms of 24-carat gold. The price of gold has doubled since 2018 (a little more than 14% compounded annual growth) and touched a sizzling Rs61,000 in 2023 (it was Rs58,638 on 12th September).
 
 
Our concern about the new campaign by Heera Gold stems from its controversial background and the fact that it is absolutely in sync with how Ponzi / multi-level marketing (MLM) schemes work.
 
All MLMs pay handsome returns initially to lure people. Some are large global operations that can go on for decades by using political support and employing movie stars and renowned sports personalities, to pitch their products. Eventually, the steady siphoning of funds and high payouts, without a credible business model, causes them to fold up.
 
Heera Gold’s History
 
Heera Gold began operations in 2010 and was already reneging on payments in 2012, when Asaduddin Owaisi, member of Parliament (MP) from Hyderabad, filed a complaint against it for cheating his constituents. The group began to seriously unravel in 2018 when the Hyderabad police, SFIO and ED intensified their investigation (Read: SEBI confirms Heera Gold is a Ponzi scheme, says EOW, ED and SFIO probing the MLM).
 
In October 2018, Dr Nowhera Shaik was arrested on various charges including money-laundering (Read: Heera Gold Chairman Nowhera Shaik arrested in Hyderabad). By this time, her group had expanded to 15 companies and had even set up a political party which contested elections in Karnataka. She was granted conditional bail in 2019.
 
The ED investigation and action against Heera Gold was continuing until March 2023, when the agency attached Rs33 crore worth of properties under the money-laundering charges.
 
The Ponzi Parallels
For investors, the comparison with PACL and Sahara is important. Jaipur-based PACL or Pearls, a shadowy entity with unknown promoters, conned people by offering high returns by buying units of land in a mutual fund-like, collective investment scheme. It first attracted the attention of the Securities and Exchange Board of India (SEBI) in November 1999 (Read: Collective Investment Schemes: SEBI has done a great job on Sahara but what about the others) when it had already raised Rs 20,000 crore by promising high returns and was planning an initial public offering (IPO).
 
Despite an investigation launched by the regulator, the company was able to game the legal system with the help of high-profile lawyers. This ensured that PACL could continue its fund-raising spree by obtaining stay orders from various courts. By the time the cases reached the apex court, the promoters had raised over Rs49,100 crore (Rs60,000 crore, according to some media reports) from 55mn (million) investors and moved vast amounts of their wealth abroad. The SC verdict in 2016, including the committee under retired justice RM Lodha supervising the collection and refund of money, was much too late to provide any real justice to investors. As of May 2023, the committee has only been able to refund Rs919 crore to 1.9mn investors who got Rs17,000 each. (Read: Lodha Committee may be the Answer for mega scams)
 
Subrata Roy’s Sahara group was even more stunning. In 2012, the SC handed down a landmark verdict in a specific case pertaining to Rs25,000 crore raised through debenture-like instruments without regulatory clearance. The group founder, Subrata Roy, spent nearly two years in jail and remains out on bail. There were investigations launched by other Central agencies. 
 
And yet, right under the nose of regulators and the judiciary, Sahara set up four cooperative societies across India, which raised over Rs80,000 crore, managing to convince gullible investors about its credibility and business until this fiction also unravelled around the COVID pandemic. (Read: Sahara’s Mysterious Riches: Rs1,10,000 Crore Raised in 10 Years despite Intense Scrutiny of Government, Supreme Court and SEBI).
 
In March this year, following another SC order (Sahara Refunds: A Silent Regulator and a Mysterious and Confusing Supreme Court Order), the government has promised to refund up to Rs5,000 crore to investors of the Sahara cooperative societies. This means that only a small number of investors will get a small part of their principal back.
 
The Moral Dilemma
Ponzis, such as Sahara, PACL and Heera Gold, present a dilemma. While the audacity of the founders and their ability to manipulate the system and market themselves in dubious ways is without doubt, the investors also need to share the blame. The very same investors who ignored all the negative reports on Sahara, PACL or Heera Gold, will go to desperate lengths to recover their money when it is largely irrecoverable.
 
Heera Gold investors, clueless about the gravity of judicial proceedings had begun to WhatsApp Supreme Court judges hearing the case in August 2022. It led to an angry justice SK Kaul issuing a stern warning and ask their lawyer to counsel them. Those who invested in the Sahara cooperatives, once a silent and faceless lot, have been holding futile demonstrations and some have tragically died by suicide.
 
Exactly like Sahara and PACL, Dr Shaik brazenly continues to raise money with the promise of extraordinary returns, despite action by regulators and investigation agencies. In doing so, she is banking on greed, gullibility and ignorance of the people.
 
The very same investors, who ignore all sensible advice when the scheme is apparently doing well, and succumb to greed and avarice,  immediately begin to look for someone to blame and turn their ire on regulators and even the media!
 
(An email sent to Dr Nowhera Shaik’s office has not been answered).
 
Comments
ks.sabaa2012
9 months ago
What about SafeGold, MMTC-PAMP India.Whether these are reliable and safest digital gold companies.
mdroza
9 months ago
Heera gold is pozy scheme which is run by Nohera Shaikh . Kindly note and stay away from the investment and she is looted 1.75 K lakhs muslim in india by heera gold and with 36 % return which is not possible.
gdbm.llc
9 months ago
It is well verified in Dubai DMCC that Nowhera is a ponzi queen, Compliance report has been made upon her fraudster activities on DMCC Letter head signed by authorities. Meetings were held at Dubai police head quarters regards the same. Supreme Court of India should take a drastic step against her & seal all her properties distributing it back to her lenders & force her sell fruits & vegetables on street like she used to do earlier as a punishment.
trivenipapercup
9 months ago
why sebi enter after game is over . still no body received money . even if they receive it comes in part .
shahbazkhanminority
9 months ago
Thank you
Shahbaz ahmed khan president heera victims association president
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