Citrus Check Inns, the new avatar of Royal Twinkle Star Club, is selling its holiday membership as an investment plan to gullible investors. Is SEBI aware about it?
Citrus Check Inns Ltd is the new avatar of Royal Twinkle Star Club (RTSC) that was infamous for selling holiday packages to gullible people on monthly instalment basis and promising high returns on their investment. Several agents of both these entities are found hard selling these as investment plans just to earn more commission and also recruiting new agents for marketing it.
One investor, Sampath P told Moneylife that, his parents invested in RTSC investment plan. Not being very financially literate they misunderstood the holiday package membership as a recurring deposit plan. They paid Rs500 every month to RTSC in the hope of getting good returns on their investment! On maturity when Sampath and his parents went to collect the amount, after standing in long queue with other investors waiting for their money, RTSC simply refused to pay up. This happened on several occasion, finally the company agreed to pay the money he invested along with some interest. He said there are many other investors who are still asking for their money.
Few agents of these companies operate through their own website and sell membership plans. Their sites include presentations and membership plans of both the companies as well as how one can earn income through its plans. Mrs Harapriya, an agent, in her blog titled: Big-Dad’s-Money, posted about how one can become millionaire by being part of its network and investing in its ‘investment plans’ and she typically pitches it in the money-circulation scheme way.
“In this world with high rate of inflation everybody wants to become rich overnight. Sometimes question comes in mind, is this possible? I know for getting prosperity in life, hard work is a must, without hard work life becomes a bed of thorns.
It is in your hand to make the dream comes true and to walk on the red carpet with roses under your feet. You will earn crores of rupees, dollar, pound sterling even euro. It is all in your hand. Join citrus check-inns in April by depositing an amount of Rs15,000 or more amount in different holiday plans of the company.”
There are many complaints on forums like complaintboard.in regarding ‘investment plans’ offered by Royal Twinkle Star Club. One such victim, Sajid Memon, warns people about the company. He wrote; “Royal Twinkle Star Club is misleading the common public by false selling. The company is really a fake. These people take common people hard earn money, promise 13%, 14% or more interest, and then come up with many excuses and finally disappear. It happened with me. They convinced me, though my family said a no and made me invest.”
Both RTSC and Citrus Check Inns are owned by Mumbai-based Mirah group, which runs hotels under the name Citrus and retail food chain restaurants such as Rajdhani, Mad Over Donuts and Falafels. Citrus Check Inns website claims that it gives freedom to its members to travel over 30 Indian and 3,000 overseas destinations.
Earlier in February 2012, the MCA has directed a probe into books and records of Royal Twinkle Star Club, following allegations of illegal deposit collection from several investors. “RTSC offered customers a variety of Investment plans for holidays, Investors have raised concerns as the holiday plans have an option for redemption of the subscription amount. Registrar of Companies, (Roc)Mumbai received complaints from several investors saying that they were approached by agents of RTSC, who guaranteed returns of 1.5 times in 4 years, 1.7 times the investment in 5 years, double in 6.5 years and 3 times in 9 years,” says a report from Business Standard.
Omprakash Gupta, chairman and managing director of Mirah group, told the newspaper that there was no probe by MCA into the company books and accounts. Goenka said, “RTSC was marketing holiday plans by subscription to the membership offers, but not collecting deposits. The points mentioned in offer documents are reward points as offered by any credit card company or airline company as bonus reward points.”
RTSC in its new avatar as Citrus Check Inns also offers membership plans with different names and features, which are based on the points system. On paying certain amount, the company provide points to investors, which they can redeem at various Citrus hotels. Each point is equivalent of Rs100 and people who do not want to avail holiday plan can ‘rent out’ their holidays to someone else after fulfilling all terms and conditions.
The company displays the holiday membership plan in equated monthly instalment (EMI) options for future holidays along with reward point scheme. However, majority of the company agents mis-sell this membership as investment and also promote it as part time and full time earning opportunity. This includes selling of membership plans and adding more people into their network like multi-level marketing (MLM) schemes and earning commissions.
One reader told Moneylife, “Citrus Check Inns is selling investment schemes and collecting money from people with promise of returns more than bank and post office, in the garb of timeshare. They are targeting low and middle income people, who do not have much knowledge of an investment product.”
One agent of the company wrote on complaintboard.in. It says, "Citrus Check Inns Ltd Refundable membership plan as well as Money Investment plan, because money is collected and pay back after different period. All plans are suitable for every customer plan period is; 5/6/7/8 and 9. It means we called Recurring Deposit / Fixed Deposit/ pension plan and money back term."
This comment clearly is intended on selling ‘investment plan’ and not any membership plan of holiday package.
What both Royal Twinkle Star Club and Citrus Check Inns are doing, under the pretext of selling membership plan, is nothing but pure collective investment scheme (CIS), as per Securities and Exchange Board of India (SEBI) definition.
The SEBI Act, 1992 gives the market regulator power to regulate the working of schemes which are in effect CIS and have the following characteristics:
• Pooling of money;
• Entrustment of money to someone such that the investors are not the ones who are managing their own money; and
• Sharing of returns from a specified investment
Money collecting activities of both RTSC and Citrus Check Inns, carry the features of a CIS, specified under Section 11AA of the SEBI Act read with Regulation 3 of the SEBI (CIS) Regulations.
Earlier, market regulator SEBI had barred several companies like Osian’s-Connoisseurs of Art Pvt Ltd , Sun-Plant Agro , Kolkata-based Rose Valley group , and Maitreya Plotters and Structures Pvt Ltd from collecting money from public under the pretext of offering ‘investment plan’ and ‘huge returns’.
The Rose Valley group was found running a holiday membership plan similar to what is being offered by RTSC and Citrus Check Inn.
Our email sent to SEBI, about the money collection scheme of RTSC and Citrus Check Inn, remained unanswered till writing the story.