I Monetary Advisory: If Only SEBI Had Acted Upon Moneylife's Warning 3 Years Ago
Moneylife Digital Team 12 June 2019
In continuation with our fight against all multi-level marketing (MLM) and Ponzi scams, Moneylife had sent emails to market regulator Securities and Exchange Board of India (SEBI) warning them about the Hyderabad-based Heera Gold and Bengaluru-based I Monetary Advisory Pvt Ltd (IMA). However, no action was taken by the market regulator. In fact, while referring the case to the CID- Economic Offences Wing (EOW), the Enforcement Directorate (ED) and the Commissioner of Police in Hyderabad, the market regulator claimed that the activities of Heera Gold were beyond the ambit of SEBI and the Reserve Bank of India (RBI).
Both Heera Gold and I Monetary Advisory have now gone bust. The tragedy is that they have both targeted one particular community by taking advantage of their sales pitch that this is an investment blessed by their religious norms.
In the past three years Moneylife has raised the issue of Ponzi operations of Heera Gold and IMA with two SEBI Chairmen—Mr UK Sinha as well as Mr Ajay Tyagi—because these firms operated like a vast collective investment scheme (CIS). Neither of the two SEBI chairmen bothered to respond. 
In our communication on 22 February 2016, we had said, "We hope SEBI will take note of this and hasten action so that people do not end up losing money. Many women too are being conned into borrowing against property to invest in these companies on the claim that the returns would be significantly higher than the interest they would pay on their loans."
This was followed by another mail on 3 April 2017.
This is really sad, since people have sold their homes to invest in such schemes—especially Heera Gold and I Monetary Advisory. When there is a high powered coordination committee of regulators comprising RBI, SEBI, Insurance Regulatory and Development Authority of India (IRDAI), ministry of finance and others, it is a pity that these fraudsters manage to carry on with impunity.
Both the controversial and shady groups have specifically targeted the Muslim community with a promise of high returns and constant references to ‘Allah’ to project themselves as a devout and god-fearing organisations. In addition, both these Ponzi schemes have support from state level politicians. 
Heera Group has deep ties with politicians from Andhra Pradesh, which may have allowed it to flourish and expand investor network across the country. In December 2017, its central office at Hyderabad was inaugurated by Mohammed Mahmood Ali, the then deputy chief minister of Telangana. 
In 2017, Dr Aalima Nowhera Shaik, CEO of Heera Gold formed the All India Mahila Empowerment Party under the banner of justice for humanity. This Party even contested 221 out of the 225 seats in the recently concluded Karnataka Assembly elections with a 'diamond’ as its symbol. It is rumoured to have lost large sums of money. This and other rumours have triggered panic among people who want their money back.
IMA too had its share of political support. An audio-clip, claimed to be from Mohammed Mansoor Khan, managing director and chief executive (MD&CEO) of IMA, alleged that senior Congress leader and Shivajinagar's member of legislative assembly (MLA) R Roshan Baig had refused to return to IMA the Rs400 crore he had borrowed. However, the same Mr Baig was present at almost every big function or event organised by IMA in Bengaluru.
Congress legislator Mr Baig, who represents the Shivajinagar Assembly segment in which the IMA Jewels office and showroom are located, however, denied asking Mr Khan to pay up Rs400 crore.
(Photo: Roshan Baig, MLA, Shivajinagar with Mansoon Ahmed Khan of IMA)
Following continuous protests by investors, there is at least some action in the case of Heera Gold. However, in the case of I Monetary Advisory, the protests are taking place since Monday only. 
After reports that Mansoor Ahmed Khan of IMA had fled to Dubai or Saudi Arabia along with his family to escape the investors' wrath as their savings were held up by his firm, investors found that the posh showroom of IMA Jewels in the city centre did not open after a week-long closure for Eid-ul-Fitr at the end of Ramzan last week.
After a meeting with top police officials on the IMA scam, Karnataka home minister MB Patil told reporters that a special investigation team (SIT) is being set up to inquire into complaints by hundreds of investors that IMA Jewels has stopped returning their deposit money and paying hefty interest on them.
In July 2018, Moneylife had reported about the panic among investors of Heera Gold over payment delays and rumours about the financial difficulties faced by the group, which has amassed vast sums of money from the Muslim community. Heera Group claimed to be a gold trading company with business all over the world. In the past five years, the lack of any enforcement action by investigation agencies has allowed it to grow rapidly and diversify into diverse businesses. 
Earlier in July 2018, while replying to an email sent by Moneylife with videos of panicky investors from Heera Gold, the market regulator’s Hyderabad office wrote to say, "Upon examination of the matter, it was found that the activities of Heera Group are in the nature of a Ponzi Scheme. Further, the nature of activities of Heera Group was also discussed in the meetings of state level co-ordination committees (SLCC) of Andhra Pradesh and Telangana, which are headed by chief secretaries of the respective states. It was decided in the meetings of SLCC that the activities of Heera Group appear to be beyond the regulatory ambit of SEBI and RBI and the case would be taken up for investigation by relevant authorities such as CID-EOW, and Serious Frauds Office of India (SFIO). Accordingly, SEBI had already referred the case to CID-EOW, Enforcement Directorate, and Commissioner of Police-Hyderabad."
“As the matter is presently being handled by Central Crime Station-Hyderabad, SFIO-Telangana, and Enforcement Directorate-Hyderabad,” the regulator has forwarded the videos sent  by Moneylife to its Mumbai office to these respective agencies. SEBI has also 'marked a copy' to the Reserve Bank of India (RBI), which is the nodal office for the state-level coordination committee. 
Last year in October, Hyderabad police had arrested Dr Shaik, chairman of the controversial Heera Islamic Business Group, better known as Heera Gold. As per the information available, the police said, Ms Shaik is heading 15 companies under different names under Heera Group of companies. "Many of the companies are involved in collection of deposits and investment in different modes of gold scheme from the public, where these companies commit a return of around 36% per annum for the invested amount. While the exact number of investors and depositors is not known because the companies have not disclosed complete information to the police, it is estimated that the number of depositors could be in thousands in different states of the country," the release says.
Investigations and information by a premier government agency, perused by Moneylife, claim that Heera Gold is involved in hawala activities. The note lists various actions against the group. For instance, on 17 May 2014, the Hyderabad Police apprehended six accused, while Heera Group promoter, Dr Shaik was named an absconding accused. Subsequently, on 21 May 2014, the Enforcement Directorate (ED) searched Heera Group premises and seized documents pertaining to the illegal transfer of money through hawala.
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G Ravishankar
5 years ago
It is disheartening that despite flagging to the authorities no action was taken. But Moneylife direct outreach through Investor Awareness programs is the long term answer. Our babus hanging to the coat-tails of their political bosses have no time to do anything else worthwhile...
5 years ago
This scam has its root in the greed and gullibility of the investors. This is not the first case where fraudsters have conned greedy public with high returns and scooted with the loot, nor will it be the last such case! The only way such frauds can be prevented is by educating the public. RBI and other money watchdogs can issue periodic ads in vernacular media warning people to beware of fraud when unsustainable interest is promised.
5 years ago
Keep up the vigilance and honesty ML team. You are the best.
Ramesh Poapt
5 years ago
Great ML!
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