The distributor collected cash and cheques worth Rs2 crore for investing in mutual funds from numerous people in Jabalpur. The Association of Mutual Funds in India (AMFI) has suspended the ARN number of the swindler

Jabalpur-based 'Champion Advisory Services', an AMFI-registered mutual fund distribution agency, has swindled investors by collecting cash and cheques to the tune of Rs2 crore. The AMFI registration number (ARN) registered under the name of Chandan Panjwani has now been suspended by AMFI.

AMFI received a letter from SBI Mutual Fund on 19 April 2010 asking details about the ARN holder. On 20 April 2010, AMFI wrote a letter to Mr Panjwani seeking his reply. Repeated emails sent by AMFI to Mr Panjwani did not elicit a response. Subsequently, AMFI suspended his ARN number on 19 May 2010.

"He collected cheques from investors and invested in his own name and later redeemed the investments. We have sent letters to the investors also regarding this. We gave him a time of 10 to 15 days to respond. We did not receive a reply so we have suspended the ARN under fraudulent case," said an AMFI official.

The ARN number 53107 has been currently put under suspension by AMFI. (See here http://www.amfiindia.com/ArnSearch_Frm_Po.aspx).

Distributors whom Moneylife spoke to said that many investors have lodged a police complaint in the Jabalpur Police Station against Mr Panjwani. The police are still on the lookout for him.

Mr Panjwani sent this statement to an email query sent by us: "Thank you for your mail. Will reply as soon as I get back."Ever since this fraud came to light, the investor sentiment is depressed in Jabalpur as people are refraining from investing. According to the AMFI website, there are around 172 ARN registered members in Jabalpur currently. 

"People asked him for account statements but he used to keep telling them that they will receive it after some time. Investors have not got their money yet. He fled with the money. We are facing problems now to convince people to invest in mutual funds. He collected cash from people saying that he is new to the business and requires money," said a Jabalpur-based certified financial planner on the condition of anonymity. 

Mr Panjwani collected cheques and cash from various people by assuring them good returns. He allegedly ran a 'lottery system'. 

Jabalpur-based distributors who spoke to Moneylife say that Mr Panjwani is suspected to be in Mumbai after absconding from Jabalpur. He changed six jobs in a matter of one year in various leading mutual fund houses and insurance firms to get a foothold in the industry. Sources indicate that he employed people who were not qualified to sell mutual funds by claiming to offer them hefty commissions. The agents who were working under him have not received their commissions yet.

AMFI's chief executive HN Sinor and chairman AP Kurian were not immediately available for comments. An email query sent to KN Vaidyanathan, executive director, Securities and Exchange Board of India (SEBI) remained unanswered till the time of writing this article