Within four years, Nashik-based KBC Multi Trade was able to collect crores of rupees. Its promoters and directors are absconding and three agents are already dead. The question is, why nobody, including SEBI took action in time?

Even as several network marketing companies or multi-level marketing (MLM) companies are trying very hard to lobby with the union government, to legalise their 'direct selling' module, here comes a story of the tragic end of an agent of one such company. As it happens with almost all MLM or money circulations schemes, in the case of Nashik-based KBC Multi Trade Pvt Ltd, the promoters have vanished with the loot estimated to be about Rs2,000 crore. Also, as usual, despite registering a complaint and subsequent raids on KBC Multi Trade offices, the Police could not make any further progress. Even market regulator Securities and Exchange Board of India (SEBI), which is supposed to be regulating collective investment scheme (CIS) has so far not shown any interest in KBC Multi Trade's fund mobilisation. KBC Multi Trade's scheme was, if you invest Rs1 lakh today, the company would pay you Rs1 lakh in six months, Rs1 lakh in the next 18 months, and another Rs1 lakh after 30 months. Thus giving three-times return on investment in 30 months.

According to local media reports, Pushpalata Popatrao Nikam and her son Sagar committed suicide due to mounting pressure from people seeking refund of their money invested in KBC Multi Trade. The mother-son duo had invested their own money in the MLM too, while Sagar was also working as agent for KBC Multi Trade and collected huge amounts from people. Balaji Gujjewar, another agent of KBC from Hingoli in Marathwada region, died due to a heart attack. Gujjewar too, had collected crores of rupees in and around Hingoli for investing in KBC Multi Trade and was under severe pressure from these investors.

Earlier in March, Nashik Police conducted raids on the offices of KBC Multi Trade and seized Rs4.66 crore, along with some computers and documents. They also arrested one Babu Chavan, but he was granted bail by a city court on the same day.

According to reports, the main promoters of KBC Multi Trade are Bhausaheb Chavan and his wife Aarti. Bhausaheb was reportedly working in a local bank and hence, had knowledge about the financial status of several of the bank's customers. In 2010, he floated KBC Multi Trade and promised to make his investors 'crorepatis' within few months if they invest lakhs of rupees. He also promised 20% to 30% commission to 'agents' who would lure more people into the 'get-rich-quick' scheme.

On Monday, several investors staged a rasta roko at Adgaon, near Nashik, demanding immediate arrest of the company's promoters and directors. After the rasta roko, the Police arrested Bapusaheb Chavan, managers, Pankaj and Nitin Shinde, both agents of KBC Multi Trade, as well as a driver of KBC's main promoter-Bhausaheb Chavan.

On 25 February 2013, the Economic Offences Wing (EOW) of Nashik Police even issued a public note, warning people about KBC Multi Trade. Following the raids and arrest of one person by Nashik Police in March this year, the EOW of Aurangabad Police also asked people to file complaints against KBC Multi Trade. The MLM company was active in several districts in Maharashtra, including Aurangabad.

However, besides issuing a public notice, the Police kept mum on the MLM. This probably helped the promoters of KBC Multi Trade to collect as much money as they could and vanish overnight. According to unconfirmed reports, Bhausaheb may have fled to Singapore along with his family.

There are thousands of people who are coming forward to lodge complaints against KBC Multi Trade and its promoters. While the exact number of people and the money they invested cannot be ascertained, it is estimated to be hundreds of crores.

Karan Gaikar, president of Chhava Sangathana, that organised the rasta roko, has demanded an inquiry by the Central Bureau of Investigation (CBI) in this money circulation fraud. “People were asked to invest in bands of Rs7,200, Rs17,200, Rs57,200 and Rs86,000; assuring a three-times return in less than three years," Gaikar was quoted as saying in a news report.

Bapurao Mate, a resident of Adgaon area, told the Times of India that he had invested Rs2.63 lakh with the hope that he would get an assured amount of Rs11.63 lakh in two to four years for his daughter's wedding. “I am from Marathwada and at least 300 people from the region have invested money with the company on my assurance," he told the newspaper.