PACL Scam: Australian Federal Court Accepts SEBI’s Claim
The Australian Federal Court had accepted claim filed by Securities and Exchange Board of India (SEBI) on assets of PACL Ltd (erstwhile Pearls) in that country. The Australian Federal Court also stated that as per three orders passed by Supreme Court of India, SEBI Act, SEBI Regulations, the Indian market regulator has full right, interest, power and authority to seek relief in Australia in the PACL case.
 
After observing that the money mobilised by PACL from investors was utilised for acquiring certain assets in Australia, as directed by Justice RM Lodha Committee, SEBI had filed a claim petition in the Federal Court of Australia seeking repatriation of the assets or the proceeds thereof on behalf of all the investors in PACL. 
 
In its order issued on 23 July 2018, the Federal Court appointed Steven Staatz as receiver for the Sanctuary Cover Properties. He is directed to pay, deposit or transfer balance of the Sanctuary Cove proceeds to the trust account of McCullough Robertson Lawyers.  
 
Last year, the Australian Court had directed to deposit balance of the monies in the trust account of McCullough Robertson Lawyers and any interest on these proceeds. On 27 January 2017, the trust account received A$87.37 million.  
 
The Federal Court also appointed Jane Clare McDonald as Referee for conducting an enquiry and assessment of the amount incurred by Sunanda Balkrishna Kadam, who on behalf of PACL investors had filed a class action suit there. Ms McDonald asked to contact SEBI or communications concerning SEBI securing the Fund in Australia, including preliminary research into SEBI’s entitlement to maintain a claim on behalf of Investors generally. As per the Court order, Ms McDonald, the referee was expected to submit her report by 17 September 2018.
 
Last week the Enforcement Directorate on Wednesday filed a charge sheet against PACL (erstwhile Pearls) and its chief Nirmal Singh Bhangoo in connection with a Ponzi scam involving over Rs49,100 crore, which was collected allegedly by two companies from 5.5 crore investors.
 
Apart from Bhangoo, who is in judicial custody, his three colleagues and other persons have also been named in the ED chargesheet filed in a special court under the Prevention of Money Laundering Act (PMLA).
 
The ED, which started the probe after lodging an first information report (FIR) in 2015 based on the Central Bureau of Investigation (CBI)'s case, had in January attached Australia-based assets of the Pearls Group and Bhangoo worth Rs472 crore. 
 
In 2016, a report from The Australian had exposed the Australian connection of PACL and Bhangoo. This was published by Moneylife (Read: PACL Scam: The Australian connection). The report said, in Australia, Bhangoo and several of his family members teamed up with Gold Coast property developers Paul Brinsmead and Peter Madrers. The two Australians had operated the company Resort Corp, which developed large tracts of coastal land in the Tweed Shire in northern NSW before its group of 14 companies collapsed in March 2009, owing about $300 million, it said. 
 
The CBI had arrested Bhangoo and his three colleagues in 2016 following allegations that they collected funds from investors in Delhi, Punjab, Haryana, Rajasthan and other states through ponzi schemes, in the name of real estate projects. 
 
In the same year, SEBI, as part of its recovery proceedings, attached all bank and demat accounts, mutual fund portfolios of PACL and it eight directors and promoters. In a release, SEBI said, the recovery proceedings have been initiated for their failure to comply with its order issued on 22 August 2014 directing, PACL and its directors and promoters to wind up the schemes, and refund Rs49,100 crore to the investors within three months from the date of the order. This amount is excluding further interest and all costs, charges and expenses incurred in the recovery proceedings.
 
Earlier in July this year, market regulator SEBI had said that PACL had increased its offer to Rs23,000 from Rs20,000 to buy own properties. Due to this, the Justice RM Lodha Committee appointed by the Supreme Court had decided to invite final counter or revised proposals from interested parties. 
 
The Lodha Committee is supervising the Supreme Court ordered process of selling PACL's assets across the country and refunding Rs49,100 crore collected from over 56 crore investors.
 
Bhangoo, his companies PACL and Pearls Golden Forest Ltd (PGFL), as well as his lakhs of commission agents were accused of cheating 5.5 crore investors on the pretext of sale and development of agriculture land.
 
The companies made false allotments of land to investors. However, the companies never owned any land in their own name.
 
Bhangoo and his companies promised the investors that allotment would be done on their investment between 90 and 270 days and if not, handsome returns would be paid.
 
 The mobilisation of funds by PACL goes back prior to 1997. Upon receipt of a complaint, SEBI on 30 November 1999 and 10 December 1999 issued letters asking PACL to comply with the provisions of the collective investment scheme (CIS) Regulations. 
 
PACL challenged these letters before the High Court of Rajasthan in December 1999, claiming that its scheme does not fall under the definition of CIS as defined under the CIS Regulation and SEBI Act. PACL also challenged the constitutional validity of the CIS Regulations. 
 
The Rajasthan High Court on 28 November 2003, held that PACL's schemes were not CIS as defined under Section 11AA of the SEBI Act. The HC also quashed SEBI's letters issued to PACL. 
 
SEBI filed an appeal before the Supreme Court against the order of Rajasthan HC. The SC on 25 February 2013, while allowing the appeal upheld the constitutional validity of CIS Regulations, and directed SEBI to investigate the matter and take appropriate actions. 
 
After conducting an inquiry, SEBI on 22 August 2014, issued an order directing PACL, its promoters and directors to wind up all the existing CIS and refund the monies collected by the company to investors as per the terms of offer within a period of three months from the date of the Order. 
 
PACL filed an appeal before the Securities Appellate Tribunal (SAT), which was dismissed on 12 August 2015. The SAT directed PACL and its promoters-directors to refund the money within three months. Since the company and its promoters-directors failed to refund the money to the investors as per the directions of SEBI and SAT, the market regulator said it has initiated the recovery proceedings.
 
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    Heera Gold Unravels: Hyderabad Victims Protest
    Investors of the Heera Islamic Business Group, better known as Heera Gold, are coming out in the open to protest delayed payments following a financial crunch faced by this Ponzi company. Last week, over a 100 victims of Heera Gold held public protests in Hyderabad along with victims and investors from other parts of India.
     
    The protests were led by Shahbaz Ahmed Khan, who told Moneylife that over 200 investor victims have filed complaint against Heera Gold and its founder Dr Aalima Shaikh Nowhera (Nowhera Shaikh).
     
    “Every day, I am receiving calls from panicky victims of Heera Gold from across the country seeking my help in recovering their investment. There are many who had invested more than Rs1 crore in Heera Gold and are now facing difficulties. They are neither receiving interest nor getting the principal amount back.” Mr Khan claims “the Heera Group and Dr Shaikh have filed around 17 cases against me, including defamation. I heard that they have got an injunction from the City Civil Court against me to prevent me from posting messages to highlight plight of victims on Facebook and other platforms. However, I am filing a writ petition against the injunction.” 
     
     
    He also alleges that due to the powerful political links of Dr Shaikh, the police are not investigating the matter or taking action against Heera Gold. He says, “Police are asking investors/victims of Heera Gold to go to the court claiming that this is a civil matter.”
     
    However, a senior official from the crime branch, Hyderabad, who does not want to be named, refuted all the allegations made by Mr Khan about lack of investigation. He says, “So far, only one first information report (FIR) had been filed. That was also filed in 2012 and based on that we are investigating the matter. However, not many victims are coming forward to give any statement or evidence. Last week, there was one FIR registered at the Banjara Hills Police station and it is about to be transferred to the crime branch. Once we receive it, we will investigate the matter so as to take it to the right legal course.”
     
    Mr Khan, however, presents another version. He claims that there are 200 investor victims, who are ready to record a statement before the police. “However, when somebody files a complaint, he or she is offered refund of their money by Dr Shaikh.” Mr Khan says that many victims are now ready to file a statement.
     
      
     
    Earlier, in July this year, market regulator Securities and Exchange Board of India (SEBI) told Moneylife that activities of Heera Gold, are in the nature of Ponzi or multi-level marketing (MLM) scheme. 
     
    Replying to an email sent by Moneylife with videos of panicky investors, the market regulator’s Hyderabad office wrote to say, "Upon examination into the matter, it was found that the activities of Heera Group are in the nature of 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, Commissioner of Police-Hyderabad."  
     
    In August 2012, Asaduddin Owaisi, member of parliament (MP) from Hyderabad, had registered a case against Dr Shaikh for cheating a large number of local investors from his constituency. The Hyderabad Police are investigating this case.
     
    On 10 September 2018, Farzanaunissa Mohammad Khaja filed an FIR under Section 406, 420 of Indian Penal Code (IPC) and section 5 of the Telangana Deposit of Financial Establishments Act, in Bajara Hills Police Station at Hyderabad. Ms Khaja has alleged in the FIR that her husband had invested Rs25 lakh in Heera Retail Hyderabad Pvt Ltd, but the company has refused to return her money. This FIR is most likely to be transferred to the Crime Branch for investigation.
     
       
     
    This controversial and shadowy group has specifically targeted the Muslim community with the promise of high returns and constant references to ‘Allah’ to project itself as a devout and god-fearing organisation. The panic among investors over the past weeks is due to delays in making payments and a change in the payout dates.
     
    In 2017, Dr Shaikh, 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.  
     
    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 Shaikh 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.
     
    The Heera group began its operations in 2010 and since then, claims to have created 25 legal entities. Of these, only 10 were found to be registered on Registrar of Companies (ROC), Hyderabad and only four are found to have filed their balance-sheets (FY12-13), which are being analysed. It is not registered under Foreign Contributions (Regulation) Act (FCRA), says a government source.
     
    A large number of PAN, TIN and other state-level registration numbers are shown on its website and are under ED and State Police investigation. These 10 companies have two sisters as Directors, namely, Dr Shaikh and Mubarak Jahan Shaikh. The third director (in only three companies) is another woman named Khamar Jahan Shaikh.
     
    The group claims to operate through over 19 companies in various business sectors, like gold trading, trading, textiles, jewellery, mineral water, granite, tours and travels, developers, electronics, Hajj and Umrah services among others. Heera Group claims to have its offices in Dubai, Saudi Arabia, Canada, China and Hong Kong. It markets itself as a trader in gold products and gold dust.
     
    You may also want to read…
     
     
     
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    COMMENTS

    Liju Oommen

    11 months ago

    This is what happens when greed takes over. No due diligence is done and hard earned money handed over to crooks.

    AIMIM Shahbaz Ahmed Khan

    11 months ago

    Why police not arresting her

    Huzefa Kazi

    11 months ago

    Dear Editor, can you please elaborate as to what will be the correct legal recourse to be taken in case investors do not get their money back?

    QNet: Saudi Arabia Raids Meeting Places of the Banned MLM
    The Ministry of Commerce and Investment (MCI) in Saudi Arabia, while continuing to pursue 'illegal' QNet marketing activity, has raided meeting places of the controversial multi-level marketing (MLM) company. 
     
    In a release issued on Saturday, MCI says, “... (the Ministry) inspection teams monitored and detected a QNet group in Najran, holding meetings at one of the hotels in the Southern Region. MCI judicial control officers, in cooperation with the security authorities, started the necessary investigation and then raiding the site, and detecting the involved person. It turns out that every hour QNet representative has a meeting with one group, and he tries to convince the attendants with the prohibited QNet marketing activity. QNet documents were also collected and seized, containing the participant's data, telephone numbers and schedules of QNet marketing activity. Accordingly, the defendant was referred to the public prosecution for taking the legal procedures against him.”
     
    “QNet marketing activity aims to mislead and deceive dealers and clients with quick profit. Therefore, they try to raise money illegally by claiming that they are investing such money. This kind of activity is considered illegal because it depends on deceiving, cheating, fraud and manipulation,” the Ministry says.
     
    Under a resolution, MCI has banned QNet marketing activity in Saudi Arabia. This includes prevention of QNet or Pyramid marketing, and also the prevention of making advertisement or promotion for such activity by any means. This is in addition to the Ministerial Decree issued by the Ministry of Interior, which stipulates that the financial fraud issues are considered crimes punishable by arrest.
     
    As reported by Moneylife, the strict action by Saudi Arabia, has made QNet to cancel V-Con, its high-profile, flagship annual event that was scheduled to be held in Dubai between 8th to 12th September. The company did not give any reason for the sudden cancellation of V-Con, but thousands of independent representatives (IRs) or agents, who were set to go to Dubai are seeking a refund the $350 each that they have paid to attend the event as well as their air tickets. 
     
    On 1 September 2018, the Ministry of Commerce & Investment in Saudi Arabia had issued a warning against QNet saying that its activities are prohibited in the country. After investigation, it (MCI) had arrested a group of four persons one from Gulf Cooperation Council (GCC), a Saudi citizen and two Saudi women. “The defendants were involved in the coordination and making the necessary arrangements for QNet activities, such as reserving hotel halls and sending invitations to clients to attend the training on QNet marketing activities. Upon raiding the site, MCI inspectors found 20 members of both sexes attending the training, as per the invitation given to them by the four organizers. It has been found out that the attendants have paid more than Saudi Riyal (SR)200,000 in cash or as a remittance to the organizers' bank accounts. This is beside paying SR30 for each attendant,” MCI had said in a release.
     
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    COMMENTS

    Maneesh Kumar

    4 months ago

    Good

    Amrit Kumar Ladha

    4 months ago

    Vihaan Direct Selling (India) Private Ltd hold all its equity capital
    I have been trapped by one college freind Amit Keyal ,from Calcutta University, who had once been a good friend and kind of a guide as well. I trusted him since college and respected him as I thought him to be a simple good man. But I am so mistaken as I released last year when he forced (by lying and showing confidence in him saying he is always there) me to pay him almost 2 Lakhs (I took a loan to give him that money) which he said he would give me back if I am not able to continue the so called e-commerce business (Qnet). Nothing was explained before the payment was made. all details about how the company works and what do i have to do are told after I was already trapped and had no other way but to follow what they say. They ask you to make friends and tell them that I m into a mind blowing business and henceforth trap the victim. I chose not to cheat people. My money is lost because since then I have called and messaged that so called businessman (traitor) numerous times but in vain and now after an year I have almost lost all hope of getting back my money .
    But I m happy that I didn't turn into one of those kinds going around cheating my own friends and family.
    There are many people making a lot of money out of this totally fraud MLM company. There are other MLM companies as well but they are ethical as they agree to that fact and reveal what a member has to do before trapping someone.

    I Can provide Some Contact details hereunder:

    Q Net Association in Kolkata and all over world.

    Sl.No. Name Mobile No. Mobile No.
    22 Amit Keyal +971-566584028
    4 Ashish +977-9802036176
    1 Avinash +91-9330958969
    2 Dayanad Mittal +91-9920350221
    8 Deepak Kankani +91-9830783316
    20 Hemant Surana +91-8697540123
    18 Murtazir Nazar +91-9051061879
    13 Nishant Gupta +91-9860779185
    19 Saru +91-9830235419
    21 Shyam Chaudhry +91-7506226543 +91-9930136801
    3 +91-8092084462
    5 +91-9980096781
    6 +91-8100058258
    7 +91-8951174594
    9 +977-9845096260
    10 +91-9376518122
    11 +61-411895943
    12 +971-557703213
    14 +91-9930761147
    15 +91-9167780347
    16 +91-9836331256
    17 +91-9038082570
    18 Babita Agarwal+91-9635276465

    Vijay Raval

    11 months ago

    We don't have any problem with Qnet loot reach people but loot needy people who need real job do not show fake dream
    Biggest thing you people encourage to get loan from bank for doing this illegal business is shameful and in the name of Direct selling you people along pyramid scheme . Sell and justify product do not make people chain for earning . Your scheme of Pyramid is banned in all over world except Malaysia for simple reason that money from all world going to Malaysia government is earning so they are happy.

    Vijay Raval

    11 months ago

    The biggest proof of Qnet banned in India their web site blocked by TRAI but still this smart people create new domain and runing their business.

    Vijay Raval

    11 months ago

    This is not bad news for Qnet banned in Dubai...

    If Indian government banned this chain than this will be huge news cum relief for country.

    Sooda Mani

    11 months ago

    I am facing problem in Aadhaar card to add mobile number, I tried going everyday e-savai maiyam many times but I couldn't get appointment to solve my problem they saying per day only 30 tocken only it seems but more than 100 people are standing. Because of this I couldn't access my personal bank and PF account and many things. I can't take many days leave. So guys I need my refund of my tax which I paid to government because we are not getting proper service from government. Though government appointed many employees they still asking money so. I need my money back. Guys will give complaint. I hope everyone would hay faced this problem. We will ban this government because they are not using our money for common people. So guys please help me to get money back. If anybody take initiative I would be thankful for you. Please help me.

    Umang Goyal

    11 months ago

    It is possible to raid in Delhi I have many person who joined qnet and fool other people to join this

    REPLY

    Sanjay Verma

    In Reply to Umang Goyal 11 months ago

    New Delhi mein bhi raid karwao….Saale Kutte, Lalchi log....Get everyone caught & in jail for cheating gullible investors.

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