PACL not only roped in Brett Lee as its brand ambassador, but also invested millions of dollars in Australia. Also, the Ponzi company's directors, including promoter Bhangoo's daughter and son-in-law, were seen living in lavish properties in Australia
PACL Ltd, formerly known as Pearl Agrotech, which has been asked to repay about Rs55,000 crore by the regulators, not only used services of cricketer Brett Lee as its brand ambassador, but also invested millions of dollars in Australia, reveals a report from The Australian.
Pearls promised generous returns to investors by supposedly rehabilitating degraded agricultural land and turning it into prime productive farming country and collected around Rs49,000 crore from investors. "Instead, the money went into the pockets of the directors, who lived lavish lifestyles and bought television stations, Indian cricket teams and invested the money in assets for themselves, including hotels and properties in Australia," the report says.
The Justice RM Lodha Committee appointed by market regulator Securities and Exchange Board of India’s (SEBI) is also looking into investment made by PACL in Australia. The report says, "Their investigations will include the 2009 purchase of the Sheraton Mirage on the Gold Coast. Mr (Nirmal Singh Bhangoo, founder of PACL) Bhangoo spent $62 million buying the resort and $20 million more renovating it. The Sheraton, of course, is Christopher Skase's old haunt."
According to the report, in Australia, Mr 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.
"Six months later, while administrators were still sorting through the wreckage of Resort Corp, Mr Brinsmead and Mr Madrers founded Pearls Australasia with Mr Bhangoo, his son Harvinder Singh Bhangoo and son-in-law Gurpartap Singh. Later Mr Bhangoo's other daughter Barinder Kaur and her husband, Harsatinder Singh Hayer, also joined the company as directors."
"In September 2014, Pearls Australasia changed its name to MiiGroup Holdings and refers to itself collectively as the MiiGroup of companies. These companies are all based in a waterfront office at Bundall on the Gold Coast. Also, operating from the same address is Shac Communications, the public relations firm that represents MiiGroup Holdings and undertook the "full rebrand for the group" in 2014. The managing director and owner of Shac Communications is Simone Holzapfel, who was Tony Abbott's chief political adviser for six years during the Howard government," the report from The Australian says.
MiiGroup, however, has distanced itself from the PACL scam and investigation going on in India. In a statement, it called itself as an Australian company with diverse business with Pearls Infrastructure Projects (PIPL) as a passive investor in some of its businesses. "...the individuals and companies associated with PIPL in India have no control and do not take part in any day-to-day operations of the independent and separately owned Australian MiiGroup. Any allegation that MiiGroup Australia is an Indian company or a subsidiary of an Indian company is false. Any allegation that any events in India are related to individuals or companies associated with PIPL are in any way relevant to or connected with MiiGroup, or that Mii Group is controlled or managed by any of these entities, is false," the statement reads.
In its report, the newspaper said, based on company searches, Mr Bhangoo's daughter Barinder and her husband Mr Hayer, live in a multimillion-dollar Gold Coast mansion. The property in the suburb of Hope Island boasts six bathrooms and five garages and was bought, along with an adjacent vacant block, for $4.95 million in 2011 by a company called Pearls Infrastructure Projects.
Quoting P Venugopal, senior counsel for SEBI, the report said, "I do not think we will ever be able to recover much. Because basically, according to us, the entire operation was just a money laundering exercise. The Central Bureau of Investigation (CBI) is investigating celebrities who were involved with the (Pearls) schemes and yes, (cricketers) Harbhajan Singh and Yuvraj Singh are under investigation with respect to the plots at Mohali (in Punjab) received by them from the company."
In 2010, PACL roped in Australian speedster Brett Lee as its brand ambassador. During a press conference announcing his appointment, Lee had reportedly said, "It's not about only being a brand ambassador, but I am proud to be a family member of Pearls Group. I feel every person is being touched by Pearls around the world. I certainly believe that Pearls is the best."
In the advertising campaign, Lee was filmed building sandcastles with kids and jogging on a beach in Goa. "He stood in front of a camera dressed in a white sports coat and recited the firm's mantra: 'Touching hearts, building confidence. Pearls Infrastructure', the news report says.
"What he should have said was "touching wallets, breaking hearts", for while there is no suggestion that Lee had any knowledge of this at the time, the company he was spiking was allegedly engaged in a monumental fraud," it added.
While Lee's manager at that time, Neil Maxwell, who negotiated the deal with PACL, and current manager, Jake Elder have denied any wrongdoing on part of the cricketer. The fast bowler's website, Brett-Lee.net still lists Pearls India as one of the brands represented by him. It says, "(Lee is) a brand ambassador across the Pearls group, representing Pearls Infrastructure Group, P7 News, Pearls Tourism & Pearls Spices."
SEBI's counsel Venupgopal told the newspaper that officials from the Australasian Consumer Fraud Taskforce, an umbrella body whose members include the Australian Federal Police and the Attorney-General's Department, had recently contacted him to discuss the alleged fraud and its implications in Australia.
He also told the newspaper that directors of PACL used Russian banks to send money (collected from investors) overseas, including Australia and it would be very difficult to follow the trail.
According to the newspaper report, the Australian arm of Pearls was adept at working political connections. In October 2010, as part of a trade mission and Australia's 2018 Commonwealth Games bid, a delegation led by then Queensland premier Anna Bligh and including then high commissioner to India Peter Varghese met with the Pearls Group, it said.
"A record of the meeting shows that in attendance were Pearls Group directors; Mr Bhangoo's other daughter Sukhwinder Singh and her husband Gurpartap Singh; 'group general manager' of Pearls Group Rikhab Jai; and 'Pearls Australia joint managing directors' Mr Brinsmead and Mr Madrers. Records show the meeting was 'designed to encourage the Pearls Group to increase its investment portfolio in Queensland' and Pearls Group was stated as having '1.6 million employees across its various entities'. The records show Ms Bligh directly dealt with requests from members of the Bhangoo family to obtain 'state-sponsored' visas," the report from The Australian says.
Earlier, 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.
According to SEBI, the amount due to investors of PACL would be over Rs55,000 crore. This includes promised returns, further interest, all costs, charges and expenses incurred in respect of all the proceedings taken for recovery of Rs49,100 crore from PACL.
The mobilisation of funds by PACL traces 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.
The special court has rejected anticipatory bail applications of two directors of Vihaan, Suresh Thimiri of Transview as well as Malcolm Desai and Michael Ferreira, the stakeholders of Vihaan that handles QNet's MLM operations in India
The special Maharashtra Protection of Interest of Depositors (MPID) Court on Tuesday rejected anticipatory bail applications of five accused in the multi-crore QNet scam. This includes, Srinivas Rao Vanka and Magaral Veervalli Balaji, both directors of Vihaan Direct selling (India) Pvt Ltd, Suresh Thimiri, director of Transview Enterprises India Pvt Ltd, Malcolm Nozer Desai, who is 20% stakeholder in Vihaan and Michael Joseph Ferreira, former world champion of billiards and 80% stakeholder in Vihaan.
The Economic Offences Wing (EOW) of Mumbai Police, which is probing the case, had invoked the stringent MPID Act against controversial multi-level marketing (MLM) company QNet, which has denied any wrongdoing on its part.
Transview Enterprises is an associate company of Vihaan Direct Selling Pvt Ltd that handles QNet's multi-level marketing (MLM) operations in India since 14 April 2012. Vihaan Direct Selling, in which Michael Ferreira, the former world billiards champion, owns 80% stake, is a direct selling agent of QNet and had done large financial transactions with Thimiri's company Transview.
The EOW had booked several accused including the former world champion of billiards and five companies related with QNet, under the MPID Act. This means all the cases against QNet, Vihaan and all those involved in the MLM scam would be heard before the special MPID Court. Until now, the accused were being investigated for cheating and forgery under the Prize, Chits and Money Circulation Schemes (Banning) Act 1978, and for money laundering by the Enforcement Directorate (ED).
In February 2014, the ED registered a case under the prevention of money laundering act (PMLA) against QNet, Vihaan Direct Selling, Ferreira and QNet founder Vijay Eswaran and three other independent representatives (IRs) of the MLM operator.
Gurupreet Singh Anand, a computer consultant from Lokhandawala, Andheri in his first information report (FIR) stated that his wife was duped for Rs30,000 by some people who had introduced themselves as the independent representatives (IRs) of QNet. Anand told the police, “They (IRs) had said that one of the bio-products my wife bought could be used to treat my 12-year-old son's brain-related diseases.”
The Champcash app on Google Play store, wants you to install 10 other apps and refer it to others to earn unlimited money, similar to money circulations scams
Champcash, a mobile app from Champion Networks Pvt Ltd, is found luring several Android mobile users, under the pretext of providing opportunity to earn unlimited money, free. However, after checking its business model, Champcash appears more like a chain-money, operating without permission from the regulators.
"Champcash is an Android Application Through which Anyone Can be a Millionaire By Just Installing Some Apps in Mobile. Just Refer Champcash to Your Friends and Ask them to Complete the Challenge By installing 8-10 Apps in their Android phone, You will Get its payment instantly," the company says on its website.
The app is listed under entertainment on Google Play and its title is "Champcash Earn Money Free". Here is says, "Funda is Simple, We are Giving Money of Advertisement. Users Installs the Apps and Advertisers Pay us and We Pay Users. You can Earn Unlimited without investing any money..."
This may sound good for a gullible person in need of free money, but remember, it is not as easy as it sounds. There are two serious issues with this claim from Champcash. One, there is no clarity on which 10 apps that a user is bound to install, open and use for at least a minute and second, why would an advertiser pay money to anyone for installing a third party apps? Also, if Champcash app is free, then why the user needs to punch in a sponsor ID?
Another issue is, how does the company claim to distribute money? Champcash says, "Other Companies are Giving money directly to their Users if they install Apps in their Phone. We Have Changed this Scenario, we are not giving any Money to the User who is Installing Apps in his phone But we are Distributing that money in Whole Network."
Now, I have been using, testing several mobile apps since past several years, and have yet to come across anyone who offers money to install an app. It is the other way around. If you use free apps, then there may be some advertising popping up while you use it. And if it is a paid version, then there would not be any advertisement besides providing your some more features of the app.
Since Champcash claims to receive and distribute money to everyone who uses its app, we asked a few questions around. First, we asked regulators, if Champcash is registered with them, since it is in money circulation business. In an email reply, an official from the Reserve Bank of India (RBI) clarified, "The company (Champcash or Champion Networks Pvt Ltd) is not registered with us - neither as an authorised entity under Payment and Settlement Act nor as an NBFC."
At the same time, we also sent some questions to Champcash, which are yet to be answered by the company. Here are the questions we asked...
What is the churning ratio of Champcash users? On an average, how many users join and leave (uninstall) the app in a 12-months period? What is the user retention rate in this line of sponsorship?
What is the average amount, a user typically earns in a month/year?
How many users earn less than $100 as reference fee in a year?
What is the maximum amount a user had earned in a year through referring Champcash app?
What are the chances that someone who starts from scratch and earns a $1 million Champ Cash?
Does the business module really free people from their jobs or have they just replaced their job with another that has more risk?
Does the Champcash really allow the leaders more time with their families?
Which are the apps that are referred for users by Champcash?
What information is obtained by Champcash and the other installed apps from user's mobile phone?
Kindly tell us names of advertisers, who are ready to pay $2 just for installing and using a third party app for a minute?
How many advertisers are enrolled in Champcash programme?
How many apps developers had partnered with Champcash programme?
Who are the top executives at Champcash?
Is there any specific reason, your domain Champcash.com is registered under proxy and all details like owner, contact info are kept hidden?
Is Champion Networks Pvt Ltd registered with any regulator like the RBI, since it is involved in payouts? Also how much TDS is deducted on the payouts and deposited to the I-T Dept by Champcash?