Pushpam Appalanaidu, MD of QuestNet India was arrested at Chennai International Airport following a look out notice from the Andhra Pradesh CID. Appalanaidu, a Malaysian, faces 21 criminal cases of cheating for duping investors for Rs160 crore
Immigration authorities at the Chennai International Airport has arrested Malaysian Pushpam Appalanaidu, who is wanted by the Andhra Pradesh police in several cases of cheating investors for around Rs160 crore through multi-level marketing (MLM) schemes. Appalanaidu was known as managing director of QuestNet India, the previous avatar of QNet in the country.
According to a report from The Hindu, the 50-year-old accused, Pushpam Appalanaidu, a Malaysian, faces 21 criminal cases of cheating and the Prize Chits Money Circulation Schemes (Banning) Act 1978 too was invoked against her.
"Criminal Investigation Department (CID) officials had issued a look-out to Immigration officials in Delhi, which was sent to all international and domestic airports in the country. The woman was caught by authorities at the Chennai airport as she was about to board a flight for Malaysia," the report says.
Appalanaidu along with four other accused had floated a MLM company and indulged in alleged illegal company activities by collecting deposits from investors in Andhra Pradesh by promising high returns, CID official told PTI.
Following police action, both QuestNet and GoldQuest, the multi-level marketing (MLM) companies run by QI group of Malaysia shut shop in 2009. They now call themselves QNet, which is also under the lens and the economic offenses wing (EOW) of Mumbai Police as well as Enforcement Directorate are probing the operations of the company.
In India, it was registered as GoldQuest International India Pvt Ltd in 2001. Elsewhere QuestNet Enterprises was registered in November 2004 in Chennai. Between them, they had offices at Bangalore, Mumbai and Hyderabad.
Although QuestNet’s claims about its legitimacy was an important part of its sales pitch, government agencies too were uncomfortable about its operations and at that time the Intelligence Bureau (IB) sent out a report questioning its activities to several government agencies.
Both GoldQuest and QuestNet used to sell a pair of limited edition, numismatic medallions for around Rs30,000 that were made in Germany. These had images of Indian deities, the ka’abah, Bhagwan Mahavir, the Pope and Mother Theresa; it also had coins for major world sporting events-in fact, it had coins for every interest group. The coins were sold through closed-group presentations led by influential people - doctors, lawyers, sports stars - and the products were pitched at those who can cough up Rs30,000 for a pair of medallions of doubtful value (limited edition coins don’t necessarily appreciate in value). The emphasis at these meetings was on establishing the apparent legitimacy of the scheme by displaying documents about its tax filing, apparent government permissions and its ISO 9001:2000 certification.
However, the selling point was not the value of the coins or their potential appreciation. Each buyer of coins, who puts down 30 grand, was supposed to persuade two others to join the scheme and purchase coins. When that happens, the originator gets back a part of his money in line with a detailed matrix, which is spelt out on its website without indicating the exact returns earned.
Coming back to Appalanaidu, during August 2009, JR Mayer, the managing director of QI Group sent an invite to Moneylife's managing editor Sucheta Dalal. Mayer, in the letter, said, "Due to the legal challenges that both the companies have been facing, in India for over a year now it has unfortunately led to both companies being forced to halt their operations and temporarily close down their offices. However the companies are by no means non-existent. Thus the MD of QuestNet India, Ms Pushpam Appalanaidu has not been in any position to make media statements or invite the media to an open forum to answer questions about the two entities."
QI group units were actually banned in 2009 while operating under the names of Goldquest International Pvt Ltd and Questnet Enterprises India Pvt Ltd. In fact, the Ministry of Corporate Affairs in its report for 2010-11 has specifically shown both these companies as being under investigation by Serious Frauds Investigation Office (SFIO).
The EOW of Mumbai Police, which is also probing the MLM fraud, had so far arrested nine team leaders of QNet for allegedly duping investors by offering to sell products such as magnetic disks, herbal products and holiday schemes through fraudulent practices. The accused have also been charged with cheating and forgery under relevant sections of the Prize, Chits and Money Circulation Schemes (Banning) Act 1978, similar to Appalanaidu.
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