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No beating about the bush.
QNet India’s CEO Suresh Thimiri, in his anticipatory bail application has denied any relations with the MLM company and its representatives!
The case of QNet, the Hong Kong-based controversial multi-level marketing (MLM) operator is taking various twists every day; but this one will shock its tens of thousands zealous subscribers and distributors as well. Suresh Thimiri, QNet India's chief executive, in his anticipatory bail application has denied any relationship with QNet or any of its representatives.
Thimiri, in his anticipatory bail application filed on 19 August 2013, before additional session Judge DA Dholkia has said, "The applicant (Thimiri) does not hold any sort of relation neither with the Company (QNet) nor its representative (including Eswaran) against whom the Complaint has been lodged by the respondents (Gurupreet Singh Anand) in Oshiwara Police Station." (See image below)
Interestingly, the same Thimiri is often seen hobnobbing with QNet's 'sales force' or independent representatives (IRs) as well as celebrities like Sri Lankan cricketer Muttiah Muralitharan as recently as in April 2013. One simple question, to the legendary cricketer. Why he is not promoting QNet in his home country? Is this because, Sri Lanka has particularly banned QNet in its previous avatar? (See image below)
Even, Thimiri's profile on LinkedIn shows him as chief executive of Transview Enterprises (QNet) (). Transview Enterprises Pvt Ltd is an associate company of Vihaan Direct Selling India Pvt Ltd that handles QNet's MLM operations in India since 14 April 2012. Before that QNet's Indian operations were controlled by QuestNet Enterprises (India) Pvt Ltd a company registered at Chennai. QuestNet Enterprises was operating QNEI eStore, a platform from where IRs, which is how the investor-dealers of QNet are described, could place orders or buy products and also enrol new recruits. After launching Vihaan, the company asked all its old IRs to mandatorily register under the new business name in order to receive their commissions. Vihaan is a direct selling agent of QNet and had done large financial transactions with Thimiri's company Transview.
Coming back to Thimiri’s submission in the Sessions Court, this may appear strange for those who do not have much knowledge of a typical MLM company and its operations. Most MLM companies tell distributors or IRs not to make claims for the products except for those found in company literature. (That way the company can deny responsibility for what distributors do.) However, many companies, including QNet and Amway hold sales meetings at which people are encouraged to tell their story to the others in attendance.
Last year, senior Amway representatives Richard N Holwill and Rajat Banerjee, who met us, admitted that although some distributors tend to go overboard in pitching the scheme, income from being a distributor of Amway can, at best, be a source of additional income or pocket money for most people. It is not the pathway to riches as MLM companies make it out to be.
Another modus operandi that is used by the top guns of MLMs is either they deny any association with the company and claim that they themselves are victims of this fraud! Reportedly, few years back police registered a complaint against a female IR (who has now become diamond in QNet) for fraud and cheating. The lady walked away from the case by claiming that she herself was a victim of this fraud. One wonders, why then the lady did not file similar complaint against the company? But this is how these MLMers operate.
In case you are still wondering why Thimiri is not filing a complaint against QNet for using his name as CEO, here is an eye opener from the Hong Kong High Court. Hong Kong-based Kurt George Rocco Rinck, who was one of the founder-director of QI group, the parent of QNet, GoldQuest and QuestNet had filed the case. Although his case was dismissed on ground that he had signed a trust agreement and thus was liable to pay money to QuestNet, here is what Justice John Saunders had stated…
2. The particular business run by QuestNet made it necessary for various of QuestNet’s directors to establish in their personal names, to be used as what were described as “buffer accounts”, bank accounts in which funds were held, to be available to QuestNet, to avoid potential problems which may arise should QuestNet’s own bank accounts be frozen.
3. In order to establish one of these buffer accounts, on 18 November 2003, Mr Rinck made a declaration of trust in favour of QuestNet in which he declared that he held all moneys in certain accounts with Citibank in Hong Kong, namely accounts numbered 12330345, 12330353, 82346968, 19356439, 39052036 and 29342899, (the Citibank accounts), which accounts were in his personal name, and that he held:
“all money which may be accrued to or deposited into the aforesaid account from time to time on trust for the absolute benefit of (QuestNet) until such time as those money are withdrawn, transfer or in whatever way he taken out from the aforesaid account according to the instruction of (QuestNet).” (sic)
4. By a subsequent similar declaration of trust, dated 13 December 2005, Mr Rinck reiterated the declaration of trust that he had made in relation to the Citibank accounts, and further declared that he held all money in account number 800777 (under Identification #800777 SAWTSCHENKO) with Dominick Co Bank in Zurich, Switzerland upon trust for the absolute benefit of QuestNet. In these proceedings the funds in the various accounts, as at 30 June 2006, have been referred to as the Trust Funds.
5. A dispute arose between Mr Rinck and QuestNet around late June or early July 2006, as a result of which QuestNet took steps to remove Mr Rinck from his positions as an employee and director of the company. Mr Rinck disputes that those steps have been effective.
Coming back to Thimiri, the Sessions Court has granted him interim bail on execution of personal recognizance (PR) Bond of Rs25,000 with one or two sureties of the same amount, while directing him to be present before the investigating officer as and when required.
We sent an email to the PR agency of QNet India. The agency told us over phone, that QNet India does not want to provide any information, including names and designations of its top executives at this stage and may issue a statement once the investigations get over.
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According to an additional commissioner of police, the EOW has frozen six bank accounts of QNet that have Rs46 crore as balance, and their teams would soon visit Bengaluru and Chennai to arrest some suspects
Economic offences wing (EOW) of Mumbai police, which is probing Hong Kong-based controversial multi-level marketing (MLM) operator QNet has so far frozen six bank accounts related with the company.
According to a report from the Times of India, these bank accounts have a balance of Rs46 crore. In addition, Manjunath Hegde, arrested in this cheating case, has been sent to judicial custody, the report says.
"We have asked the firm to submit all documents. Some office-bearers have approached the Sessions Court for anticipatory bail," the report says quoting, Rajvardhan Sinha, additional commissioner of police, Mumbai.
Sinha told the newspaper that over 50 complainants have approached them in the QNet cheating case and the police will again visit Bengaluru and Chennai to arrest suspects.
Earlier this month, EOW registered a case against QNet, for allegedly duping thousands of investors by selling them plastic and glass products terming them miraculous objects for treating severe diseases like Cancer.
The complainant, 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 FIR names five accused, including QNet's Hong Kong-based founder Dato Vijay Eswaran, a Malaysian by birth and an Indian by ethnicity, who is photographed hobnobbing with the Prince of Saudi Arabia, in order to enhance its credibility in the Gulf.
What is QNet?
QuestNet and GoldQuest, the MLM companies that had shut shop in 2009 following police action are back with a bigger bang. They now call themselves as QNet and are thriving in an environment where tens of thousands of Ponzis and MLM companies are able to lure people into believing that they have the formula to instant riches and a high growth career.
While QuestNet and GoldQuest, which mainly sold numismatic gold coins (they claimed they were limited edition coins that whose value would increase over time) in 2009 were forced to shut shop in India, their new avatar QNet offers a broader range of lifestyle ‘enhancing’ products (holiday packages, diamond watches, bio-discs, Chi-Pendants and herbal products for anything between Rs30,000 to Rs7 lakh), which promise fabulously high returns so long as new distributors are enrolled rapidly. Its product brochure says, “With 8 ways to earn and up to 50% of the sales paid out in commissions, QNET offers the most dynamic and innovative compensation plan in the direct selling profession.”
Like SpeakAsia, QNet is also registered in Singapore and has been banned in many countries, including Iran. In 2007, APLI, the direct selling Association of Indonesia, considered GoldQuest or QuestNet as a pyramid scheme.
According to Wikipedia.org, QNET has received a Fatwa by Dar al-Ifta that its business is not halal within Islamic law on the basis that it could harm the Egyptian economy. The company has also been accused of operating a product-based pyramid scheme.
At the end of August 2012, the Ministry Of Commerce and Industry of Saudi Arabia banned Qnet accusing it of stealing and falsification as well as not being registered with the ministry. Furthermore, a message was published on the official website of the Saudi Arabian Ministry of Commerce and Industry warning the Saudi Arabian people not to be involved in such schemes under any pressure of false promises, mentioning the company name 'QNet' specifically as one on those fraudulent schemes operating in the country.
The governments of India, Iran, Indonesia, Nepal, Rwanda, Saudi Arabia, Sri Lanka, The Sudan, Syria, and Turkey have at various points shutdown local offices of the company, arrested key members involved with the company, or pre-emptively banned the company from entering, Wikipedia.org, says.
According to Wikipedia.org, QNet's business model has been described as a simple pyramid scheme, where initial entrants to the scheme do make money, but as the number of independent representatives (IR) increases, finding more IR's becomes harder and harder, until those that join late are unable to recover even their initial outlay and the model collapses.
The compensation plan operates by the recruitment of customers by existing IR. An IR is provided with an ID that gives access to a 'tracking centre' (TC) in its computer system through which the IR's sales are tracked. A TC has a left and right customer group. Every customer owns a TC which is then placed on the left or right customer side of the IR's TC. A 'direct' transaction (a customer's personal reference or sale) is counted as one transaction. An 'indirect’ transaction (someone in the cusomer's TC buys/refers/sells) is also, counted as one transaction. The company pays $250 each time three product sales on an IR's left customer group are matched by three product sales on the right.
RYTHM foundation -derived from the acronym 'Raise Yourself To Help Mankind'- is a charity organization created by QI Group.
What QNet sells?
At Present, QNet mainly markets products made by other subsidiary companies of QI Group. The products are in travel packages, nutrition, personal care, home care, collectibles, fashion accessories and education.
One of the products being marketed by the company is the Amezcua Bio Disc (also spelled BioDisc and BioDisk) which the company claims can "redefine and harmonise the energy of water, greatly maximising its positive affect on the human body". These and other detailed claims of often miraculous properties have been widely denounced as fraudulent by various scientists, media commentators and watchdog organisations. Critics have noted that the claims are based on thoroughly debunked pseudoscientific concepts such as hexagonal water and that they have never been validated by a peer-reviewed process. QNet has stated in a document published to its representatives that there are no known test and approval bodies to date on such products, Wikipedia.org says.
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Operators of illegal money-pooling or MLM schemes will soon face penalties of up to three times the profit made by them as against the current provision of a fine of Rs1 crore
Market regulator Securities and Exchange Board of India (SEBI) has decided to increase the monetary penalty for those running unauthorised collective investment schemes (CIS), as the existing mechanism has not proved to be sufficient to deter such illegal mobilisation of money.
Operators of illegal money-pooling or multi-level marketing (MLM) schemes will soon face penalties of up to three times the profit made by them, as against the current provision of a meagre fine of Rs1 crore
A proposal to this effect has been approved by SEBI and the same would be notified soon, a senior official told PTI.
As per a SEBI memorandum in this regard, illegal mobilisation of funds within the existing legal framework falls within a provision wherein a maximum penalty of Rs1 crore may be imposed.
SEBI is of the view that this penalty “is very meagre compared to the money mobilised by unregistered CIS, especially considering that in certain cases the money mobilised is in multiples of thousand crore.
“Hence, adjudication under the existing mechanism may not be sufficient to deter such illegal mobilisation of money.”
Accordingly, SEBI has decided to amend the relevant regulations to provide for “a penalty of Rs25 crore or three times the amount of profits made, whichever is higher”.
To tackle the growing menace of investors being duped of their hard-earned money through various illegal investment pools, many of which are in the nature of ‘ponzi’ schemes, SEBI has been given the mandate to take action against all such money collection activities involving Rs100 crore and more.
A typical ‘ponzi’ scheme involves the operator collecting a large amount of money from investors and paying them returns from their own money or the money collected from subsequent investors, rather than from profit earned by the person or entity operating such a scheme.
Such activities came to be known as ‘ponzi’ schemes after Charles Ponzi, who became notorious in the US in 1920s for deploying this technique while promising 50% return on investments in 45 days and 100% within 90 days.
A large number of such schemes have come to the fore in India as well, while many of them have faced regulatory actions by SEBI in recent months.
However, SEBI in most of the cases has only asked the operators of such schemes to refund the money to investors and stop such unauthorised activities. The schemes that have faced action include those promising huge returns based on investments on potatoes, goat rearing, cattle and butter schemes, Emu farming, real estate and holiday memberships.
Tightening the noose on perpetrators of such investment pools, SEBI in its board meeting earlier this month decided that all unauthorised CIS activities be declared as ‘fraudulent and unfair trade practices’ and dealt with accordingly