SFIO probing 67 companies for running Ponzi, MLM schemes
Moneylife Digital Team 05 August 2013

SFIO is probing 67 companies for running Ponzi or money circulation schemes. In addition, the government has received complaints of financial fraud against 154 companies including Saradha, Rose Valley group, Vaishnavi Corporate Communication, Speak Asia, Reebok India and Alchemist Infra

Serious Fraud Investigation Office (SFIO) is probing 67 companies for allegedly running Ponzi or money circulation schemes. Corporate Affairs Minister Sachin Pilot said his ministry has ordered SFIO to conduct probe against 67 companies who had allegedly floated Ponzi or multi-level marketing (MLM) schemes.


"...Investigation is being conducted in respect of all of them. As and when the investigation is completed, government orders prosecution in respect of violations of the provisions of the Companies Act, 1956 and Indian Penal Code, 1860," Pilot said in a written reply to the Rajya Sabha.


Ponzi or MLM schemes are fraudulent investment operations, which lure investors with promise of high returns.


Pilot also said the government is looking into complaints of financial frauds against 154 companies including those connected with Saradha Group and Rose Valley Group.


"Complaints have been received against 154 companies/ organisations during the last three years," he said, adding that his ministry has ordered probe of the balance sheets and other documents in these cases.


"Some cases have been referred to the Economic Offences Wing (EoW) of the concerned state government for further investigation," he added.


As per the list provided by the Minister, complaints of financial fraud have been received against Saradha Group's 10 entities such as Saradha Realty, Saradha Agro Development, Saradha Exports and Saradha Garden Resorts & Hotel.


Besides, the list includes names of 14 entities related to Rose Valley Group including Rose Valley Industries, Rose Valley Marketing and Rose Valley Hotels and Entertainment.


Vaishnavi Corporate Communication, Speak Asia, Reebok India, Alchemist Infra are among the other companies against whom complaints have been received, according to the list.


On steps initiated by the government to detect corporate wrongdoings, Pilot said the ministry is in the process of developing an early warning system to identify cases of frauds or potential frauds at the earliest.


"Pilot testing of the system is expected to be completed during 2013-14," the Minister said.


In addition, Pilot said various measures had been undertaken to protect the investor' interests through programmes on awareness and education.


Some of these steps include issue of multi-lingual print media advertisements from time to time to caution the investors about fraudulent investment schemes, creation of facility on MCA-21 website for lodging complaints and for tracking their status and a system of sending SMSes cautioning investors to be careful while making investments.

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