In spite of umpteen examples, the number of people falling into the net of cheats in Kerala is in upswing. Kerala has become a fertile ground for all sorts of cheats. When the law catch hold of a few, suddenly dozens of others mushroom. Only names of people and modus operandi change. Every day, media comes out with revelations of new fraud perpetrated by innumerable companies in the name of real estate, money chain, multi-level marketing, pyramid schemes, and network marketing. In spite of umpteen examples, gullible people fall prey to these cheats.
One lakh people lost their money to the tune of Rupees 1000 crore, DGP Jacob Punnose told media. Even police personnel and government employees are links in these chains, he said.
Blade mafia fleeced like Shylocks in the guise of chits and easy money. Later, deposits were collected offering in exchange teak and manchiyam plantations and goat farms. Latest to the additions are flat and money chains. Many fell in to the trap under the promise that easily, 200 to 300 percent profit can be made from these schemes. The probe which began in a few districts is now expanding to other states too.
People’s Rights Committee had convened a meeting of the victims of cheat at Thrissur. 250 complaints involving 17 companies were received. Known cases are only a few. Cases to be recorded are more.
Just go through some of the shocking swindling cases that made headlines in recent media: Sabarinath who floated two firms, Total for You and Total Music, cheated the investors to the tune of more than Rupees 200 crore from public on the pretext of fabulous investment schemes. There are more than 700 complaints. Tycoon Empower International Ltd multi-level marketing Company swindled Rupees 410 crore. More than 24,000 people were left in the lurch when they vanished after withdrawing their deposits from the bank. Complaints registered before the Sivasubrahmanyam Commission appointed by the Supreme Court rose to 20,000. Nano Excel Corporation Ltd. Director Patric Thomas was held for fraud amounting to Rupees 600 crore. Bizarre collected Rupees 100 crore from public through chain and shares.
Bizarre’s promise to investors were to open super markets in 140 Assembly constituencies. Verison Builders and Developers director Sunil Henderson was arrested for swindling Rupees 10 crore from 25,000 people. Police have closed the regional offices of RMP Infotech Pvt Ltd at Kozhikode, Thrissur, Kochi and Thiruvananthapuram. Action was taken against Modicare too. Crime Branch raided the Kochi office of Japan Life for selling magnetic beds worth crores of rupees through chain system. Way 2 Life promised to double investments in 100 days. Hundreds were cheated, crores of rupees lost. Apple A Day owners Saju Kadavilan and Rajiv Cheruvera collected Rupees 100 crore seems to be the mother of all real estate frauds. Cases filed against them are 700. Liberal sponsorships and advertisements were a facade for their shady deals. Apple Heights, Apple Tower, Apple Guest House, Apple Com Limited Edition, Apple Suite, Apple Ice, New Kochi are a few of the 21 projects declared by the Apple group. New projects - Nano Flat in 72 acres, 374 Nano plot, 50 Nano Villa, 30 Nano Hut, 200 Nano Homes were also announced. Around 100 crore Rupees were collected before they vanished. Cheques given to many were bounced. There is no end to the list. Meanwhile, Tycoon and RMP approached court alleging police intervention into their business.
Once the law enforcing agencies took action against a few, the investors got panicky. Real number of victims will never be known; everyday names of new victims surface. Yet besides venting their protest, very few come forward to file complaint. They are afraid of the promoters as well as the police. They fear that their names will be added to the list of accused. Most of the victims are the middle class who build castles in the air. Depositors include NRIs. Many depositors are trapped since they cannot disclose their source of income.
The victims include people who pledged or sold gold jewellery, land and building, besides depositing their hard earned retirement benefits expecting high returns. They find it extremely difficult to face the reality. They cannot withstand this setback. The drastic death of Supreetha Prasada of Pandalam in Pathanamthitta district proves a point. She allegedly set herself on fire by pouring kerosene oil. She is said to be the agent of a multilevel marketing company. Relatives say that the suicide was an aftermath of the failure to sell the goods like soaps and medicines she purchased paying one lakh rupees. The cheats take capital of the Keralite’s mindset to make easy money. Besides individual loss, this swindlers cause huge loss to the state’s economy. Through lottery cheating, the exchequer lost Rupees 80,000 crore, former Chief Minister V.S. Achuthanandan said.
“The reason for cheating is the psychology of Malayalis to jump into any scheme even if cheated umpteen times. Usually, if someone tells you can make easy money there will be a doubt. But in these cases, people believe that easy money is possible. The lack of legal deposit schemes by which people can make good returns also leads people to money chain trap. There is a lottery mindset among Malayalis,’’ ADGP T.P. Senkumar IPS, who had probed “LIS’’ cheating case told TSI.
“Common people will be losing only Rupees 5,000 or 10,000. But fraudsters get huge amount. Even if a few go to court, the compensation will be negligible. Rest of the huge deposits is safe. Cases of cheats who had convicted are rare. This embolden them to commit more fraud. Giving advertisements of money chain and blade are against law. Police can take action against such media. One should confirm whether such firms have RBI registration. There should be disclaimer. There is tendency to believe what appears in reputed print media. Cooperation from media was wanting when I was dealing with LIS case. Liberal advertisements released by LIS were the reason. Trusts can function only for the purpose for which it is registered. Charitable trusts cannot do business. Efforts to suppress LIS case was one for the reasons for all the future frauds. When large advertisements are released as in the case of ``goat-teak-manchiyam’’ schemes, police should be vigilant and take action,’’ Senkumar said.
Money circulation schemes are banned under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. It prohibits luring people with exorbitant money or products. “There will be laws to curb fraud by private financial institutions,’’ Chief Minister Oommen Chandy said. “Indications are that the magnitude of the cheating is far more than what appeared in newspapers. Private financial institutions make use of investors’ greed for huge profit to cheat them. These people will fall a prey to their inducements and promises,’’ he said.
“Those who run money chain and those who join in it are culprits. There are policemen who made money and lost money. Policemen who have gone out of the way will be taken action including suspension. One firm who indulged in fraud to the tune of Rupees 300 crore had 14 fictitious accounts in a single bank. All institutions promising doubling money on enrolling one and that person enrolling another are fraud. All money chains are punishable under Indian Penal Code,’’ DGP said.
A few years ago, there was a raid in Amway Kochi centre. “Amway’s health and wellness brand – Nutrilite, has around 25 products. These are food or dietary supplements. Under the Food Safety and Standards Act 2006, food or dietary supplements are classified as foods. The Drug Inspectors of the state incorrectly were of the opinion that these products are drugs. We approached the courts and the Hon’ble High Court of Kerala was pleased to stay the action against Amway. As you would know, it has been business-as-usual for us in Kerala since we started commercial operations in May 1998,’’ Amway India Enterprises CEO & MD William S Pinckney told TSI.
“Our products are world class (600 patents globally), and as a company, we have created around 500 direct and 2500 indirect jobs, and there are 500,000 successful Amway business owners in India. There are no complaints in Kerala against Amway and we believe there would be no reason for complaint,’’ he said.
“We see action against fraudulent companies as an opportunity for regulatory agencies to be able to differentiate the ethical companies from those that are not. We had paid Rupees 12.38 crores to Kerala Government and Rupees 210 crore to Central Government in 2010. Amway and 14 companies such as Tupperware, Herbalife, Avon, Hindustan Unilever Network etc are part of the Indian Direct Selling Association (IDSA), the industry body of direct selling companies. IDSA has been in dialogue with the Union Government to enact direct selling guidelines or a legislation that would help regulatory authorities differentiate between ethical direct selling companies and those that are not. Unless these guidelines are formulated soon, more consumers and ethical companies will be hurt. We believe that once the Union Government formulates guidelines on the direct selling industry, the industry will rise to its true potential,’’ he added.
However, whoever or whichever company approaches, there is no substitute for people’s vigil. Some of the important things to be noted should be: whether the company has made any genuine investments in India, Do the company has genuine quality products of its own? Do they have a proper marketing plan? Do they have 100 per cent refund policy? Do they give any option for quitting? If a company does these things, then it is meant to do serious business in India and not intended to cheat and loot the public. Only deposit in those genuine companies and associate only with those people.
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