In Vijayawada, Andhra Pradesh, you can earn Rs 10,000 a month working just twice a week from home. The catch is, to become a multi-level marketing “leader”, you first have to pay prospective employers Rs 1,500. Also, friends and family must enrol into the scheme, each paying Rs 1,500 “fees”. Chances are, within weeks, this employer will disappear with the money. For such is the modus operandi of a typical multi-level marketing, ponzi or pyramid scheme. Such schemes flourish across India (a Rs 1.5 lakh crore worth fraud, by 2011 estimates) but are especially popular in southern states, including Andhra Pradesh.
“These schemes have caused much hardship among the poor, unemployed and gullible, even deaths, in Andhra. Investigations show hundreds of crores lost to such schemes where promoters disappear,” says DIG V.C. Sajjanar, former head of the economic offences wing of the state police. Sajjanar was instrumental in carrying out raids against Japan Life India, a pyramid scheme that looted Rs 4,000 crore.
Critics say MLM plans typically mimic business models of large companies like Amway. In response to AP investigations, the FIPB has launched a fresh probe into the firm’s business. “Yet, the probe seems oriented to regulate such firms rather than impose a ban as we demand,” says Mohan. Amway is registered as a direct-selling company. It is, however, subject to two ongoing police investigations in Andhra as well as a PIL in Hyderabad. “The models of Amway, Japan Life, Southern Wonder, Green Glory, PACL and others are really the same as the smaller ponzi schemes. Smaller ponzi schemes are inspired by larger frauds,” says Sajjanar. Fresh approvals for direct selling firms are on hold.
In Tamil Nadu, some clever firm offered huge return via an investment scheme to set up emu farms. All the investors in emu farms’ scheme are complaining, as they fear loss of money. Earlier many companies offered plots with teakwood plans claiming return of over 100% after some 15 years. We often see how unscrupulous firms or companies attract innocent investors to invest in high return but dubious deposit schemes and how such investors are cheated. Unfortunately because of lack of coordination between various State and Central government agencies, these fraudsters often get away. Further, there is no efficient and adequately staffed agency (law is not very useful) to gather information and to catch the cheaters at an initial stage of such frauds. If we have to avoid a repeat of uncontrolled mobilization of innocent investors’ funds, we have to set up a far more efficient regulatory system.
Sometime back we had a real esiaie company promising investors teak and other farms in the far south of Tamil Nadu.There was another scheme promising Goats /Goat milk in perpetuity for investors.Also cattle farms galore. All of them came to a sticky end with some promoters going to jail. Suckers are born every minute.Take the case of students flocking to questionable"Universities" abroad and one in London flouting all rules, Because the 'student' visas were easy to get.TriValley or other , makes no difference. Parents and authorities never think twice before letting their kids/wards apply. Strangely enough many of the students duped are from Andhra Pradesh.Wonder why this is so?Must be the craze for "phoren" education, however dubious.Should we classify degrees from Soviet Union or The Paople's Republic among these?It is a well kept secret how Medical graduates from the last two have tales to tell.A fit study for our 'Investigative' journalists.
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