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NRIs fall victim to Indian money chain fraud

By VM Sathish

7 money chains, multi-level marketing firms siphoned off over Rs10bn from NRIs
Many Non-Resident Indian investors who have been allegedly duped by dubious money chain companies and builders are taking legal action to retrieve their investments and prevent occurrence of such schemes. After two major money chain rackets from South India have been busted by the Indian investigators and their senior officials arrested, a number of NRIs in the UAE have come out with complaints against such companies that were covertly operating and mobilising business through a wide network of agents and subagents.

Seven dubious money chains, some operated by police officials in the South INdian state of Kerala, have been operating under different names in the Gulf countries, canvassing business from NRIs, through a marketing network using friends, relatives and other acquaintences.

According to Jacob Punnose, Director-General of Police, Kerala, seven money chain and multi-level marketing firms have siphoned off more than Rs10 billion from various sections of people in Kerala, including NRIs, in the past couple of years. The current investigation is focused on Bizzare Global Group of Companies that duped several thousand investors, by promising to set up a chain of supermarkets. The NRI victims are mainly from Kerala, Tamil Nadu, Andhra Pradesh and Karnataka.

Bizare Group attracted investment from NRIs for a chain of supermarkets that they planned to set up. Many people have invested from Dh10,000 to Dh100,000. The company has established a chain of network marketing agents who convinced the investors giving three promises - safety, confidence and steady income flow. Bizzare Group planned to open 140 supermarkets in different parts of South India and for each supermarket, they collected money from 1,200 shareholders, many of them from the UAE, Saudi Arabia and other GCC countries, victims revealed to 'Emirates24|7'.

The group collected money, but never built the supermarket chain. The agents convinced investors that once 400 shareholders purchase share in the supermarket project, the required land would be bought. One of the NRIs who lost money in the scheme, said they were told that "construction work for the market would start after the next 400 investors put in money and the market would become fully operational after the remaining 400 share holders join the project."

"This is a highly rewarding investment for people like you who are highly educated and involved in various organisations. We have started 12 supermarkets till now, and our 13th supermarket is going to be inaugurated in Kottayam this December 1 (2008). We have also entered in real estate sector now, started villa projects in Guruvayoor. There is a lot of scope in this investment scheme. We promise you at least four times the investment you make in short span of time," he said quoting an e-mail canvassing NRI investors for the schemes. The group promised laptops, premium cars and travel packages as incentives.

The viability of supermarket was promised because all the 1,200 shareholders would become customers, ensuring regular increase in sales volume and profitability.

Many NRI investors have purchased several share units each valued at Rs16,500 (Dh1,400) and the number of victims totals several hundreds. Investors from particular NRI pockets such as Malappuram, Vayanadu, Trichur and Calicut are the main victims who were lured to the money chain business through other NRI agents.

NRIs have invested in these schemes, when they went on vacation and attended special "study classes" organsied by money chains in star hotels.

"These money chain agents have collected money from NRIs in all emirates in the UAE. They have been active in other Gulf countries too," said sources familiar with the schemes. According to Kerala Police, about 100,000 investors have lost heavily in the dubious money chains and the initial loss is estimated to be Rs1,000 crore.

The group promised good investment scheme in a supermarket chain. They promised income from weekly promotion schemes (100 per cent), royalty income of Rs7,000 to Rs15,000 per month, yearly dividend, repurchase income, monthly incentives of 30 per cent of the total monthly purchases.

Meanwhile about 130 NRIs from the UAE have lodged police complaints in Kerala against promoters of Apple A Day Properties, a builder who has conducted marketing road shows in various hotels in the UAE and collected money promising to sell flats, but did not deliver them.

Promoters of Apple A Day Property have surrendered to police and the state government promised NRIs that a special investigation team will be send to the UAE for further inquiries. They have formed an "Apple A Day Properties Victims Group," in the UAE to fight the case in India. This group of NRIs in the UAE have served legal notices and police complaints against a property developer and approached the Indian Government and a consumer court in India seeking to track down promoters of an Indian construction company that allegedly failed to deliver five star apartments with seven star facilities, two years after the promised date.

The company owners have surrendered to the police and are in judicial custody for further investigation.

A group of investors in the UAE who have addressed the media with their grievances said: "In 2007, Apple a Day Properties launched Seven Star Furnished Suite Apartments and a couple of other high profile projects in the UAE and marketed it among NRIs through a major advertisement campaign. The promoters had promised that the 7-star suites at Nedumbassery would be completed for delivery by April 30, 2009. About 160 NRIs had paid the property price worth more than Rs1 million each to book the property. Many of them have obtained bank loans to purchase the property," said Abdul Kader, an Abu Dhabi-based businessman.

The promoters had promised that the 7-star suites at Nedumbassery consisted of about 200 units with average price of Rs1.2 million each.
Investigation are on to find the agents who worked for the schemes, too.

© Emirates 24|7 2011