Playing with people’s greed

 Speak Asia ­racket

How easy it is to play with the greed of people and make money! It has been proved once again with the arrest of the kingpins behind the massive racket of Speak Asia.

Earlier, many companies like GoldQuest, V-Can, Apple FMCG, Quantum and a score of others amassed huge money in the name of selling goods.

Though, the modus operandi of Speak Asia is slightly different, yet the common crime in all the operations of these companies is that their schemes attract the provisions of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978.

Can anyone move against MLM schemes? Yes, says SC

In the case of A R Antulay vs R S Nayak (AIR 1984 SC 718), the apex court stated thus: “Crime is a wrong against the society at large and therefore, as a general rule, any person having knowledge of the commission of an offense may set the law in motion by a complaint.”

Speak Asia, which is registered in Singapore, first came out with a service called online survey. The company claimed that several national and multinational companies asked it to conduct surveys of their products and the members would be paid regularly if they completed the survey forms online.

It said the members had to pay Rs 11,000 as admission fee, and they would be paid Rs 1,000 every week.

In effect, the members would get Rs 52,000 per annum, so it claimed.  Moreover, if they introduce members, they would also be paid Rs 1,000 for every introduction. This was enough to lure people who joined it in droves and went on a spree of introducing as many members as possible. Greed would not make them realize that money wouldn’t grow on trees.

Way back in 2010, a Vijayawada-based civil society organisation, Corporate Frauds Watch Society, was the first to notice the fraud of Speak Asia after its secretary attended its meeting at a hotel in the city. The issue was immediately taken to the notice of the police. However, as is their wont, the police dilly-dallied over the issue on the pretext that they could not understand this white collar crime.

Then the voluntary body’s secretary approached Inspector General of Police of Crime Investigation Department (CID) of Andhra Pradesh in 2011, and appealed to him to file a criminal case against the fraudulent scheme of Speak Asia.

In a three-page complaint to the AP CID, the secretary elaborated the modus operandi of the online survey company. Acting on it, the CID arrested some of the accused in Mumbai, and froze their accounts to the tune of Rs 142 crore.

However, the investigation ground to a halt, as the Speak Asia filed a writ petition in the High Court on the plea that the police were harassing them while their business was legal. The company made the Corporate Frauds Watch also one of the respondents on the plea that it had no locus standi to lodge the criminal complaint.

The counsel for the Society filed an affidavit, citing the Supreme Court judgment in A R Antulay vs R S Nayak (AIR 1984 SC 718) which states thus: “Crime is a wrong against the society at large and therefore, as a general rule, any person having knowledge of the commission of an offense may set the law in motion by a complaint.”

After going through the argument of the learned counsel of Speak Asia, the High Court found its business model attracted the provisions of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and dismissed the writ petition.

Later, Speak Asia approached the Supreme Court and that was the last heard of it. However, after several criminal cases were filed in many States throughout the country, the police of several States including the Delhi Police continued the investigation.

Due to the relentless investigation of Delhi Police, the fraudsters – Ram Sumiran Pal and Ram Niwas Pal, both brothers - were finally brought to book.

The kingpins siphoned away the funds to Singapore and from there to Netherlands, Italy, Brazil, Dubai and finally brought back to India. This is nothing but money-laundering. Now, they started legal businesses using the laundered money.

The ill-gotten wealth should be seized and confiscated by the government. Moreover, the agents employed by Speak Asia should also be arrested and prosecuted, since they are also the perpetrators of the crime. These agents must have earned sizable commission by roping in whoever they came across. And they do not mind joining another company to cheat more people.

Dr Ch Divakar Babu, the president of Corporate Frauds Watch, says that the racketeers call this type of money circulation schemes with different names – direct selling, network marketing, multilevel marketing, referral marketing. Ultimately, all these schemes are intended to cheat the gullible by camouflaging their schemes with products.

All these companies encourage their members to rope in their friends and relatives by offering attractive commissions for enrollment, he adds.

The strange phenomenon is the members who lost their hard-earned money in such schemes never report to the police. The reasons are obvious. They are introduced into such schemes by their friends and relatives. How could they file a complaint against them? But they never trust them again in their life. In effect, their relation is strained forever. This is how the fragile social fabric of our society is getting damaged. Secondly, they feel humiliated to tell anyone that they foolishly lost their money in some scheme. Thirdly, generally they do not know whom to complain and how. That is how these crooks have been surviving through one scam after another.

After GoldQuest racket was unearthed by Corporate Frauds Watch in 2008, several companies like SpeakAsia Online, NMart and others sprouted outright looting people. Each of these companies has managed to garner at least Rs. 1,000 crore.

The Andhra Pradesh High Court in Amway India vs. Union of India case in 2007 rightly pointed out that, “It is, thus, evident that the whole scheme is so ingeniously conceived that the inducement for aggressive enrollment of new members to earn more and more commission is inherent in the scheme.  By holding out attractive commission on the business turned out by the downline members, the scheme provides for sufficient inducements for its members to chase for the new members in their hot pursuit to make quick/easy money.”

The Supreme Court in Kuriachan Chacko case in 2008 justified the inclusion of Section 420 in the case against such money circulation scheme, stating that knowing fully well the scheme would not work forever these people are inducing and cheating the public.

It is high time the police plunged into action by strengthening the Economic Offences Wing and take the issue seriously in the larger interest of the economy and the society. 

Speak Asia fraudster of over Rs 2,200 crore fraud held

Corporate Frauds Watch filed the first criminal complaint against Speak Asia way back in 2011.The fraudulent company filed a writ petition in Andhra Pradesh High Court appealing to the higher judicature to announce that its scheme is legal. After the High Court dismissed its petition vindicating the stand of Corporate Frauds Watch it closed its operations and disappeared with ill-gotten money.

Corporate Frauds Watch demands the confiscation of the people’s money and criminal cases should be filed against the agents who had amassed enormous commissions cheating the gullible.

According to the information from Delhi Police, Ram Sumiran Pal, an alleged mastermind of the over Rs 2,200-crore 'Speak Asia' online marketing firm scam in which around 24 lakh gullible Indians were duped has been arrested by Delhi police.

He was wanted in at least eight cases of Andhra Pradesh Mumbai, Haryana, Madhya Pradesh.

The 37-year-old racketeer, Pal, a resident of Shahajanpur in Uttar Pradesh who was on the run for the last 28 months, was arrested on Monday from Connaught Place after months of sustained investigation by a Crime Branch team led by DCP Kumar Gyanesh, police said.

Pal and his brother Ram Niwas Pal, who duped people through a online marketing firm, also had Bollywood links as leading stars would perform at lavish functions held by them for investors and agents to lure more people and the siphoned off money was then also invested in many films, police said.

"He (Pal) was involved in a number of white collar crimes. He was in hiding in Dehradun and is wanted in at least eight cases of Mumbai, Andhra Pradesh, Haryana, Madhya Pradesh. He is one of the masterminds of the 'Speak Asia' scam and has also created a number of companies with his brother in order to cheat lakhs of innocent people," said Additional Commissioner of Police (Crime) Ravindra Yadav.

Both the brothers Ram Sumiran Pal and Ram Niwas Pal became part of the top management of multi-level marketing companies registered in foreign countries like Singapore, Italy and Brazil, which by their international profile, attracted more investors and also helped them in money laundering at a later stage, police said.

A company namely Speak Asia, registered in Singapore, was introduced in India in early 2010 by these two brothers with the help of one Manoj Sharma.

Speak Asia was an online survey marketing company which sold web subscription for Rs 11000 each and in return the investor had to fill survey forms, which were later found to be fake, for certain MNCs for promised annual payment of Rs 52000.

It may be recalled Vijayawada-based Corporate Frauds Watch has filed a criminal complaint against the fraudulent company in 2011. After the Andhra Pradesh launched criminal proceedings against the fraudsters Speak Asia wrapped up its operation in India.

According to police, 'Speak Asia' had remitted over Rs 900 crore to Singapore. The money was sent from India to the banks in Singapore and from there to Dubai, Italy and UK. However, the money came back from UK again to UAE (Dubai) and to India.

Ram Sumiran Pal is the first senior office bearer of 'Speak Asia' to be arrested in the matter, said Yadav

They used to have seminars and functions at different places. The promoters of the company, including Ram Simran Pal, used to travel all over the country and address meetings and seminars of their agents and investors in luxury hotels all over India. They acted like big tycoons having a lavish lifestyle to encourage the agents to bring more and more innocent people in the net.

"On one such occasion, the promoters held a meeting of the investors in Goa. They hired a special train to Goa for the investors and an exclusive portion of beach of a resort was booked.

"The open invitation to attend this meeting was given on the portal of the company and this was attended by thousands of people and their expenses were borne by the company," said Yadav.

In order to entertain the investors, leading stars of Bollywood performed in this programme. "There is no doubt that booking a special train and performances by film stars for a big bash at a beach resort in Goa was done to attract more eyeballs and therefore, hook more gullible people, who might choose to join the MLM scheme," he said.

The company had duped over 24 lakh investors. The amount of scam has gone up to Rs 2,276 crore. A number of cases were registered in different States. Thereafter, all the senior office-bearers of the companies went into hiding.

As per DCP Kumar Gyanesh, after the registration of criminal cases against the company in June 2011, 'Speak Asia' shut down its business, but its Directors and office- bearers handled the internet portal and told investors that no case has been made out against the firm and the firm will be restarted soon.

Despite vehemently denying the fact that Speak Asia was not just making up its surveys and relying on new membership fees to generate profit, it has come to light that Speak Asia's surveys were indeed fake and were just an eye wash, he said.

The Economic Offences Wing (EOW) Mumbai is investigating maximum number of cases of 'Speak Asia' fraud case since the last 28 months.

It is reported that more than 210 bank accounts containing over Rs 142 crore have been frozen. Besides this, another 150 bank accounts are reportedly under investigation over suspicion of funds being transferred in the scam, said Gyanesh.

After escape from Mumbai, Ram Sumiran Pal settled in Dehradun with his in-laws. He invested the ill gotten money in real estate and started construction projects in Dehradun.  He also purchased office and residential spaces in Mumbai, besides agriculture and commercial land in Shajahanpur, UP where he wanted to construct a luxury hotel, police said.

'Multi-Level Marketing' and the Gettysburg Address?

Several years ago, I spoke with a former 'Amway' adherent from the USA who, back in the 1990s, had once gone on a pay-through-the-nose pilgrimage to 'Amway' HQ in Ada, Michigan. He described an exhibition he'd been taken to by his fanatical 'Amway' handlers. This contained facsimiles of historic American documents including: 'The Declaration of Independence', 'The Bill of Rights' and 'The Gettysburg Address.' 

Almost as a perfect reflection of 'Amway' (corruption of 'The American Way'), the words which these documents contained were authentic, but the documents themselves were thought-stopping, and essentially-worthless, fakes, presented as valuable artifacts locked in specially-lit, glass security-cabinets draped with thought-stopping flags, and images, and with patriotic music, and speeches, playing in the background. 

I asked the former 'Amway' adherent the following question:

At the time you visited this 'Amway' exhibition, what connection did you imagine Lincoln's Gettysburg Address could possibly have had with so-called 'Multi-Level Marketing?'

To which he replied:

'I really have no idea!'

With an irony that is close to exquisite, one of the original authors of the pernicious 'Amway' fairy story, Richard DeVos, once gave (along with his dutiful wife, Helen) $10 millions of his ill-gotten gains to 'The National Constitution Center in Philadelphia.' 

http://www.philanthropynewsdigest.org/news/amway-corp.-founder-gives-10-million-for-national-constitution-center

Whilst second generation 'MLM Income Opportunity' racketeer, Doug DeVos, has recently been elected as executive board chairman of 'The National Constitution Center. '

http://articles.philly.com/2012-01-29/business/30676086_1_amway-devoses-founding-document

The founding fathers of the American Republic, and Abraham Lincoln, must be spinning in their graves. For the copy-cat nightmares which reality-inverting cultic organizations like 'Amway', 'Herbalife' , 'Forever Living Products', Nu Skin', 'Xango', etc., have all been peddling as a proven means of achieving 'The American Dream,' are about as far from the original high ideals upon which the American Republic was founded, as it is possible to get.

In this historic photograph (taken at the Gettysburg national cemetery dedication of 1863), Abraham Lincoln is seen upper left centre. It is interesting to note at least one African-American member of the audience with his back to camera, right front centre. 

One hundred and fifty years ago this week, on the gloomy afternoon of November 19th, 1863, US President Abraham Lincoln gave a two and a half minute address at the dedication ceremony of a national cemetery on the Gettysburg battlefield in Pennsylvania.  An estimated 15 000 people, were in attendance.

Lincoln's landmark speech (now said 'to have set the tone for the following century'), was written and delivered by the President less than five months after the bloodiest battle of the Civil War had produced (during just three days) over fifty-one thousands casualties (of which approximately seventeen thousands were dead or missing).

This week marks not only the one hundred and fiftieth anniversary of the Gettysburg Address, but also the 50th anniversary of the murder of President John Kennedy in Dallas Texas (November 22nd, 1963), followed (two days later) by the murder of the Kennedy's apparently-motiveless, only suspected-assassin, Lee Harvey Oswald, on live television by a known-mafiosi (and Dallas strip-club owner), Jacob Leon Rubenstein (a.k.a. Jack Ruby), whose bosses had plenty of motives for wanting Kennedy dead and any rigorous, independent investigation of Oswald, halted.

Lincoln's Gettysburg Address is generally considered to be the most poignant, and eloquent, speech in all American history.

'Four score and seven years ago our fathers brought forth on this continent a new nation, conceived in liberty, and dedicated to the proposition that all men are created equal.

Now we are engaged in a great civil war, testing whether that nation, or any nation so conceived and so dedicated, can long endure. We are met on a great battle-field of that war. We have come to dedicate a portion of that field, as a final resting place for those who here gave their lives that that nation might live. It is altogether fitting and proper that we should do this.

 

But, in a larger sense, we can not dedicate — we can not consecrate — we can not hallow — this ground. The brave men, living and dead, who struggled here, have consecrated it, far above our poor power to add or detract. The world will little note, nor long remember what we say here, but it can never forget what they did here. It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us — that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion — that we here highly resolve that these dead shall not have died in vain — that this nation, under God, shall have a new birth of freedom — and that government of the people, by the people, for the people, shall not perish from the earth.'

When translated into plain language (out of Lincoln's Biblical-sounding 19th century, political rhetoric): He portrayed the civil war as a test of whether his country's great republican experiment could continue and succeed; for the revolutionary idea that the people could govern themselves, was still in its infancy and unproven. Thus, in the Gettysburg Address, Lincoln claimed to be re-dedicating the American Republic to the high-ideals upon which it had originally been founded.

The reality behind Lincoln's pretty words turned out to be somewhat ugly; for tragically, 100 years after the last shot of the civil war had been fired and Lincoln himself had been assassinated, the Southern States were still brutally enforcing strict 'racial' segregation.

African Americans were first exploited as sub-humans, before being effectively-excluded from their country's much-vaunted, great republican experiment. However,1863-1963, was the century of American Apartheid lying between Abe Lincoln and Jack Kennedy.

The Civil War was not originally fought over slavery. It was fought over the Southern States' rights to pursue their own way of life, free from interference by a remote federal government in Washington DC. However, the perennial American argument about the appropriate form, and size, of federal government, coupled with the politics of Americans' ethnic origins (often inaccurately described as,'race'), are, in fact, the factors which directly connect Lincoln to Kennedy.

By the 1960s, American liberals had identified southern 'racial' segregation as the remnants of slavery clinging on in the land of the free. John Kennedy was one of those pressing for change, but the white South was not ready to change voluntarily.

For historical reasons, the South had always massively voted Democratic. In 1963, it threatened to swing to the Republicans. Jack Kennedy was facing re-election and he went to Dallas only because he had to win the State of Texas.

According to legend, as Kennedy's motorcade drove from Dallas airport into town, the President turned to the First Lady and announced that they were now 'entering nut country'.

 

It was Kennedy's Texan successor, President Lyndon Johnson, who was able to use the wave of sympathy, and outrage, that was created by the Dallas assassination, to force through Congress a series of Acts which ended legal segregation and gave voting rights to millions of African Americans. To many naive observers, these events have been seen as finally fulfilling Lincoln's Gettysburg promise. However, in reality, 'MLM income opportunity' racketeering, has made a mockery of Abe Lincoln's fine words, for US-based cultic organizations like: Amway', 'Herbalife' , 'Forever Living Products', Nu Skin', 'Xango', etc.,' have all been allowed (by successive federal governments) to infiltrate traditional culture and be run as parallel totalitarian states in microcosm: where government of the people, by the people and for the people, has quite literally perished from the Earth.

Again with an irony that is close to exquisite, the so-called 'land of the free' has actually exported it's own home-grown variety of totalitarianism dressed up as 'American-style capitalism,' to the rest of the world.

David Brear (copyright 2013)

Amway chief on obtaining-spree of anticipatory bails

It appears Amway chief Mr William Scott Pinckney is on a spree of obtaining anticipatory bails throughout the country. In Andhra Pradesh alone he had obtained anticipatory bails in about four criminal cases. When a local court refused to grant, the Amway approached the Punjab-Haryana High Court and secured permission to move abroad. YES! He has time to travel abroad and attend meetings all over the country inducing the gullible to join his 6-4-3 scheme and lose money. But no time to attend the criminal court. He fears that once the court delivers the judgement, his game will be over.

Punjab-Haryana High Court

William Scott Pinckney vs Ut Chandigarh on 17 June, 2013

CRM-M No.19553 of 2013 -1-

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CRM-M No.19553 of 2013 (O&M)

Date of decision : 17.6.2013

William Scott Pinckney

...... Petitioner

v.

UT Chandigarh

...... Respondent

CORAM : HON'BLE MR.JUSTICE NARESH KUMAR SANGHI Present : Mr. R.S.Cheema, Sr. Advocate with Mr. Rohit Chandel, Advocate for the petitioner. Mr. Hemant Bassi, Advocate for the respondent. ***

NARESH KUMAR SANGHI, J.

In view of the short notice, the reply filed by the respondent is taken on record. Copy thereof has been supplied to the learned counsel opposite.

Heard.

Learned counsel for the petitioner submits that the petitioner is an American national. He is Chief Executive Officer and Managing Director of M/s Amway India Enterprises Pvt. Ltd. incorporated under the Companies Act. The said Company has a turnover of Rs.2000 Crore per annum in India. The FIR was registered in the year 2002 and thereafter, the untraced report was prepared but due to variety of reasons all of a sudden, the Investigating agency presented the charge sheet in the year 2012. Thereafter, the petitioner sought the anticipatory bail from the Court of competent jurisdiction. He further submits that due to business compulsions, the petitioner has to attend the meetings in America and other countries about six times in a year. Therefore, the petitioner has to visit America from 22nd to 29th June, 2013, for attending the meetings. He also contends that the petitioner moved two applications dated 6.5.2013 and 5.6.2013 before the learned trial Court and those were declined without assigning good reasons. He further submits that the date before the learned trial Court for summoning of the co-accused of the petitioner is fixed for 4.7.2013 and thereafter, only the arguments will be heard with regard to framing of the charges and as such the presence of the petitioner is not required before 4.7.2013. He also contends that the petitioner is ready to furnish the security to the satisfaction of the Court so that he may not misuse the concession to be granted to him for going abroad.

Learned counsel for the respondent-State vehemently opposed the prayer of the petitioner to allow him to go abroad on the following grounds :

(i) That if the petitioner is permitted to go abroad, he is unlikely to come back to India.

(ii) The criminal revision petition against the rejection of his prayer passed by the learned trial Court was maintainable, therefore, the present petition is not entertainable by this 

Court.

(iii) The order dated 6.5.2013 whereby the application for grant of permission to go abroad was declined by the learned trial Court has not been challenged before any court of competent jurisdiction and as such the said order has become final. He further submits that second application which was decided on 5.6.2013, was not maintainable.

(iv)That the petitioner has no serious concern to visit America as proposed by him.

I have heard learned counsel for the parties and have also gone through the material available on record. In the cases of Srichand P.Hinduja Vs. CBI New Delhi SC 401; Jagtar Singh Vs. State of Punjab and another 2004(4) RCR (Criminal) 521 (P&H); Arun Kapoor Vs. State of Haryana 2004(4) RCR(Criminal) 594 (P&H), the Hon'ble Courts even allowed the foreign nationals to go abroad during the pendency of the trial. The petitioner though the foreign national, is Chief Executive Officer and Managing Director of M/s Amway India Enterprises Pvt. Ltd. for the last several years and is operating his company. He has to visit foreign countries for smooth running of the business of the Company and declining of his request to go abroad would certainly prejudice the business of the Company being headed by him in India. The petitioner has been booked in three separate cases for the offences punishable under Section 420, IPC and Sections 3 & 4 of the Prize Chits and Money Circulation Schemes Banning Act, 1978. All the charge sheets are arising out of the same FIR which were registered in the year 2002. The petitioner has already been granted the benefit of anticipatory bail and the same has not been misused by him. The dispute in the criminal case is with regard to Rs 35,000/- only as stated by the learned counsel for the petitioner.

Keeping in view the totality of the facts and circumstances of the case, the present petition is allowed. Petitioner William Scott Pinckney son of Bernard Ross Pinckney is permitted to leave India in accordance with the norms from 22.6.2013 to 29.6.2013 subject to his furnishing security by two Indian Directors of M/s Amway India Enterprises Pvt. Ltd. in the sum of Rs 5 lacs each by way of bank guarantee/fixed deposit receipts to the satisfaction of the learned trial Court/Duty Magistrate, Chandigarh. After return of the petitioner from the foreign visit, the bank guarantee/fixed deposit receipt shall be released by learned trial Court.

( Naresh Kumar Sanghi )

17.6.2013 Judge Meenu

No time for Amway chief to attend criminal court

They are all alike. The politicians, bureaucrats and even heads of multinational companies and those who believe that they are too big to follow the trivial issues like attending the judicial court.
The case in point is the head of Amway India Enterprises, Mr William Pinckney. He has once again failed to present before the Chief Metropolitan Magistrate Court, Nampally in Hyderabad recently. The presiding judicial officer cannot do anything but to post the case to the next date on December 12 because either the public prosecutor or the attending police officer did not raise any objections to the absence of the accused No 2 in the criminal case against Amway India Enterprises. 
The counsel for the CEO promptly submitted papers to the judicial court stating the reasons for his client's absence. These high profile men feel it that it is below their dignity to attend the court. They move around freely organising press conferences, travelling throughout the country appealing to the gullible to join their illegal money circulation scheme, take with them the least questioning scribes on paid tours. However, they could not find time to attend the judicial court. 
Suddenly, half page advertisements appeared in almost all newspapers in the State of Andhra Pradesh on November 13 much to the surprise of everyone. Nobody could understand what was the provocation. The next day, the Additional Director General of Police (CID), T Krishna Prasad, released a press statement on Thursday to all print media appealing people not to fall prey to the schemes of Amway India Enterprises since the company's business model was illegal. The CID stated in the statement that they had arrested Amway CEO William S. Pinckney on Thursday in connection with a fraud case of 2010.
The Addl DGP cautioned public against Amway products. "They (Amway) are promoting their products through money circulation by conducting membership drive. The firm cheated public by enticing them with incentives. Their activities are covered under money circulation and violate Prize Chits and Money Circulation Schemes (Banning) Act, 1978."
In essence, Amway tried to buy the print media by giving them half page advertisements and it has succeeded to some extent. It had lobbied through the intermediaries bringing pressure on the media not to publish the police statement. But almost all the newspapers published the police statement though not in full. 
The notable point is that the CEO has already obtained anticipatory bails in the criminal cases pending in various police stations in the State of Andhra Pradesh. 
The Corporate Frauds Watch Society on Friday sent the following press note for favour of publication to various newspapers.

                     PRESS NOTE FOR PUBLICATION

To

The Editor,

__________________________

Sub: Public alert against Multi-Level Marketing Frauds – Reg.

Respected Sir,

            I, Shyam Sundar, Secretary, Corporate Frauds Watch Society, in the interest of general public wanted to request and alert the public not to fall prey to the companies indulging in the Multi-Level Marketing Schemes. These schemes are nothing but product camouflaged illegal Money Circulation Schemes. In the front end, these companies showcase sale of products and in the backend they promote recruitment of chain of members with the false promise to get quick rich.

            Corporate Frauds Watch society has also filed criminal case in Ramachandra Puram P.S. against Amway India Enterprises for promoting illegal Money Circulation Scheme in 2010. The CID has taken up investigation in this case and arrested the CMD of Amway. 

In 2006 when the CID seized and sent the 33 of products of Amway to analysis, the State Food Laboratory, Nacharam opined that 18 of the products of Amway are not food, adulterated and misbranded. On that, the State Food department has filed criminal cases against Amway and Amway has been facing criminal trial in Nampally Criminal Courts in this regard. Apart from this, with regard to some of the products, Vijayawada consumer forum has also ordered to withdraw the products from market and also fined Rs.1 lakh. When Amway appealed against the order of district forum, State Consumer Forum also upheld the order of Vijayawada consumer forum. Later the Amway approached the National forum.

Moreover, the sale transaction of these companies are not legal in terms of Sec.3 of Sale of Goods Act, 1930 r/w Sec.2(c) and 3 of Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and Contract Act, 1872. Apart from this, the so-called members are not end-consumers to get protection under Consumer Protection Act, 1986 since these MLM companies refer their members as distributors not consumers.

Hence, we request the public not to fall prey to the schemes of such MLM companies and their products which may not only harm the health but also make people offenders in terms of Prize Chits and Money Circulation Schemes (Banning) Act, 1978. Kindly publish it in the interest of general public.

(SECRETARY)

How multi-level marketing cheats at all level

Is it possible that network marketing firms are flocking to India because they are just not wanted elsewhere? CNN-IBN found that the British Government has sued Amway for unethical practices. China banned all forms network marketing in 1998, Sri Lanka, Nepal, and Australia have also tightened the noose. But in India, MLMs have managed to skirt between the legal loopholes. While ads promise exaggerated incomes make claims in magazines and newspapers, not everybody’s dreams come true.
Case Study 1: Santoshamma 
Santoshamma is one of them. She ploughed her dead husband's monthly pension of Rs 2,000 into an MLM dream floated by Quantum International Pvt Ltd, even paying the enrollment fees for those she recruited. “I lined up 15 members, I persuaded them. I even paid on their behalf. But nothing came of it. I lost Rs 40,000 rupees, I got nothing. I am a Christian. I have these Sri Yantras. I bought four Sri Yantras. They cost Rs 8,000,” she says. She bought a 'Sphatika Mala' instead of soap as Quantum assigns these beads greater Commission Value (CV). Says Santoshamma, “They told me, I was one point short of travel to Malaysia. That’s why I should enroll two or three more persons, so I made another two persons join.” 
Editor, Pelli Patrika, Krishna Mohan says it’s looting the poor. “A lot of indigenous Amway likes are emerging on a day-to-day basis and are looting the poor, gullible, innocent people,” he says. 
CNN-IBN Investigation approached a police officer who bust an MLM outfit-the mattress selling Japan Life India. The officer explained how MLM operations in India are in fact, illegal. 
Says IPS, Vishwanath Sajjanar, “Way back in 1978, the Central Government has banned all money circulation schemes by whatever names they may be called, whether you call network marketing or multi-level marketing or direct marketing. The very running of money circulation scheme is illegal in India.” Multi-Level Marketing was banned in 1978. The Prize Chits and Money Circulation Schemes (Banning) Act bans “money circulation schemes” in all forms - Multi Level Marketing, Network Marketing and Direct Marketing A recent Andhra Pradesh High Court judgment in a case involving Amway has held that its business is illegal, calling it a Money Circulation Scheme that have been banned since 1978. In response, Amway continues to maintain that. "It is a legal and ethical company doing business in public interest,” says in a statement. (Source: andhranews.net July 2007) Says Sajjanar, “Even in the Supreme Court, an SLP has been dismissed of Amway company where it was clearly held that Amyway's business model is nothing but money circulation scheme, falling into the mischief of this act.” In 2003 and 2004, the Madras High Court also declared such networking schemes illegal. Says Sajjanar, “Copying them many Indian companies have started, saying this model is accepted. When there is no action against them they can also do.” 
On ground, consumer activists are trying to do their bit Says Secretary, Public Alert Sewa Society, Manda Bhiksham Raju, “High authorities from firms involved in this business are forcing me (my society) to withdraw complaints.” Raju's job is tough. MLM firms know the allure of quick money is hard to resist. 
Case Study 2: Yesamma 
Yesamma was told network marketing is as simple as making and selling idlis. An idli-dosa vendor making Rs 1500 a month, Yesamma spent Rs 15,000 buying up Quantum products. She believed a Certificate of Incorporation was a personal insurance cover the company gifted her. “My children warned me, but the insurance attracted me,” she says, adding, “They told me this is an insurance document.” Her commission statements of Rs 2 tell the story of the high failure rate in such enterprises. 
When CNN-IBN approached Quantum, the Company refused to comment. 
Most “victims” of network marketing we met in rural Andhra Pradesh were not even aware of their legal rights as consumers. We also found that the law too is reluctant to act. There is also ample confusion within the Government on the legal status of multi level marketing firms. In December 2002, the then Minister of Consumer Affairs, Srinivasa Prasad, told the Lok Sabha that multi-level marketing schemes are legal. But on the same day, the then Minister of State for Finance, Anandrao Adsul, told the Lok Sabha that such schemes were in fact illegal and should be investigated. The Reserve Bank of India too has done a flip-flop on this. In 2001, it declared the MLM schemes of Japan Life illegal. But in February 2003 it changed its mind. Like millions across the world, they too fell for the sales pitch, lost time money and effort chasing an illusion. 
Says software professional, AVS Satyanarayana, “Finally we know this is not worth the time and money we spend but because to support our people who are really mad for it.” 
Agrees another member, Dr Umamasheswara Rao, “It is not a gambling because gamble is designated as gambling, prostitution is designated as prostitution, this is shown as a business it is not a business.” Mathematics and common sense will tell you that losing money in network marketing is not because you failed. Chain recruitment tends to favor those at the top of the heap. But most - and that could include you - do end up at the bottom.

Read more at: http://ibnlive.in.com/news/how-multilevel-marketing-cheats-at-all-
level/59842-7.html?utm_source=ref_article

Direct sellers move out of Kerala in state of fear as cops not allowing agents to operate

Ratna Bhushan, Economic Times Bureau Oct 16, 2013

NEW DELHI: Direct selling firms such as Amway, Modicare, K-Link and DXN are cutting down their operations in Kerala significantly due to police harassment since the arrest of Amway India CEO in May, two executives of the Indian Direct Selling Association (IDSA) said.

Officials of the IDSA, which represents all the top direct sellers in the country, said distributors of most these companies are being questioned by the state police at regular intervals.

"In case the situation does not improve for the operational feasibility aspects, few of them might consider to move out of the state of Kerala," Chavi Hemanth, secretary general at the IDSA, told ET. "We hope we are able to convince the government to provide a safe environment where people can carry out their business 
without the fear of police," she said.

According to the association, the four southern states contributed 39 per cent to the Rs 6,385-crore direct selling industry in 2011-12, and some companies get up to 40 per cent of their revenues from Kerala.

There is no specific legislation in India to regulate the directselling industry and that is the biggest worry for operators. The Kerala police sent shockwaves across the industry this summer when it booked Amway India Chairman and CEO William S Pinckney and two company directors under the Prize Chits and Money 
Circulation Schemes (Banning) Act over some distributors' complaints.

Direct sellers have been demanding a separate legislation and exclusion from laws regulating chits. A clear policy framework will help differentiate authentic players from those that disappear after taking money from agents, they have said. Earlier this year, American direct selling cosmetics firm Mary Kay withdrew from 
India citing lack of regulation.

A Modicare spokesperson said the home-grown direct seller is facing business challenges in Kerala due to ambiguous steps taken by various authorities. "A clear direction from the central Government on this front is much needed for the growth of direct selling industry," the person said.

Amarnath Sen Gupta, IDSA chairman and India country head of Malaysian direct seller DXN, said the association is continuously negotiating with the Kerala government, adding that the decision to continue operations in the state will depend on what legislation the government introduces. Companies that had active business in Kerala include Amway, Modicare, Tupperware, K-Link and DXN. Hindustan Unilever's direct selling arm Hindustan Unilever Network too has a presence in Kerala.