Thursday, 28 November 2013

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. 

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