Friday, 30 September 2011

Guntur Police bust RMP Infotech racket

Guntur district police headed by Superintendent of Police, Mr Shyam Sundar, busted the racket of RMP Infotech, a money circulation scheme promoter and arrested some of its organisers. The RMP Infotech has been promoting the money circulation scheme in the guise of sale of products.
The name of RMP Infotech is a misnomer. It is not an information technology company. Under the guise of that name, the company is actually selling suit length material along with some other products and offering attractive commissions on enrollment of new members.
There is entry fee and commission on enrollment where both ingredients are present in the scheme which makes it a money circulation scheme promoter.
A close look at the products offered by RMP Infotech reveals the true colours of this fraudulent company.
The company openly claims that its business model is binary i.e. every member has to enroll two persons each. This is nothing but mathematical impossibility.
Corporate Frauds Watch congratulates Mr Shyam Sundar and his team of police officers for bringing a culprit to book.

Thursday, 29 September 2011

More evidence that senior UK govt officials and Ministers must know full-well that 'MLM' is a racket

The following warning has been reproduced from the  British Government's 'Action Fraud'  Website:

Business opportunity fraud involves an offer to become financially independent, or to generate extra income, by setting up your own business.

More information about business opportunity fraud
A letter, advert or website asks if you are interested in making easy money by working from home, or setting up your own online business.

The scheme allows you to choose when you work and enables you to fit your work around your other responsibilities. The work itself could involve filling envelopes, assembling products or selling goods or services through your own website.

However, any products or services you are asked to sell are worthless and you won’t be able to sell them.
You have to pay money up front to register with the scheme, buy customer leads, set up your web site, buy products to sell on, or receive an instruction manual on how to run your business.

If you’re asked to assemble goods or fill envelopes, the fraudsters will find fault with your work and use it as a reason for not paying you.

Many of these schemes are straightforward pyramid schemes, where you will only earn money by introducing other people to it. For example: by selling them copies of the instruction manual.

Are you a victim of business opportunity fraud?
  • You’ve received an email or letter, seen an advert, or landed on a website explaining how you can make easy money by working at home, or by setting up your own online business.
  • You’ve paid money up front to register with the scheme, bought customer details, set up a new website, bought products to sell. However, the products are worthless.

Pyramid scheme fraud involves an unsustainable business which rewards people for enrolling others into a business that offers a non-existent or worthless product. 

More about pyramid scheme fraud

A fraudster advertises a multi-level investment scheme that offers extraordinary profits for little or no risk.

You’re required to pay a fee to enter the investment scheme.

You’re then required to recruit friends or family members to enter the scheme. If you do this successfully, you’re paid out of their receipts. They are then told to recruit others to keep the chain going.

Your money is not actually invested in any product. Instead, it’s simply passed up the chain of investors. Because pyramid schemes are unauthorised and make no profits, you’re very unlikely to recover any lost investment. While the fraudster at the top will collect most of the profits, those who entered the scheme later end up losing out.

Legitimate trading schemes rely on valuable goods and services, while illegal pyramid schemes focus simply on recruiting more and more investors.

Using hard-sell techniques, fraudsters try to pressure you into making rushed decisions, giving you no time to consider the nature of the investment.

Fraudsters aim to make their business seem legitimate. This means they will often use technical jargon, impressive job titles and mock websites to look credible. If you have any suspicions about a scheme’s authenticity, you should investigate the company’s status and contact details.

Are you a victim of pyramid scheme fraud?
  • You’ve been approached about a multi-level investment scheme that offers great-sounding profits with little or no risk.
  • You’ve paid a fee to join the scheme.
  • You’ve enrolled others on the scheme and already earned money from your efforts.

Wednesday, 28 September 2011

The British govt. apparently knows full-well that 'MLM income opportunity' fraud can destroy communities, families and individuals

Corporate Frauds Watch has received part of an unsigned, and unpublished, report which, we are informed, was produced for a UK government Dept.
Perhaps the most interesting aspect of this document, is its authors' use of the same non-specific term, 'income opportunity fraud,' now used by attorneys in the Bureau of Consumer Protection at the US Federal Trade Commission. Notice the report's emphasis on why so few victims have come forward. It is also interesting that no estimate is given for the actual overall numbers of victims of blame-the-victim 'income opportunity' fraud in the UK, and that no victims or front companies are mentioned by name. However, if what this report contains is already confidentially known to senior UK government officials (and probably to Ministers), how is it possible that numeous 'MLM income opportunity' racketeers are still allowed to hide their psychologically, and financially, abusive criminal objectives behind legally-registered, privately-owned, limited-liablity, commercial-companies in the UK? The racketeers behind these counterfeit corporate structures have obviously got their agents to make false declarations to the UK Registrar of Companies, as to their actual purpose.
The continued silence of UK govenment officials and Ministers (who apparently have known full-well that countless UK citizens have been destroyed, and continue to be destroyed, by this insidious, global, criminogenic phenomenon) could be construed as being part of an overall pattern of ongoing, major racketeering activity.
Corporate Frauds Watch
The following is a page from the report:
What have been the psychological effects of income opportunity fraud? 
'Income opportunity fraud is personal violation. Although there is no outward physical injury, certain victims have described the betrayal they felt, as the psychological equivalent of rape. Whilst a few victims have sought the help of mental health professionals or advocacy groups, most have suffered alone.
Income opportunity fraud victims' trust in their own judgment, and their trust in others, has often been destroyed. They generally cannot seek the support of family members or friends, because family members and friends often have been exploited at the victims' instigation, producing increased feelings of guilt and self-blame.
Income opportunity fraud often leads to the following feelings or emotional reactions amongst its victims:
shame, embarrassment and guilt
the sense that the victim contributed to his/her own, or to others', victimization
self-doubt, shock, disbelief
societal condemnation and indifference (produced by the attitude that victims merit what they got as a result of their own greed and stupidity)
isolation (victims suffer in silence rather than risking alienation and blame from family members and friends)
anger, resentment and a sense of betrayal toward the recruiter for taking advantage of the recruit
frustration with criminal justice system
fear for the victims' financial security
increased concern about victims' personal safety and well-being, or that of victims' families.
The financial cost of income opportunity fraud can be evaluated. However, less easily measured, and perhaps the most devastating cost of all, has been the emotional impact of this crime on many of its victims. Such harm is often the result of the victims' loss of the following:
financial security
family home
previous social contacts including marriage partners and relatives
retirement or other savings
professional or personal credibility
Although victim-service providers and mental health professionals have focused on the emotional harm caused by violent crime. Some of the same physiological and long-term emotional effects experienced by victims of violent crimes have also been experienced by income opportunity fraud victims:
stress, increased blood pressure and heart rate
inability to eat or sleep
loss of enjoyment of daily activities
Short-term effects on income opportunity fraud victims have included:
preoccupation with the crime (thinking and talking about it constantly, replaying the crime, wondering what could have been done differently, etc.)
inability to concentrate or perform simple mental tasks
concern that other people will blame victims for what has happened
increased strain on personal relationships (divorce or withdrawal of support)
In extreme cases, income opportunity fraud has led some victims to attempt, or to commit, suicide.

Why has income opportunity fraud been under-reported?_________________________________________________________________________________________________________________________________________________________________________________

NGOs and government agencies that help crime victims have not reported significant levels of income opportunity fraud victims, in part because the victims themselves are often too embarrassed to come forward. Many feel they have only themselves to blame when, in reality, it has been gangs of calculating and skilled confidence tricksters who have been to blame for these widespread criminal acts. Although income opportunity fraud victims are not alone, they often suffer their losses alone and in silence. Shame, guilt, embarrassment, and disbelief are among the reasons explaining why only a low percentage of fraud victims overall make any form of complaint to law enforcement. However, the percentage of income opportunity fraud victims who have complained, is far lower. Some income opportunity fraud victims experience such high level of shame or fear about the loss of personal and professional respect and credibility, that they choose not to disclose their victimization to anyone, including family members, friends and professional colleagues. Many consider their losses are not large enough to report. They chose not to get involved, believing that law enforcement agencies will not take the crime seriously, or believeing that nothing will result from reporting the crime. Sadly, this is often the case. Income opportunity fraud victims can fear confronting the person(s) who defrauded them. They also can fear other peoples' judgmental attitudes towards a public disclosure, particularly when they have not even told anyone close to them that they were the victim of a crime.'

AP High Court's judgement in full against speakasiaonline




CRL.M.P.Nos.6459 and 7016 of 2011





          This Criminal Petition is filed by the petitioner company namely Speakasia Online Pvt. Ltd. represented by its Authorised Representative Mr. Charan Kumar, under Section 482 Cr.P.C., seeking to quash the proceedings in F.I.R.No.30 of 2011 on the file of the Station House Officer, C.B.C.I.D., Hyderabad, registered on the basis of the complaint given by the 2nd respondent.

The petitioner company was arrayed as an accused in F.I.R.No.30 of 2011 for the offences under Sections 420 of I.P.C. and 4, 5 and 6 r/w 2(c) and 3 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 (for short “the Act”).

The contents in the complaint are as follows:

i)        The business of the company is told as Online survey. The joining fee of the company is Rs.11,000/-. One must get enrolled into the scheme to join others into the scheme for commissions. Huge income is promised by the company within a short span of time. The scheme of the company is Binary scheme. Binary scheme means one person has to enrol two persons and again these two persons have to enrol two persons each and again these four persons have to enrol two persons each and this chain continues endlessly. As the network and chain of members get extended, the upline members will get more commissions.

ii)       It is promised by the company that the commission is paid not only on the personal efforts of joining members into its scheme but also on the efforts of joining new members into the scheme.

iii)      The promoters of the scheme very well knew that it is certain that the scheme was impracticable and unworkable making tall promises and for the benefit of very few who have joined the scheme at the initial stage. If each person keep on enrolling two persons, at the 15th or 18th  level all the Indian population and at the 24th level all the World population will become the members of the company and there would be no member left to join/enrol into the scheme of new members by the already existing members. This will result in heavy loss of money of the enrolled members. The scheme will collapse under its own weight.

iv)      Because of misrepresentation and deceptive words, nearly 19 lakh people have joined into the scheme of the petitioner company all over India and the company got quick and easy money of Rs.5000 crore by cheating and looting all these 19 lakh people.

This Court on 13.07.2011 passed the following order:
“There shall be interim stay of arrest of Officials/Employees belonging to the petitioner company, but investigation can go on.”

Respondent Nos.1 and 2 filed petitions in Crl.P.M.P.Nos.6459 of 2011 and 7016 of 2011 respectively, with a prayer to vacate the interim stay granted by this Court on 13.7.2011.

The main contentions raised by Sri Vedula Venkata Ramana, Senior Counsel, appearing for the petitioner company are as follows:
1)   1)     First Information Report can be registered only for commission of an offence. The First Information Report should state the manner in which the offence committed. In the absence of any commission of offence, there cannot be any registration of First Information Report.

2)   2)     The entire complaint does not disclose any offence as stated in the First Information Report.

3)   3)     The complainant lodged the complaint in expectation of loss of money to the public, even prior to commission of any offence. The complaint does not disclose about the manner in which the subscribers are cheated and also the modus operandi of the petitioner company.

4)   4)     The allegations made in the complaint do not attract an offence under Section 420 of IPC.

5)   5)     Section 511 of IPC is also not registered in the First Information Report.

Hence, the prosecution cannot claim that an attempt was made to commit the offence.
The learned Senior Counsel, to substantiate his contentions, relied on a decision in “State of West Bangal and others Vs. Sanchaita Investments and others”[1][1]. In the said judgment, the learned Senior Counsel has drawn the attention of this Court regarding his first contention that there cannot be any First Information Report, when cognizable offence is not committed. He further submitted that in the said case, the Apex Court held that to attract an offence under the provisions of the Money Circulation Scheme, the following ingredients should be there:
A.      A.      there must be a scheme;

B.      B.      there must be members of the scheme;

C.       C.       the scheme must be for the making of quick or easy money on any event or contingency relative or applicable to the enrolment of members into the scheme or there must be a scheme for the receipt of any money or valuable thing as the consideration for a promise to pay money on any event or contingency relative or applicable to the enrolment of members into the scheme;

D.     D.     the event of contingency relative or applicable to the enrolment of members into the scheme will however not be in any way affected by the fact whether or not such money or thing is derived from the entrance money of the members of such scheme or periodical subscription.

The learned Senior Counsel also relied on a decision in “Indian Oil Corpn. Vs. NEPC India Ltd. and others”[2][2] wherein the principles of exercise of jurisdiction under Section 482 of Cr.P.C. are reiterated by the Apex Court on the basis of its earlier judgment.

The learned Senior Counsel further relied on a decision in Abhayanand Mishra Vs. State of Bihar”[3][3] to substantiate his arguments with regard to preparation and an attempt to commit an offence.

In contra, the learned Public Prosecutor has submitted that the First Information Report discloses cognizable offences and in view of the order passed by this Court on 13.07.2011, the Investigating Agency proceeded with the investigation. He stated the following facts before this Court for consideration:

                i.                               i.            During the course of investigation on 25.06.2011 two franchises of Vijayawada by names (1) Devireddy Srinivasa Reddy and (2) Lanka Venkata Ayyappa Swamy were arrested as A.2 and A.3 and documents were seized pertaining to the bank accounts, agreements, cell phones and laptop from their possession and sent them for judicial custody. According to the confession of the statements of A.2 and A.3 that on attracting the advertisements of the petitioner company, with a view to earn more money in easy way by attending online simple surveys and also to enrol panellists, they joined as franchises to the petitioner company in Andhra Pradesh by depositing Rs.3 lakh each. The modus operandi of the company is if a person got registered in petitioner company, he should pay an amount of Rs.6,000/- for six months and Rs.11,000/- per annum. Further, the person required to furnish subscription code, personal details including bank account details. When he becomes panellist, once he completes the surveys, he will get Rs.500/- for each survey. The subscription is valid for 12 months. The method of survey is that the petitioner company will put a questionnaire to the subscriber about a product and its performance.

              ii.                             ii.            The I.O. visited the Registrar of Companies and caused enquiries about the registration of the alleged companies namely (1) Seamless Outsourcing LLP, Mumbai, (2) Kritanz Management & Allied Services, Mumbai, and (3) Tulasiyat Tek Pvt. Ltd., Mumbai and also addressed a letter to the Registrar of Companies for furnishing of certain information on registration of above firms.

            iii.                          iii.            On 08.08.2011 the I.O. received the information from the Assistant Registrar of Companies, Andhra Pradesh, Hyderabad in which he stated that no company in the name of “Speak Asia Online Pvt. Ltd.” is found to be registered in the Ministry of Corporate Affairs Registry.

             iv.                            iv.            The I.O. got served notices U/s 91 & 160 Cr.P.C. to (1) Manoj Kumar, CEO, (2) K. Charan Kumar, Regional Manager, and (3) Harender Kour, Global CEO of petitioner company through their advocate Sri S.S.R. Murthy to attend before him on or before 25th July 2011. Manoj Kumar, CEO and Harendar Kour, Global CEO have not attended so far before the I.O.

The first contention raised by the learned Senior Counsel is that First Information Report can be registered only for commission of an offence. It is true that First Information Report is to be registered on commission of an offence, more particularly, for a cognizable offence. Once a cognizable offence is committed, First Information Report can be registered. But at the same time, some of the provisions in the law enable the Investigating Agency to register First Information Report for mere preparation alone, for example, Sections 120-B, 399 of IPC and 7(1)(a) of the Criminal Law Amendment Act. Further, whether an offence committed or not always depends upon the ingredients mentioned in the provision of law.

Some provisions in the penal laws made the preparation also as an offence. When the provision deals the preparation as an offence, the preparation itself is commission of offence.

In the present case, the offences alleged are under Sections 420 of I.P.C. and 4, 5 and 6  r/w  2(c) and 3 of the Act.

For the sake of convenience, Sections 2(c) and 3 of the Act are reproduced hereunder:
“2(c) of the Act: “money circulation scheme” means any scheme by whatever name called, for the making of quick or easy money; or for the receipt of any money or valuable thing as the consideration for a promise to pay money, on any event or contingency relative or applicable to the enrolment of members into the scheme, whether or not such money or thing is derived from the entrance money of the members of such scheme or periodical subscriptions.

Section 3 of the Act -  Banning of prize chits and money circulation scheme or enrolment as members or participation therein:- No person shall promote or conduct any prize chit or money circulation scheme, or enrol as a member to any such chit or scheme, or participate in it otherwise, or receive or remit any money in pursuance of such chit or scheme.”

          The said provisions, on a mere reading, indicate that there is no need of any loss or misappropriation of funds to attract an offence. Mere informing a scheme, which covered under the money circulation scheme and enrolling members as subscribers, itself is an offence. It is not necessary to further elaborate on the same, since the Sections are unambiguous and clearly indicate the acts which attract an offence.

          The view of this Court is fortified by the decision rendered by the Apex Court in Kuriachan Chacko and others Vs. State of Kerala[4][4].

          As far as the offence under Section 420 of IPC is concerned, this Court is of the view that the said case is registered along with other provisions of the Act. Further, the investigation will disclose whether an offence is committed under Section 420 of IPC.  Wrong mentioning of any provision in the First Information Report itself is not a ground to quash the First Information Report and to stay the investigation.

The facts and circumstances in the 1st cited case (supra) are totally different from the facts and circumstances of the case on hand. It is also observed in the said judgment, whether an offence is disclosed or not must necessarily depend on the facts and circumstances of each particular case and in considering whether an offence, into which investigation is made or to be made, is disclosed or not, the Court has mainly to take into consideration the complaint or the F.I.R. and the Court may in appropriate cases take into consideration the relevant facts and circumstances of the case. On a consideration of all the relevant materials, the Court has to come to the conclusion whether an offence is disclosed or not.

Further, in the said case, the firm namely Sanchaita Investments offered fabulous interest at 48% per annum to its members and later reduced it to 36% per annum. Such high rate of interest was being paid, even though the loan certificates receipts show that the interest was liable to be paid at 12% p.a. The Apex Court felt that the said facts do not disclose any offence under the provisions of the Act. It is true, in the said facts and circumstances of the case, the essential ingredients of Section 2(c) of the Act are totally missing. The Apex Court also elaborately discussed the said fact and opined that acceptance of money and periodical interest paid by a company do not come within the purview of Section 3 of the Act. But, the facts in the present case are totally different and the invitation made by the petitioner company in the name of “surveys” discloses an offence under the provisions of the said Act.

The learned Senior Counsel further contended that the complainant failed to inform as to how he gathered the material. The same need not be proved, at this stage.

Since there was no stay of investigation, the investigation so far conducted by the Investigating Agency discloses that 21 witnesses were examined and two persons were arrested.  The investigation further reveals that 24 lakh members were enlisted, more particularly, 30000 persons were enrolled in the State of Andhra Pradesh, the money transacted is Rs.2276 crore, Rs.467.17 crore was transferred to Singapore, and so many other incriminating materials are collected.

This Court is not inclined to go into all those things, because the question before this Court is whether the investigation to be proceeded or not and hence, it is not necessary to record the manner in which the investigation proceeded in this case which will cause prejudice to either parties.

In view of the foregoing discussion, this Court is not inclined to quash the First Information Report No.30 of 2011 on the file of the Station House Officer, C.B.C.I.D., Hyderabad, and the interim stay granted by this Court on 13.07.2011 is liable to be vacated.

        Accordingly, CRL.M.P.Nos.6459 and 7016 of 2011 are allowed and the interim stay granted by this Court in Crl.P.M.P.No.5698 of 2011 on 13.07.2011 is hereby vacated and the Criminal Petition is also dismissed. Miscellaneous petitions, if any, filed shall stand closed.



30th August, 2011


[1][1] (1982)1 S.C.C. 561
[2][2] (2006) 6 S.C.C. 737
[3][3] AIR 1961 SC 1698
[4][4] (2008) X S.C.C. Page No.708

Sunday, 25 September 2011

NTV busts Tupperware racket

The crew of NTV news channel headed by reporter Mr Damodar visited an apartment block to cover a kitty party organised by a group of women living in that block the other day. There they found a team of women selling some plastic kitchen containers. Out of curiosity they wanted to buy a small plastic container which they thought would be around Rs. 10. But to their utter shock, the saleswoman told them that it costs Rs. 150 as it is eco-friendly material. They learnt from them that the plastic containers are marketed by a company called Tupperware. All the containers of varying sizes are exorbitantly priced. A water bottle costs Rs. 250 and a small lunch box set costs Rs. 1000. 
As he has recently covered speakasiaonline extensively, the senior TV reporter, sensing a racket behind the sales, immediately called Corporate Frauds Watch to find out the details of that company. Learning enough about Tupperware, and about the criminal case filed against the Tupperware with the Ramachandrapuram police station, in the district of Medak by Corporate Frauds Watch, the NTV team filmed the Tupperware sales programme and presented it in its FOCUS programme on September 23, 2011. Just click to watch the video.

The programme starts with the same old rhetoric 'fulfill your dreams' by joining as distributor of Tupperware.
This programme has become very popular and Corporate Frauds Watch received a number of calls appreciating the efforts for exposing the fraudulent company.

Friday, 23 September 2011

What did US tax-payers actually get in return for US Justice Dept. officials spending more than $120 millions?

It has been suggested to me that I am crazy to say that America has turned into Fascist State, simply because some US Justice Dept Officials have apparently been involved in a fiddle involving 250 $16 muffins.
Obviously, if that was what I had said, then I probably would be crazy. However, the accusation I'm making, is far more serious and specific.
Today, with world stock markets again in free-fall due to more gloomy forecasts from the US Federal Reserve, the latest word from America on the recent scandal surrounding the US Justice Dept. wasting tax-payers' money, beggars belief. According to one Blogger, US Justice Dept. officials did 'over-spend' on their conferences, but the $16 muffins and $10 cups of coffee and cookies reported as being served at these conferences, is all a myth extrapolated by the press from inaccurate catering bills
Now, even if this generous interpretation of the available evidence is entirely true (which personally I very much doubt), the fact remains that US Justice Dept. officials submitted accounts in which they pretended to have legitimately spent more than $120 millions on around 1800 conferences during 2008-2009. Unfortunately, this is the very same period during which the current world economic crisis hit, due to revelations that the bosses of some of America's largest financial institutions had been allowed to rake in indecently huge bonuses (right under the noses of the US Securities and Exchange Commission) by fraudulently authorizing astronomic quantities of apparently 'profitable' loans to countless borrowers who actually had no means of repaying them, before parcelling-up this mountain of toxic debt into small bundles, giving it a fancy name and then fraudulently selling it as 'a low risk investment.' 
To date, the US Justice Dept. (despite all of its many conferences) has not yet managed to hold anyone fully to account for this titanic US based, organized fraud and chronic regulatory failure. This begs the question:
What (other than a flock of docile, and well-fed, attorneys and a pile of inaccurate catering bills) did US tax-payers actually get in return for these US Justice Dept. officials spending more than $120 millions?
Unfortunately, these shameful events are frighteningly reminiscent of Hitler's Germany and Mussolini's Italy - where corrupt, and fabulously-wealthy, leader/racketeers and corrupt, and fabulously-wealthy, businessmen/racketeers worked hand in glove to exploit the people whilst a morally-bankrupt, but well-fed, justice system looked the other way.
David Brear (copyright 2011)