Monday, 31 December 2012

Tupperware indulges in illegal multilevel marketing

Tupperware is another American company which set foot in India in the name of direct selling after liberalization was introduced in the country. It also claims like other members of Indian Direct Selling Association  (IDSA)that it is a good business opportunity and the consumers would get benefit through this business model.
Like the products of all these direct selling association members, the products of Tupperware are also exorbitantly priced and one has to become a member by paying certain amount. Never ask the question why should anybody become a member to purchase products. That is the racket behind the business model.
But there is a difference in this business model. The Tupperware targets women, that too, upper middle class women, all over world. Generally, they are all housewives with 'disposable' income. They are induced with the pep talk of easy and quick money and good business opportunity sitting at home.
Once they fell for the trap, they are encouraged to make their friends and relatives to buy products by becoming members. The members who introduced the new members would also be rewarded with commission.
The women try their hand to enroll new members and sell the products to them. But it would be very difficult to sell a plastic water bottle for Rs. 250 though it is guaranteed to last for a life time. By the time they realised that it is not easy, they would be losing some thousands of rupees by way of buying kitchen plasticware.
Anyway, they do not realise that they are cheated. They believe that they could not do that 'wonderful business' like everybody and they themselves are to be blamed for the failure. They never realised that the scheme itself is cheating. On the other hand, they are afraid that their husbands would scold them if they learnt about it. Moreover, their friends and relatives who were joined into the scheme by them would never trust them again.
Vijayawada-based Corporate Frauds Watch filed a criminal case against the Tupperware. So far, the police could spare no time to investigate into the scam. Already several millions of Indian were duped into the scam and several hundreds of crores of rupees were siphoned out of our country.

Wednesday, 26 December 2012

In the name of ducks, consumers lost several crores

Consumers need to think twice when someone approaches them with the offer of 'good business opportunity' or 'good investment opportunity'.
Duck Development Society is a classic example to study how easy is it to dupe the gullible in the name of good investment opportunity.
Prakasam district-based Duck Development Society offered people a good investment opportunity with abnormal returns within a short span of three months. All the investors have to do is investment the amount and wait for three months. Meanwhile, if they want to make extra amount, they could refer the investment opportunity to their friends and relatives to get commission from the recruitment of new investors.
The modus opereandi is simple. The Duck Development Society would be paid Rs. 23,000 by each investor and the amount would be spent to purchase some ducklings and the society would undertake the responsibility to rear them. After three months, the grownup ducks would be sold for an unspecified amount and the investor would be paid Rs. 38,000.
It is an attractive proposal of getting returns of Rs. 15,000 in three months with an investment of Rs. 23,000.
Many people fell for it and soon the Duck Development Society spread its tentacles all over the State.
An anxious investor from Gadval in Mahaboobnagar district approached Vijayawada-based Corporate Frauds Watch to know whether it is a good investment opportunity. After telling him that it is a fraud, the Corporate Frauds Watch has also taken up the matter to the notice of the police.
Surprisingly, the police were still under the impression that it was a good business opportunity.
Corporate Frauds Watch told the police that if duck-rearing is really good business opportunity and fetches good returns, the Society should approached the commercial banks with its project. The Banks would be too happy to extend financial support for such projects. Why the Society is collecting money from people? The police have seen the gameplan of the Society and registered a criminal case against the society.
Even after the criminal case was registered, the Society continued its operations for sometime. However, the Society soon started defaulting the payments. People took to streets demanding payments. But by that time the Society has already garnered about Rs. 80 crore and vanished.
The Duck Development Society has indulged in several crimes. One, collecting deposits from public without the permission of the Reserve Bank of India is a crime under the provisions of the AP Protection of Depositors Act, second enrollment by paying commission is a crime under the provisions of the Prize Chits and Money Circulation Schemes (Banning) Act, thirdly knowing fully the chain would break sooner than later, they encouraged the chain scheme and it is a crime under the Section 420 read with Section 34 (jointly and severally liable) of Indian Penal Code.
The organisers were caught later and spent sometime behind the bars before they were released on bail. The case is still under investigation.

Friday, 21 December 2012

Andhra Pradesh High Court dismisses RMP Infotech writ petition, disallows to withdraw funds


Crl.P.Nos.9771, 10597, 10603, 11729, 12472, 12476,
12610, 12913 of 2011 and W.P.No.17544 of 2012


Crl.P.No.10597 of 2011 is filed by A.5 in Cr.No.338 of 2011 of Arundalpet Police Station, Guntur; Crl.P.No.10603 of 2011 is filed by the accused in Cr.No.267 of 2011 of Old Guntur Police Station; Crl.P.No.11729 of 2011 is filed by A.1 in Cr.No.206 of 2011 of II Town Police Station, Ongole; Crl.P.No.12472 of 2011 is filed by RMP Infotech Private Limited relating to Cr.No.82 of 2011 of Santhamagulur Police Station; Crl.P.No.12476 of 2011 is filed by the accused company in Cr.No.370 of 2011 of Pattabhipuram Police Station, Guntur; Crl.P.No.12610 is filed by RMP Infotech Private Limited in Cr.No.387 of 2011; and Crl.P.No.12913 of 2011 is filed by the same Company in Cr.No.95 of 2011 of Kothapeta Police Station for quashing respective FIRs under Section 482 Cr.P.C.  One of the main grievances of the petitioners in these petitions is that the accused are being harassed by the police in Guntur and Prakasam Districts by registering various crimes making the same or similar allegations in all the cases.  It is contended by Senior Counsel for the petitioners that instead of registering different cases, the police could have taken facts relating to the subsequent FIRs as additional information in FIR registered on the first occasion.  The said course suggested by the petitioners’ Senior Counsel could not have been adopted because facts/allegations in each FIR occurred within the territorial jurisdictions of different police stations in different districts.  The police from one police station may not have territorial jurisdiction to make investigation into the allegations relating to other FIRs occurred within the territorial limits of other police stations either in the same district or in another district.  For that reason, the premier crime investigation agency of the State namely CID took over all the above cases from Guntur Urban and Prakasam Districts vide Memo C.No.2614/C.12/CID/2012 dated 13.06.2012 of Additional Director General of Police, CID, Andhra Pradesh, Hyderabad for investigation; and all the matters were entrusted to Deputy Superintendent of Police, CID, RICU, Guntur for further investigation. 
2. It is contended by Senior Counsel for the petitioners that business activity of RMP Infotech Private Limited does not attract any penal provisions of any enactment.  All the above cases were registered by the respective police against the respective accused in each case for offences punishable under Section 420 IPC and Sections 4 & 5 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 (in short, the Act).  It is contended that there is no element of cheating in the business activity attracting Section 420 IPC muchless activity of the petitioners and more particularly RMP Infotech Private Limited (in short, the Company) does not attract definition of ‘Money Circulation Scheme’ contained in Section 2(c) of the Act.  On the other hand, it is contended by counsel for the de facto complainant in Santhamaguluru Police Station that activity of the Company through its local branches in different parts of the State squarely attracts the definition under Section 2(c) of the Act.  It is further contended on behalf of the de facto complainant that activity of the Company resembles that of Speekasia Online Private Limited covered by unreported decision of this Court dated 30.08.2011 in Crl.P.No.5626 of 2011 and also that of Amway Case as laid down by this Court in Amway India Enterprises v Union of India[1].
3. In police proceedings/special report of the police which is FIR in Cr.No.338 of 2011 of Arundalpet Police Station, Guntur the business activity and modus operandi of the Company is noted in the words of an independent distributor of the Company who was taken into custody, from the following lines:
“2. Mr.Pravin Jaya Chandan is the Managing Director, Mr.Dhaval Jaya Chandan is the Chairman along with few more directors of our company.
3. Head office is located in Chennai, Mahalingapuram.
4. In the beginning through multi level marketing I have purchased an Oven and Siyaram suit length for 6500 from RMP Infotec Private Limited and from that time I am working as independent distributor.
5. In the beginning when I joined the company as independent distributor, I submitted a demand draft of Rs.6500 in favour of RMP Infotec Private Limited payable at Chennai along with a completed application, ID Proof, Age proof and Pan card at the franchisee located in Gandhinagar, Vijayawada and took my product from there.
6. There are 16 products in our company.
7. Whenever I sell these products to two people, the company gives a commission of Rs.1000 on my name.
8. In this way I have said my friends and relatives about this scheme and products, likewise 1 person grew into 2, 2 grew into 4 and so on and as of now I am earning Rs.60,000 as commission per week.
9. In the same way I have given training to other people and help them to increase the turnover.
10. There are 98 franchises of our company in India.
11. We are buying products and applications from these franchisees by paying the concerned prices through DD.
12. After purchasing product, all independent distributors are paid commissions on product sales.
13. We consider this as multi level marketing.
14. There are around 18000 people who have purchased products and are placed below me as distributors.
15. My ceiling money does not exceed 1,30,000 per week.
16. We some times conduct Business Opportunity presentation.
17. We keep on training our distributors and that’s how we increase our company sales.
18. We create complete confidence on our company to the public and cheat them by telling that they can make huge money in less time and make them join us as distributors.”
4. It is contended for the petitioners that the Company which is based in Chennai is indulging in direct selling of products to the customers for lower cost which is upto 70% of maximum retail prize (MRP) of the products by directly securing them from reputed Companies like Siyaram, Big Bazar, Wipro, HCL etc. and in that process, the Company avoids C & F Agent, Super Stockist, Stockist, Distributor, Wholesale dealer and retail dealer and also avoids cost of advertisement and that by virtue of direct selling of products to the customer/buyer who joins as independent distributor/member of the Company and that in that process, the company earns huge profits out of which 35% is distributed among independent distributors.  In the process of business of the Company, when a member joins as independent distributor, by purchasing products of the Company, he has to sell the Company’s products to at least two new customers and in which event, he gets profits/commission from out of value of products sold by him to those two new members and also certain percentage of money paid by those two new members towards their membership.  Those two new members/independent distributors have to again sell the products by each of them to two more outsiders; and the activity percolates to the downwards.  In all such types of Direct Selling or Multi level marketing, the process reaches a saturation level when new members joining at that level will not be able to sell products to any new members.
5. In State of West Bengal v Swapan Kumar Guha[2] three Judges Bench of the Supreme Court after re-arranging definition of Money Circulation Scheme in Section 2(c) of the Act, observed:
“On a plain reading of the said definition, the requirements of a money circulation scheme are-
(i) there must be a scheme;
(ii) there must be members of the scheme;
(iii) 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;
(iv) 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.”
6. This Court is of the opinion that at the threshold of the investigation, it may not be proper for this Court to scrutinize the alleged activity of the Company and its branches, independent distributors etc. and to come to any conclusion whether the said activity attracts the definition of Money Circulation Scheme contained in Section 2(c) of the Act or not. 
7. Senior Counsel for the petitioners also fairly submitted that even if investigation is allowed to be proceeded further, freezing of bank accounts of the Company by the police during investigation is causing untold hardship to the Company in its business activity.  For that reason, the Company filed Crl.P.No.9771 of 2011 questioning the same and seeking quashing of directions of Sub-Inspector of Police, Arundalpet (L&O) Police Station, Guntur directing IDBI Bank to freeze two CMS accounts of the Company in that bank, by way of letter dated 04.10.2011 addressed to the bank.  Further, after CID took over investigation of all the cases, Inspector of Police, CID, RCIU, Guntur addressed another letter dated 15.05.2012 to ING Vysya Bank Limited, Chennai to freeze another account of the Company pending investigation.  Questioning the same, the Company filed W.P.No.17544 of 2012. 
8. It is contended by the Public Prosecutor that Section 7(1)(d) of the Act empowers the Investigating Officer to seize all things which are intended to be used or reasonably suspected to have been used in connection with any Money Circulation Scheme.  It is further contended that it is only for the purpose of ultimate seizing of money which is derived from the Money Circulation Scheme covered by these offences, the Police Officers have frozen bank accounts of the Company. 
9. As interim measure in Crl.P.No.9771 of 2011, this Court permitted the Company to withdraw Rs.11.00 crores from IDBI Bank to meet immediate needs of the Company towards his obligations to its employees etc.  It is reported that the Company could not withdraw the said amount as by then the Kerala High Court  also have passed an order relating to freezing of the said accounts.  In the circumstances and having regard to there being prima facie case for the prosecution, this Court is of the opinion that it would not be just and proper to allow the Company to deal with the bank accounts as it likes.
10. I find no legal or justifiable reason either for quashing FIRs in these crimes or for quashing letters of Police Officers freezing bank accounts of the Company pending investigation. 
11. In the result, all the criminal petitions as well as writ petition are dismissed.  At the same time, in case of any compulsive circumstances and dire necessities, the Company is at liberty to approach this Court by separate and independent petitions for withdrawal of portions of monies lying in the bank accounts.           

Dt.11th December, 2012

[1] 2007(4) ALT 808 (D.B)
[2] (1982) 1 Supreme Court Cases, 516

Money Circulation under Multi Level Marketing Scheme: RBI

The Ponzi and Multi-Level Marketing (MLM) schemes fall within the purview of ‘Money Circulation’ which is an offence under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. That Act is administered by the Ministry of Finance (Department of Financial Services) through the State Governments. Recently Ministry of Finance in consultation with the Reserve Bank of India, have circulated Model Rules to be notified by the States. These rules make it amply clear that investment schemes run in the MLM mode are illegal under the above Act and organizers of such schemes need to be prosecuted.
While coordinating action against such schemes lies with the States and the nodal Ministry, the Ministry of Corporate Affairs has till November 2012 received complaints against 86 Companies mostly located in West Bengal and Tamil Nadu States and one company registered outside India doing business on-line in association with some Indian companies.
Ministry of Corporate Affairs has ordered investigation into the affairs of 7 companies under Section 235 of the Companies Act, 1956 to be conducted by Serious Fraud Investigation Office (SFIO) and scrutiny of balance sheets under section 234 and/or inspection of the Books of Accounts and other records of the remaining 80 companies under Section 209A of the Companies Act, 1956 to ascertain, if the activities involve violation of the provisions of the Companies Act, 1956.

Wednesday, 19 December 2012

Andhra Pradesh High Court dismisses the writ petition of RMP

Justice Samudrala Govindarajulu  of Andhra Pradesh High Court last week dismissed the writ petition filed by the fraudulent multilevel marketing company Resource Money Power Infotech a.k.a. RMP after patiently hearing the arguments of its counsels and the counsels of Corporate Frauds Watch.
It may be recalled that RMP filed the writ petition seeking declaration of its business model legal which is in fact an illegal money circulation scheme. 
The judge has apparently seen through the dubious marketing techniques of the fraudsters who have been making illegal gains in the name of selling products and services. However, it could not convince the High Court that its business model is beneficial to the consumers.
The full text of the judgement would be published as soon as it appears on the High Court website.
The NMart fraudsters have, in a tactical move, withdrawn their writ petitions fearing caustic remarks from the High Court. They are not in a position to resubmit the writ petitions.
The GoldQuest racketeers could not dare to file a writ petition in the High Court since they know it would be suicidal.
In essence, there is hardly any future for these racketeers who are promoting network marketing, direct selling, referral marketing, multilevel marketing or any other marketing to loot the public in broad daylight.

Sunday, 16 December 2012

Multilevel marketing is illegal in China

In 1998, when MLM pyramid selling schemes first swept across China – and China was being hailed by the MLM industry as the next frontier – the government banned all  direct selling. This was because in China, as in America where many of the scams  originated, direct selling had become the main disguise for pyramid schemes. On Wall Street and in financial centers around the world, pyramid schemes disguise themselves as "investment" opportunities and "hedge funds." But on Main Streets  all over the world, pyramid schemes are disguised primarily as "business"  opportunities and "direct selling."

After the ban in China, the US-based multi-level marketing industry launched a  major lobbying campaign to get China's government to legalize multi-level  marketing. It even gained the help of the US Trade Representative at that time,  Charlene Barschefsky, who worked for the Clinton Administration. Ms. Barschefsky was publicly thanked by Amway for her efforts to help the MLM industry. The usual  false claims were put forth by the MLM industry and Ms. Barschefsky that MLM is  really "direct selling", not pyramid schemes.

MLM Trying to Recruit Illegally

China's government used consulting firms to investigate the distinctions between  MLM and obvious pyramid schemes such as "gifting clubs." In the end, it determined that MLM is only a disguised pyramid scheme. There were differences without distinction. It concluded that MLM is a fraud industry. It decided to maintain the ban. Pyramid Scheme Alert provided videos, news reports, analysis, and technical assistance to the main consulting firm that was working with the Chinese government. It recommended that the government maintain and reaffirm its ban on MLM, which the government ultimately agreed with. In 2005, the ban was reaffirmed while true direct selling (sales by direct sellers to retail customers) was allowed. This action was a great shock to the MLM industry which needs new territory as its existing markets are saturated.

Today, the MLM industry continues its lobbying and there is much evidence that it is enticing Chinese citizens to break the law. Major MLMs such as Usana, Herbalife and Amway operate in China only as retail selling operations. The recruitment-based pay plan is not allowed. But in Taiwan, MLM does operate in the American 
model. Many people are urged to join downlines based in Taiwan or other countries. Some are encouraged to fake their residences. Additionally, as the USA Today article noted, people are being told that the government will legalize MLM pyramids.

Lies as Main Recruiting Tool

China's battle against pyramid schemes comes up against the most difficult of all challenges: MLM's great expertise and experience with lying. It is so adept at  deception it can gain tremendous control over people, as cults. China, as in the USA, is seeing people bankrupting their families and ruining their marriages while 
under the cult-like spell of MLM promises of wealth and security. Reports of suicides are rising related to MLMs, which is true in the USA also.
As in the USA, there is now a consumer organization in China – the China Anti-Pyramid Scheme Association – to help consumers learn the truth about MLMs and to break free of MLM lies. The first book that exposes the truth about MLM pyramid schemes has also been published by a Chinese author.

MLMs have great ability to mislead people about promised income, and the nature of pyramids and their legality. These lies are combined with lies about products, fake testimonials from shills at recruitment meetings, and fake growth numbers. While Ponzi schemes collapse quickly after they are exposed, MLM pyramids even after exposures and analysis, can fight back with campaigns of deception. Ponzi's survive with concealment. Pyramids operate in plain view but with disguise. The USA Today article notes that though MLM is outlawed in China, MLM recruiters tell people that "secretly" the government supports MLM and "wants Amway to succeed" 
there. And, of course, they use the lie about the "sale of products" being proof against a pyramid.

Contrast with USA

The efforts of China to educate its citizens with the truth about how pyramid schemes work and its aggressive efforts to protect its people from pyramid predators contrast sharply with America's, the land where the "direct selling" pyramid scheme was invented. In the USA, the lies about MLMs offering the average person high income and protection from Recession are published by the mainstream media. The New York Times called MLM recruitment schemes a "fall back" for consumers during Recession and repeated an erroneous average income figure propagated by the MLM industry. MLM schemes that inflict 99% loss rates on consumers sit on the boards of Chambers of Commerce. The former chairman of the Federal Trade Commission was a former Amway lawyer and now works as a lawyer/lobbyist for an MLM. Our former Chief of Consumer Protection at the FTC now 
represents Amway.

The question must be asked: which economy shows the greatest promise for the future? The one that treats pyramid schemes as corrupting and harmful and works to protect people from losing their money with public education and law enforcement? Or the one that allows the frauds to spread, treats them as legitimate businesses, even as they deceive and harm, and whose government officials take jobs with the schemes?

Saturday, 15 December 2012

RMP receives an earful in Andhra Pradesh High Court

Resource Money Power Infotech popularly known as RMP has induced several millions of consumers through out the country in general and South India in particular with the promise of easy and quick money by becoming its member. However, almost all of them lost their hard-earnings in the scam.
After police filed a criminal case against RMP, the company like all its predecessors like Amway, Apple FMCGm V-Can Network, had also preferred to file a writ petition in the Andhra Pradesh seekings its intervention to prevent police from proceeding investigation against the company. On the pretext that a writ petition was pending before the Andhra Pradesh High Court, RMP continued its activities.
However, after Vijayawada-based Corporate Frauds Watch (CFW) filed an implead petition in the writ petition filed by RMP, the AP High Court got the opportunity to hear the point of view presented by RMP and CFW.
The writ petition reached the single judge Bench comprising Justice Samudrala Govindarajulu heard the arguments of the counsels of RMP and CFW. During the course of arguments, Justice Govindarajulu pointed out he knew the fraudulent ways of several multilevel marketing companies which have been fleecing money from public. The Government pleader told the Bench that theAmway case was referred to the larger bench, Justice Govindarajulu made caustic remarks against Amway India.The Judge also said that the Bench is aware of the circumstances that led to the referral of Amway writ petition to the larger Bench. After hearing the arguments of all parties concerned, the Bench reserved the order.
Resource Money Power is also one of those multilevel marketing companies which induce people with easy and quick money. Its business model is also same that of Amway India. One has to become a member by paying about Rs. 6,000 and he would be given a suit length and other stuff. But the real inducement is the commission he would be paid if he enrolled new members into the scheme as his downline.
The company has already cheated several millions through out the country. Generally, the members are introduced into the scheme by their friends and relatives. That is why nobody comes forward to lodge a complaint with the police. However, after the scheme reaches a flash point, it starts defaulting and then only people would come forward to lodge complaints.
At that point of time, all these fraudulent companies file writ petitions in the high court appealing to the court to declare its model business model legal and continue with their business. It is high time consumers realised the futile exercise of joining such schemes to earn money. Generally, these companies advertise that it was a good business opportunity. There is hardly any business opportunity but it is only a disguised illegal money circulation scheme banned under the provisions of Prize Chits and Money Circulation Schemes (Banning) Act, 1978.

HSBC bosses agree to pay $1.9 billions fine and are put on probation
UK-based HSBC bank is the biggest in Europe (by market capitalisation). It declared pre-tax profits of $12.7bn for the first half of 2012.

After an astonishing US Senate investigation (published earlier this year, 2012) concluded that  HSBC had 'been a conduit for drug kingpins and rogue nations,' the current bosses of HBSC have now announced that they have agreed to pay the US authorities a staggering $1.9 billions (the largest penalty ever imposed on a bank) to avoid facing money laundering charges. This means that although some of the most-serious financial crimes imaginable have been committed by certain corporate officers and employees and HSBC, no individual or corporate structure will face the slightest criminal charge. Although, financial penalties imposed on banks for perpetrating crimes have been described as'fines' it would, therefore, be a far more accurate use of English to describe these payments as 'expenses.' Indeed, I am reliably informed that, since financial penalties imposed on banks reduce their profits, they are tax-deductible.

In the case of HSBC, and various other banks which continue to be caught engaged in large-scale money laundering, these jaw-dropping events are particularly baffling, since large-scale money laundering is, by its very nature, always part of a pattern of major racketeering activity (as defined by the US federal Racketeer Influenced and Corrupt Organizations Act, 1970), in that large-scale money-laundering is the process of using labyrinths of legally-registered corporate structures, generally pursuing lawful enterprises, to disguise the proceeds of ongoing major organized crime so that this money cannot be linked to unlawful enterprisesIndeed, US RICO legislation provides severe penalties ($250 000 fines and 20 years prison, per racketeering count) for all persons (including attorneys and bankers) proved to have been engaged in a pattern of ongoing major racketeering activity. Yet, predictably, RICO has not yet been invoked by US prosecutors, and the latest bosses of HSBC and their attorneys, have simply been allowed to pretend that the bank's was only guilty of having 'poor money laundering controls' which they are now in the process of reforming. Oh, and they have offered their 'apologies.'

We accept responsibility for our past mistakes... We have said we are profoundly sorry for them.' Current HSBC group CEO, Stuart Gulliver.
Somewhat belatedly, HSBC officials have recently said that they have reserved $290 millions to improve their money laundering controls and that they have taken back some 'bonuses' (payments linked to unlawful profits) paid to senior executives in the past.
HSBC has also announced that it is due to reach a similar (deferred) criminal-charge avoidance agreement with the UK's Financial Services Authority. Indeed, last month HSBC said that it had set aside $1.5 billions to pay for any settlement or fines.

This latest HBSC news followed the announcement of a similar settlement with UK-based Standard Chartered bank. Its bosses have so far agreed to pay $300m in fines for violating US sanctions.

Ironically, the regular sale to banksters of what are effectively 'Get of Jail' cards, has been described as being part of a 'crackdown on money laundering and sanctions violations being led by federal government agencies and New York state authorities,' following the release of a report by the US Senate which concluded that:
  • 'HSBC in the USA had not treated its Mexican affiliate as high risk, despite the country's money laundering and drug trafficking challenges'
  • 'The Mexican affiliate had transported $7billions in US bank notes to HSBC in the USA, more than any other Mexican bank, but had not considered that to be suspicious'
  • 'HSBC had circumvented US safeguards designed to block transactions involving terrorists drug lords and rogue states, including allowing 25,000 transactions over 7 years without disclosing their links to Iran'
  • 'HSBC had provided US dollars and banking services to some banks in Saudi Arabia despite their links to terrorist financing'
  • 'In less than 4 years HSBC had cleared $290m in obviously suspicious US travellers' cheques for a Japanese bank, benefiting Russians who claimed to be in the used car business'
The report suggested that it was obvious that HSBC accounts in Mexico and the USA were being used by drug barons to launder mountains of cash. Interestingly, other qualified-observers have suggested that bank officers became blinded to reality in a desperate attempt to generate profits after making catastrophic investments in Mexico. However, the Senate report also stated that HSBC regularly dodged restrictions on dealings with Iran, North Korea and other states subject to US trade sanctions. 
Thus, HSBC bosses were more than happy to sign a 'Deferred Prosecution Agreement' in which they have effectively been placed on probation after effectively pleading guilty to a corporate-breaching of the 'US Bank Secrecy Act' and the 'Trading with the Enemy Act' as well as to committing a catalogue of money laundering offences. Yet had HSBC been indicted for any of these offences, then the US (and other) government(s) automatically would no longer have been permitted to conduct business with the bank.
Bob Werner

In a predictable move reminiscent of 'MLM Income Opportunity' racketeers, HSBC has announced that it has now bought the services a former senior US federal regulator who will work as 'Head of Financial Crime Compliance' (a post which, tellingly, did not exist previously).

Until recently, Bob Werner headed the US Treasury's Office of Foreign Assets Control (OFAC) - the agency responsible for enforcing US sanctions on countries including Iran.

David Brear (copyright 2012)

Sunday, 2 December 2012

Amway IBO's murder case: Life imprisonment to unemployed youth

Women's Session judge Nirmala Gitamba on Monday (December 26) pronounced and sentenced Bhukya Ravi Kiran to life imprisonment and imposed a fine of Rs. 3,000 holding him to guilty of murdering an Amway IBO Nimishakani Sailaja, wife of Rammohan, professor, Siddhartha Engineering College in Vijayawada,on November 10, 2006.

According to the prosecution, Ravi Kiran is an unemployed youth who did various odd jobs for eking out an living. His brother is an auto rickshaw driver. Naga Durga, servant maid of the housewife Sailaja, told the auto driver that Sailaja was an independent business owner (IBO) of Amway India Enterprises and earning wads of money. Naga Durga also told him that Sailaja said several times that she was earning more than Rs 65,000 every month after joining Amway.
The auto driver informed his brother Ravi Kiran about the business opportunity of Amway. Ravi Kiran believed that Sailaja was earning a lot of money every month. One day he met Sailaja who enthusiastically explained the business opportunity of Amway India Enterprises and it is easy and quick way to earn good money. She pestered him to join Amway India to earn easy and quick money by just enrolling more members into the scheme.
Ravi Kiran has other plans to earn easy and quick money. He hatched a plan to do away with Sailaja and steal the money she had earned as Amway IBO.
Ravi Kiran checked into a small hotel with the pseudonym B Kishore of Gudivada town on November 6, 2006 and purchased a knife to put his plan into action.
On November 10, he went to the apartment where Sailaja was living and told her that he was interested to join Amway India but he needed more details. Unsuspecting and overenthusiastic Sailaja let him into the apartment house.
While she was explaining the business opportunity, Ravi Kiran stabbed her with the knife and strangled her with her own saree. Sailaja died on the spot. Ravi Kiran removed gold ornaments from her person and broke open the almyrah to find wads of money stashed there. But to his dismay he found only Rs. 1700.
Her husband, Rammohan, who returned from the college for lunch, found his wife in a pool of blood. He lodged a complaint with the police.
During the course of investigation, the police found Ravi Kiran indulged in the crime. 
Fifteen witnesses corroborated the prosecution case and it was found Ravi Kiran was guilty.
A simple lie that she was earning wads of money as member of Amway India resulted in the death of the housewife.