Two promoters of Noida firm held for duping 17 lakh people across 8 states of Rs 5,000-cr
The alleged fraud first came to light in March this year, when a 19-year-old student from Hyderabad lodged a complaint against the company in March following which the Cyberabad police had launched an investigation.Updated: Aug 21, 2019 09:53 IST
The Cyberabad police on Tuesday arrested the promoters of a Noida-based multi-level marketing company, eBiz.com, for allegedly cheating nearly 17 lakh people across the country to the tune of over Rs 5,000 crore.
The alleged fraud first came to light in March this year, when a 19-year-old student from Hyderabad lodged a complaint against the company in March following which the Cyberabad police had launched an investigation.
“Now, we have arrested the managing director of eBiz.com, Pawan Malhan (62), and his son, Hitik Malhan (31), who looked after the company’s operations,” Cyberabad police commissioner, VC Sajjjannar, said.
In March, Hitik was taken into custody for questioning but had obtained anticipatory bail and evaded arrest, police said. “Subsequently, he stopped responding to the notices served to him in connection with the case,” the commissioner added.
Police have frozen deposits worth Rs 389 crore in various bank accounts of the company, its directors and the two suspects. “The company head office at Sector 63 in Noida in Uttar Pradesh has been sealed as well,” the police said.
“Apart from the case lodged in March, three other cases were also registered against the company within Cyberabad limits and are under investigation. It is reliably learnt that a number of cases have also been registered against this company all over the country. A case was also registered by the Enforcement Directorate and is under investigation,” the police commissioner said.
The police booked the suspects under sections— 406, 420 and 506 of the Indian Penal Code and also under other sections of Prize Chits and Money Circulation Schemes (Banning) Act of 1978.
“Through its scheme, the company had duped people in cities of Hyderabad, Bangalore, Chennai apart from states like Delhi, Uttar Pradesh, Maharashtra, Karnataka, Tamil Nadu, Goa and Jammu and Kashmir,” he said.
Commissioner Sajjannar said the promoters mostly attracted students, women and retired persons luring them with easy means of making money.
Each person would pay at least Rs 16,821 to join their scheme and become a member. Each member would, in turn, have to enrol more people who would then become part of the chain.
“After paying the money, the new entrant gets some products/e-learning courses/holiday package and the person who enrolled them gets a commission. The new representatives will have to enrol three more members. As the number of persons increases down the line, the people on top of the pyramid would get more money in the form of commission, he said.
“It is a sort of pyramid scheme in which the primary seller at first does not get any commission but as the pyramid beneath him/her grows, (s)he can get huge commissions,” he said.
However, as the network grows, finding new members becomes difficult and the chain gets broken somewhere and the scheme collapses at one point of time. All those who invested in the form of deposits would lose their money, the commissioner said.