Economic Offences Wing (EOW) Of The Mumbai Police Speeds Up Rs 425 Crore QNet Scam Investigation

Economic Offences Wing (EOW) Of The Mumbai Police Speeds Up Rs 425 Crore QNet Scam InvestigationFraudulent multi level marketing (MLM) companies have been operating in India for long. Till now the regulatory norms of India have failed to curb these MLM companies and the frauds committed through them. Although the Indian Companies Act, 2013 (PDF) has been formulated to curb corporate frauds yet a dedicated fraudulent MLM regulations is need of the hour.

The powers of Serious Fraud Investigation Office (SFIO) were also enhanced so that they can effectively deal with corporate frauds and crimes in India. Similarly, the Securities and Exchange Board of India (SEBI) would release corporate governance rules for the listed entities in India very soon. SEBI has also notified the Securities And Exchange Board Of India (Procedure For Search And Seizure) Regulations, 2014 (PDF).

The fraudulent multi level marketing (MLM) companies’ website should be blocked in India. This is so because these MLM websites may have server located abroad and may not be approachable even with the help of mutual legal assistance treaty (MLAT) between India and other countries.

Similar on the line of MLM companies, the Bitcoins exchanges in India are also flourishing unregulated. Meanwhile it has been reported that Indian corporates are lobbying for regulated digital currency in India.

Recently the Reserve Bank of India (RBI) cautioned users of virtual currencies against various risks, including legal risks. The Enforcement Directorate (ED) also searched few Bitcoin websites in India as it believes that Bitcoins money can be used for hawala transactions and funding terror operations. In these circumstances the role of Indian corporates for lobbying for regulated digital currencies in India must be analysed.

Meanwhile, the Economic Offences Wing (EOW) of the Mumbai Police is investigating the multi level marketing scam involving the firm QNet. India Today has reported that the EOW of Mumbai Police is making all efforts to search former world billiards champion and Padma Bhushan Michael Ferreira in connection with the alleged Rs 425-crore QNet scam, whereas the latter is putting similar effort to get the citizenship of another country.

Few days back, the EOW has issued a lookout notice against the 74-year old sports ace for his alleged involvement in the marketing scam. “Till now, he has not turned up for questioning. Three weeks ago, we had sent summon to his residence, which was followed by a lookout notice, but there is no response from his side,” said a police officer. In case, Michael fails to be present before the investigating officers, a second summon would be sent soon, declaring him, officially “absconding”.

Ferreira, who is holding 80 per cent shareholding in Vihaan Direct Selling Pvt Ltd, which operates QNet business in India. A documentary, video, and photo evidence indicated that Michael might be the big player behind this decade-old pyramid scheme that is fooling thousands of investors in India. “This scheme has siphoned off hundreds of crores out of India. In fact, there is high possibility that money has been laundered to other countries in Asia, Eastern Europe and Africa, especially Egypt,” an EOW officer said.

However, a press release issued by Vihaan Direct Selling Pvt Ltd, has denied all these allegations. Ajay Chanam, spokesperson for QNet in India, said, “the situation surrounding QNet in India and in Mumbai particularly appears to be some form of orchestrated sustained attack on the company to undermine our reputation and prevent us from competing fairly and openly in India”.

QNet is quite confident that “as true facts emerge, authorities will also see this clearly as a calculated attack on QNet and take appropriate action against those responsible for scheming this at the first place.” However, the press release remained silent on Ferreira issue.

Till now, the EOW had arrested nine team leaders of the QNet for allegedly duping investors by selling products like magnetic disks, herbal products and holiday schemes through fraudulent practices. They are out on bail.

According to Moneylife, the EOW has also received a complaint against Bollywood actor Boman Irani and his son Danesh in the QNet scam. According to sources, police have found transactions worth Rs18 crore in Danesh’s bank accounts related with QNet. The actor was also present at several promotional events organised by Qnet in India.

The Financial Express has further reported that EOW has frozen Danesh Irani’s bank account, blocking his Rs 25 lakh. Two fixed deposits were linked to his bank account. Cash and FDs collectively valued at Rs 25 lakh were found in the account. The scrutinisation of Danesh’s bank account revealed that about Rs 40 lakh had been received from QNet (over a period of time) in 2013. “We are verifying to ascertain as to what sort of job he had performed, for which the QNet paid him about Rs 40 lakh,” the officer said adding that Danesh would be summoned soon.

Complainant Gurupreet Singh Anand, who had filed an FIR against the QNet in August last year, has recently approached the EOW, with a two-page complaint giving the details of alleged links of Danesh. Gurupteet had claimed that he shared Danesh Irani’s QNet membership details with the investigators and his account had shown that he carried out Rs 18 crore worth transactions and because of which he received substantial amount of commission.

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  1. Pingback: SEBI Notified The Securities and Exchange Board of India (Procedure for Search and Seizure) Regulations, 2014 | Exclusive Techno Legal Centre Of Excellence For Cyber Crimes Investigation In India

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