SCAMSLEAK: MLM Scams

SEBI warns against investing in two Bengal 'ponzi' firms

Kolkata : Continuing the heat on ponzi firms in the wake of the Saradha scam, the Securities and Exchange Board of India (SEBI) Sunday issued caution advertisements against two West Bengal based companies which have been raising funds under the collective investment schemes (CIS).

In the advertisement carried in leading national and local dailies, SEBI warned the general public against investing in Rose Valley Real Estate and Construction and MPS Greenery Developers Ltd.

Stating that neither the Rose Valley nor the MPS Greenery has a certificate of registration to run a CIS, the SEBI advised against investing in any of the mentioned companies, and warned that the onus of investing in such schemes would be at investors' "own risk and responsibility".

The SEBI earlier had made an order against one of the companies of the Rose Valley directing it not to collect any money from investors or to launch a scheme, not to dispose/alienate any of its assets and not to divert any funds raised from the public.

The January 2011 order of the SEBI against Rose Valley's CIS schemes was challenged by the company in the Calcutta High Court.

"As per the high court's order dated May 3, 2013, the hearing in this matter has concluded and the judgment is reserved. The general public is hereby cautioned that none of the companies of Rose Valley Group have obtained a certificate of registration from SEBI to run a CIS to raise money from investors," the advertisement said.

After the chit-funded Saradha Group collapsed unable to repay to lakhs of depositors, the capital markets watchdog has been regularly issuing advertisements in major national and regional dailies drawing investors' attention to such dubious schemes promising high returns.

On the other hand, a hoard of companies engaged in raising funds under such schemes has been talking to media to allay investor fears.

Several such companies, including Rose Valley, MPS Greenery, Prayag Group, I-Core, have come up with advertisements in various print and electronic media, assuring their investors.

Following the Saradha collapse, investors have been making a beeline against the offices of the ponzi firms seeking refund of their investment. Over a dozen agents, investors and operators of such companies have committed suicide across West Bengal since the scam broke out.
Courtesy
Submitted by admin4 on 19 May 2013 - 10:49pm
By IANS,
http://twocircles.net/2013may19/sebi_warns_against_investing_two_bengal_ponzi_firms.html

60 firms like Saradha operating in Bengal

Kolkata: At least 60 fraudulent firms like Saradha Group, which is embroiled in the West Bengal chit fund scanDal, are actively operating in the state and may have amassed around Rs.10 lakh crore from unsuspecting depositors, say people in the know.

Further, there are "countless" small and unregistered shady money laundering firms operating in the state, especially in North and South 24 Parganas, Malda and Birbhum districts, according to experts.

Widespread protests had been reported across West Bengal as irate depositors and agents of the Saradha Group, which has gone bust, hit the streets and attacked many of the firm's offices. There were incidents of clashes between the agents and the depositors who demanded their money back. There were also unconfirmed reports of an agent committing suicide.

Lured by the promise of high interest rates - ranging from 25 percent to 30 percent - lakhs of depositors, mostly poor people in the state's villages and small towns, had deposited their hard-earned money with the company. The group is alleged to have siphoned off investors' money worth Rs.17,000 crore.

Shamik Dasgupta, former general manager of the Calcutta Stock Exchange, said that most of the fraudulent companies like Saradha are violating provisions of the Companies act to misuse public money.

"These companies are not chit funds. They are formed under Companies Act, 1956, and are registered with the ministry of corporate affairs," Dasgupta told IANS.

He said more than 60 firms like Saradha were actively operating in Bengal.

On the total amount of depositors' money which they might have siphoned off, he said: "We came to know that Saradha Group alone could have mopped up over Rs.17,000 crore. So, the total amount amassed by such companies could be about Rs.10 lakh crore."

Mala Banerjee, president, Federation of Consumer Associations of West Bengal, said there were "countless" small and unregistered shady firms in the state.

"We got an unconfirmed report that only in South 24 Parganas there are more than 50 fraudulent companies, which are small and unregistered. Other districts where such companies are operating include North 24 Parganas, Malda and Birbhum," Banerjee said.

Responding to queries in the Lok Sabha last month, Minister of State for Corporate Affairs Sachin Pilot had said that the government has received complaints against 64 firms, besides nine Saradha Group companies, for indulging in ponzi or multi-level marketing (MLM) schemes in West Bengal.

Fraudulent companies raise money from investors for various ponzi schemes. The investment plans include daily or monthly instalments and lump sum investment.

Pilot said that besides floating ponzi or money circulation schemes under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, unscrupulous firms cheat investors in various other ways.

According to the minister, such fraudulent means include: "vanishing" after raising money through public offers; illegal collection of deposits in violation of the Companies act; floating sham collective investment schemes (CIS) in violation of SEBI (Securities and Exchange Board of India) act; and collecting money from public by posing as Non-Banking Financial Companies (NBFCs) in violation of the RBI (Reserve Bank of India) act.
Courtesy:
Submitted by admin4 on 25 April 2013 - 4:31pm
By Mithun Dasgupta, IANS,
(Mithun Dasgupta can be contacted at mithun.d@ians.in)
http://twocircles.net/node/322926

Government looking into chit fund issue: Pilot

Kolkata : The central government is looking into the issue of some chit funds and Ponzi schemes duping small investors by using legal loopholes, union Corporate Affairs Minister Sachin Pilot said here Sunday.

"The central government is looking into the issue. We would also encourage state governments in taking necessary action against there firms. These firms are now misusing the loopholes," Pilot said here.

The corporate affairs ministry was planning to begin an awareness campaign among investors to caution them about these financial schemes, he said.

Pilot said the central government has received complaints about financial frauds committed by "some companies, chit funds and Ponzi schemes".

"Our main objective is to protect small investors from these companies, who are taking away their (investors') hard earned money".

He said besides West Bengal, Assam, Sikkim, Maharashtra and Madhya Pradesh are also facing such problems.

The Reserve Bank of India (RBI) last week said it has already warned all the state governments about mushrooming of chit funds and also written to them to take appropriate actions against such funds for duping depositors.
Courtesy:
Submitted by admin4 on 16 December 2012 - 11:09pm
By IANS,
http://twocircles.net/2012dec16/government_looking_chit_fund_issue_pilot.html