Shaba Afreen, a media professional, invested Rs 20 lakh in Heera Gold of Companies in 2016. A resident of Tolichowki in Hyderabad, and a single mother of three, Afreen in 2018 found herself on the streets along with her children, when the company stopped paying monthly dividends, and refused to let her withdraw her investment. She had fallen victim to a halal ponzi scheme that has scammed thousands of people across India and the world.
"That Rs 20 lakh was my life's savings. It's all gone now," Afreen says, “I was introduced to Heera Gold by a trusted friend, who had invested Rs 1 lakh and was earning Rs 3,000 a month. I went to the Heera Gold office in Hyderabad. They painted a picture of a multinational company with investors and companies across the world. I enquired with people and they all had only positive things to say about Heera Gold." Afreen’s, elder brother who resides in UAE invested Rs 24 lakh, and many other relatives also made hefty investments in the halal ponzi scheme.
But the last time that investors got any dividends, for their investments into Heera Gold and 15 other companies that operate under Heera Gold, was in June 2018. The Enforcement Directorate pegs the scam to be worth Rs 3,000 crore, and the number of Heera Gold victims to be around 1.72 lakh. The Hyderabad Central Crime Station (CCS) pegs the scam to be over Rs 5,460 crore and called the 15 companies floated by the Heera Gold as shell companies. However, those who are fighting the group in court and are offering legal support to the victims say the scam is worth much more, and that the number of victims could be well over a couple of lakhs in India alone.
A scam to target Muslim community
A ponzi scheme is one that promises high returns to investors, but which does not have a legitimate business backing. Old investors are paid using the money generated from new investors, and the scheme can only last as long as there are more and more investors willing to put in their money.
What attracted investors from the Muslim community to the Heera Gold was the promise of halal investments, a form of non-interest-paying investments conforming to the Islamic Sharia laws. Unlike fixed bank interest rates, which are considered to be anti-Islam, halal schemes sell their plans as a form of partnership business with the promise of high returns. The company tapped into the community of Islamic clerics, giving them small donations in exchange for them advocating their followers to invest. The company promised a 36% partnership return on investments, whereas banks could give a return of at most 13% per annum.
Most of their marketing was done by investors who had turned agents for a commission.
And the fact that Nowhera Shaikh – a success Muslim businesswoman – was the face of the Heera Gold had another consequence. "Many of the investors were women and quite a lot of them did not tell their husbands about investing in the company,” says Afreen, “I know five such women personally, their husbands are in the Gulf and are unaware that their money's all gone.”
The police have so far made three arrests in the case – Nowhera Shaikh the chairperson, CEO and founder of Heera Gold; the company director Biju Thomas; and General Manager Mary Thomas. So far 22 cases have been filed against Nowhera and her associates and the investigation of the case is spread across several Indian states with victims filing FIRs against the company in Telangana, Karnataka, Tamil Nadu,Kerala, Maharashtra and many other places. Investors from abroad are yet to even begin litigation against the firm. In the meantime, Nowhera Shaikh – now in Chanchalguda Central Prison in Hyderabad – is not cooperating with the case, the police have told the courts.
The hook: A Quran teacher turned Heera Gold founder
Nowhera Shaikh hails from Tirupati and is reportedly the daughter of a vegetable seller with little or no formal education. At some point, she called herself an Islamic scholar and attached a doctor tag to her name. She is said to have started as a Quran teacher in Tirupur collecting money from the locals with the promise of monthly payments. Ponzi schemes were her bread and butter. She would in 2006 become the president of At-Tawheed International Dawah Centre for Women.
"All of this was done without an office, in a remote town near Tirupur, sometime before 2007," says Younus A Sayed from Mumbai, a Heera Gold victim. Over the past couple of years, Younus has been documenting the Heera Gold, and has created Youtube Videos warning the public about their scam. "People trusted her as she was also involved in teaching kids how to read the Quran," he says.
In 2007, Nowhera set up Heera Gold, as the investments grew and her business began to expand. Her first office was in Mumbai, and she allegedly claimed to trade gold from Ghana.
Soon, Heera Gold started issuing 'share certificates' to their investors. Up until 2012, Investors in Heera Gold were told that the company is a public limited company and that the investors were actual shareholders of the company. And they told the investors that the company wasn’t listed in the stock market so that they could continue the halal scheme.
However, by 2012, the ‘shareholders’ were reduced to ‘members’, and slowly, as the group started running their operations online, the proof of investments slowly started becoming weaker, says Younus.
“If an investor demanded a printout, Heera Gold would take a black-and-white printout and give it to them. This practice of providing black-and-white certification to investors again was an attempt to weaken proof of investment. The investors kept on coming but the change in certification was not noticed, as new investors never knew or had never seen the format of old certificates,” he adds.
The line: Investors turned marketing agents
One of the reasons why the company managed to run the scam for so many years and managed to grow their investments exponentially was the genius of turning investors into marketing agents for the ponzi scheme. For anywhere between one and 10% commission, investors became operators and branch managers, Marketing Executives (ME) and Direct Selling Agents (DSA) of Heera Gold. “And almost all of them were Muslims,” says Younus, “They would wear the traditional Islamic skull cap, or a burqa, or keep a beard. And this made people from the community trust them.”
Investments came from Muslim communities across India, Pakistan, Indonesia, USA, UK and almost all the Gulf countries. TNM spoke to several of these victims – some of whom were working as agents with Heera Gold – who confirmed this strategy.
The sinker: Clerics who vouched for Heera
Shabaz is a social activist with political ties and owns a 30% share in Afia Plaza – a commercial complex where he has a modest office and runs a banquet hall. The building housed the headquarters of the Heera Gold, which has been shut since Nowhera's arrest. He claims to be the first person to have filed a complaint against Nowhera Shaikh and Heera Gold back in May 2010.
In his letters to the CBI and NIA on the issue, Shabaz has insisted that the role of clerics must be probed. Heera Gold over the years allegedly roped in several imams of local mosques in Muslim dominated areas of Hyderabad, mostly from the Jamiat-e-Ahle Hadith (JAH), the sect that Nowhera belongs to.
“They built a mosque in Tolichowki, 'Majid-ul-Bilkis' at a cost of Rs 50 lakh. If a rich person comes and invests in your neglected locality, the people there – including imams – will speak well of the investor. It creates good faith. They invested Rs 50 lakh and collected Rs 5 crore from the locality,” Shabaz alleges.
A similar approach was adopted in other states, like Karnataka and Maharashtra, where the company distributed pamphlets through mosques seeking investments, he says. “People trusted them as it came from the mosques. The general lack of education and awareness among the Muslim community only worsened the matter,” he adds.
There are several videos on social media of Islamic clerics associating investing in Heera Gold to an act of good deed linked to the Islamic faith. In one such video, Shaikh Arshad Basheer Madani, a cleric associated with the Jamiat-e-Ahle Hadith could be heard saying, “We have gold at home that we use to adorn our body, but if some of this gold is invested in Heera company, some money will come. We can use this money to help our brothers, our husbands, we can educate our children, we can also become like Alima Nowhera Shiekh and play a productive role. I hope god gives you the wisdom to invest.” In another video, Maulana Meraj Rabbani could be heard singing Urdu couplets praising Nowhera.
There also exist multiple WhatsApp and YouTube based news outlets that TNM has reviewed that routinely come up with videos in support of Nowhera and Heera Gold. In these videos, they request investors to be patient and not to file FIRs and allege that all the cases and investigations being orchestrated by the AIMIM led by Assaduddin Owaisi. Shabaz says this accusation is because he is a member of MIM and due to previous complaints against Nowhera by Assaduddin Owaisi.
Paigham Madre Watan, Reaction TV Urdu, Right path are just a few of the YouTube and WhatsApp based news outlets that advocate for the Heera Gold. TNM has reached out to these outlets but have not yet received a response.
Victims of the halal ponzi scam that TNM spoke to named several Islamic scholars who have actively pushed for the Heera Gold, including Shaikh Arshad Basheer Madani, Maulana Sanaullah Madani, Maulana Meraj Rabbani, Maulana Jalaluddin Qasmi and several others. TNM reviewed several videos where these clerics were actively asking the Muslim community to invest in Heera Gold. We tried to reach out to these clerics but received no response.
Whistleblower demands CBI probe
A large cutout along the busy Mokdumpur Road at Masab Tank in Hyderabad reads, "WhistleBlower Shabaz Ahmed Khan fight against illegalities" referring to the politician/social worker who has filed a petition in the Telangana High Court seeking a CBI probe into the Heera Gold's halal ponzi scam, because the Hyderabad police do not have jurisdiction in all the places from where complaints have come.
"I used to do social work and people would come by my office and ask if they should invest in Heera's Ponzi scheme. I would advise them not to, and word reached Nowhera. Since then, my fate has been tied to this case," says Shabaz.
The tables and sofas at Shabaz’s office are stacked with complaints from victims. He claims to have gotten in touch with over 10,000 victims of Heera Gold from all over the world. Shabaz has been coordinating with those who have come forward to file complaints from other states under the banner of Heera Gold Victims Association.
Supporters of Nowhera however allege that Shabaz’s activism is politically motivated. He was a politician in 2010, a member of the TDP who would later on join the AIMIM in 2014.
In 2010, Nowhera filed a case of sexual harassment against Shabaz, which he claims is an intimidation tactic. Nowhera had also gotten a stay order from municipal courts to prevent Shabaz from speaking out against Heera Gold. “She even filed a Rs 100 crore defamation case against me,” he says.
The ponzi scheme might have gone on for several more years, except in November 2017, Nowhera Shaikh decided to ‘diversify’ into a much riskier business: politics.
Politics broke the ponzi camel’s back?
On November 12, 2017, Nowhera Shaikh decided to enter politics by launching the All India Mahila Empowerment Party (AIMEP). She decided to contest all seats in the Karnataka elections. While not much was known about Nowhera in political circles, and though there weren’t any rallies or speeches one would expect from a serious politician, she evidently splurged a lot of money on the election. There were advertisements in major Kannada and English News dailies, their election operations were based at the Leela Palace, a five star hotel. The party also brought in star campaigners like Bollywood actors Arbaaz Khan and Sohail Khan to canvass for the party.
And for the first time since 2012, the payments to investors was delayed by a month. Simultaneously, Younus says, the number of new investors had started dropping, signalling the downfall of the ponzi scheme.
Between January and June 2018, the company made five policy changes, delayed payments, blacklisted those who wanted to withdraw, and even increased the lock-in period of investments from one year to two, from three months to six months – and all this without informing investors. They also launched a new gold scheme offering gold at prices lower than market rates if payment was made upfront.
In a last-ditch effort to prevent investors from withdrawing, the company created settlement agreements where the investors were not paid in full. Upon investigation the Hyderabad CCS found over 10,000 withdrawal requests from investors from their Hyderabad office alone, according to the affidavit filed by the police to the court.
“The investors were made to agree that the benefits they received until the date of the settlement would be deducted from the capital amount. So, if an investor had invested Rs 10 lakh two years ago, and had received about Rs 7 lakh as benefits, he or she would be given Rs 3 lakh only,” says Younus. There were many other terms and conditions in this settlement form, which many of the investors failed to comprehend. Most of the investors were desperate to get their money back and owing to illiteracy, some of them signed this document, he adds.
By October, over seven cases were filed in Hyderabad and Nowhera was arrested in Delhi by the Hyderabad police on a transit remand. They booked her under sections of the Telangana Deposits of Financial Establishment Act 1999 and The Prize Chits and Money Circulation Schemes (Banning) Act, 1978.
While the Hyderabad High Court granted her conditional bail in October, she was arrested again upon release, but this time by the Economic Offences wing of the Mumbai police. She was then picked up the Hyderabad wing of the Enforcement Directorate in May 2019.
Along with Nowhera Shaikh, six others, including the Heera Gold's managing director Mubarak Jaan Shaikh, their general manager Molly Thomas, marketing executive Ajeeza Juwale, marketing manager Akhtar Modak, and agents Mudassar and Rizwan Shaikh, were booked under Sections of criminal breach of trust, cheating and conspiracy of the Indian Penal Code, along with relevant sections of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978.
Officials investigating the case from the Hyderabad police refused to comment for this story. But in an affidavit filed by the CCS to the Telangana High Court opposing Nowhera’s bail plea, the investigating officer called for further probe into the diversion of funds. The police during the course of investigation found 240 bank accounts, but these accounts had just Rs 26 crore in them. The police in total found 81 properties in the name of Nowhera across India, and also believe she has assets abroad. They interviewed 262 Heera Gold victims from Hyderabad.
The Telangana High Court will now take a call on if the case should be investigated by the CBI.