The Cyberabad police in Hyderabad on Sunday arrested nine people, including some dropouts from Indian Institute of Technology (IIT) Kharagpur, in a major multi-level marketing fraud case worth Rs 30 crore.
In a press note, the police said that the CEO of the company, identified as Mohammed Rizwan, along with two Directors, Bhattu Saikonda and Mohd Isaaq, and six others were arrested and Rs 40 lakh was seized from their bank accounts.
The police said that the company sold several products and involved a scheme where members enrolled new members in exchange for a commission.
Speaking to reporters, Cyberabad Police Commissioner V C Sajjanar said that the accused had set up operations in Hyderabadâs Malakpet area, under the name of âPro Healthy Ways International LLPâ and sold 18 products including some that promised to increase or decrease weight. They had enrolled close to 40,000 people in the states of Telangana and Andhra Pradesh, investigators said.
âEach distributor should pay Rs 4,000 for joining and then should lure unemployed youth and elderly people for commission. In this manner, over Rs 30 crore was collected,â the Commissioner was quoted as saying.
The accused were booked under relevant sections of the the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and the Indian Penal Code (IPC). They were later produced in front of a local court and sent to judicial remand.
The city police have reiterated several times that Multi-Level Marketing (MLM) frauds generally target unemployed youth by making big promises stating that one can earn several lakh rupees sitting at home and have appealed to people not to fall for such claims.
In August this year, sleuths from the Commissionerâs Task Force in Hyderabad conducted a raid at the office of GRM Estates Pvt Ltd in Old Bowenpally and busted a massive cryptocurrency racket. The police said that the racket was being organised under the guise of a multi-level marketing scheme and five people had been arrested.
"The main accused Gardas Ramesh hatched a plan to gain illegal easy money and started a multi-level marketing business with the name of Coinx Trade, claiming that it was a legitimate cryptocurrency, and lured the gullible public with a promise of making them rich within short period with high returns, encouraging them to invest money in Coinx Trading, which was being organised online from the USA and UK," the police had said in a press note at the time.