Ponzi scam: ED attaches assets worth Rs 278 cr of Telangana-based firm

In a statement, Enforcement Directorate said residential plots, apartments, farmhouses and commercial buildings located in Delhi and Noida and bank deposits in the accounts of Pawan Malhan and Anita Malhan, the main promoters of the firm EBIZ.COM Pvt Ltd, their family members, and associates have been attached as part of a provisional order issued under the Prevention of Money Laundering Act.

New Delhi:The Enforcement Directorate (ED) on Tuesday said it has attached assets worth Rs 278 crore in connection with its money laundering probe in an alleged ponzi scam involving a Telangana-based multi-level marketing group.

In a statement, the agency said residential plots, apartments, farmhouses and commercial buildings located in Delhi and Noida and bank deposits in the accounts of Pawan Malhan and Anita Malhan, the main promoters of the firm EBIZ.COM Pvt Ltd, their family members and associates have been attached as part of a provisional order issued under the Prevention of Money Laundering Act (PMLA).

At present, Pawan Malhan and his son Hitik are under custody of the Telangana Police in the case, it said.

The total value of the attachment is Rs 277.97 crore and the assets include 29 immovable properties purchased at a cost of Rs 34.60 crore and bank deposits amounting to Rs 242.25 crore lying in 124 accounts maintained in the name of the accused directors and the firm, according to the statement.

The ED said the company and its promoters "fraudulently collected about Rs 1,064 crore from around 12 lakh subscribers".

Directors of the company "cheated the common public by propagating false promises of earning quick and easy money and inviting gullible public to become members of their pyramid scheme in the guise of direct selling multi-level marketing network by introducing worthless products like free computer education packages, suit lengths among others", the agency said.

The purpose of introducing sub-standard and over-priced products was only to masquerade their pyramid fraud as a direct-selling product company, it added.

To lure more gullible investors, they extensively advertised their commission model in which very high commissions were paid to existing members for enrolment of new members in the downlinks of the pyramid structure, the ED said while describing the modus operandi of the alleged ponzi scam.

Investigation revealed that funds were fraudulently collected from the gullible investors as deposits towards membership in the scheme through a chain of agents spread across the country, it said.

"The funds collected were illegally diverted into the personal accounts of the directors, their family members and other associates under various heads including dividends, high salaries, and incentives," the agency alleged.

It said the funds collected from the subscribers were "layered" into the personal accounts of family and close associates and then invested in movable and immovable properties in order to conceal them.

The central agency filed a case under the PMLA based on an FIR filed by the Telangana Police.