Hyderabad: A "fraudulent" multi-level marketing scheme that was allegedly run by a Bengaluru-based company was busted by Cyberabad police. The police have arrested 24 people, including its CEO and others.
The firm allegedly cheated about 10 lakh people across the country, collecting huge amounts to the tune of Rs 1,500 crore from them, a police release here said. Bank accounts of the company have been frozen by authorities. It is reported that bank accounts held Rs.20 crore.
A press release issued by the police said a person had filed a complaint against the firm on February 20 stating that he was cheated with an attractive income offer for promoting its products.
The complainant had invested Rs 12,500 but did not receive any commission on his investment as promised by the company's "promoters".
When he contacted the promoters and he was told that the business was a multi-level marketing firm and income would be earned only by enrolling more members in the chain system.
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According to the statement, the scheme mandated that new applicants for membership should pay Rs 12,500 and buy the company's products to become a member. Besides, the applicants would also have to get others to enrol in the scheme to earn a bonus.
According to the release, any scheme involving the enrolment of members is nothing but a Money Circulation Scheme which is banned under Prize Chits and Money Circulation Schemes (Banning) Act- 1978. It also amounts to cheating and is punishable under IPC section 420.
