The Enforcement Directorate (ED) on Tuesday attached assets worth over Rs 277 crore relating to Noida-based firm eBIZ.com for allegedly cheating around 12 lakh people through pyramid-style multilevel marketing schemes to the tune of Rs 1,064 crore.
The ED attached several residential plots, apartments, farmhouses and commercial buildings in Delhi and Noida and bank balances belonging to eBiz.com's directors Pawan Malhan and Anita Malhan, and their family members under provisions of the money laundering laws.
The ED initiated an investigation under the Prevention of Money Laundering Act on the basis of FIRs registered by the Telangana Police against the company and its directors and associates for cheating people by "propagating false promises of earning quick and easy money."
"The company cheated the gullible public by inviting 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, etc," said the ED in a release.
"The purpose of introducing sub-standard over-priced products was only to masquerade their pyramid fraud as a direct-selling product company. To lure more gullible investors, they extensively advertised their commission model in which very high commissions were paid to existing members for enrollment of new members in the downlinks of the pyramid structure," the agency said.
On August 20, the Cyberabad Economic Offences Wing had busted the racket and arrested its managing director Pawan Malhan, his son Hitik Malhan, who are in Telangana Police custody. The company's head office in Noida was also sealed and deposits worth Rs 398 crore were frozen in their multiple bank accounts.
The ED's investigation revealed that funds were fraudulently collected from the investors as deposits towards membership in the scheme through a chain of agents spread across the country. The investigation found that the funds collected from the members were illegally diverted into the personal accounts of the company's directors, their family members and other associates under various heads including dividends, high salaries, and incentives.
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"Investigations conducted so far revealed that the accused have fraudulently collected approximately Rs 1,064 crore from around 12 lakh subscribers. It was also revealed that the funds collected from the subscribers were invested in movable and immovable properties so as to conceal them," said the ED.
The Cyberabad Economic Offences, however, had said that the company cheated around 17 lakh people to the tune of Rs 5,000 crore.
Several cases of cheating were registered against the company on a complaint of four people at various police stations in Telangana including a case filed by one Mohammed Sharooq in Telangana last month.
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