Rs 3,700-cr scam unravelled: How a social media biz got 'unliked' in Noida

Multiple agencies are investigating a business built around Facebook likes

Anubhav Mittal, the chairman & managing director of Ablaze Info Solutions, didn’t seem perturbed even as his swank office in Noida was taken over by investigators from various agencies for allegedly perpetrating fraud, running into Rs 3,700 crore, on 650,000 people, and he was taken into custody.

All the chubby and bespectacled 27-year-old wanted to ensure was that his team doesn’t panic.  In a 37-second video, ostensibly recorded while in confinement, Mittal addressed people who seem to be his key employees or associates: “Sana, Fatima, Simran, Deepika and others, I am with you. You just stay with me.”

In the message, now uploaded on YouTube, he told his associates that this is a short bad phase for the company and it will be back on track again. “We will rock the world.”

He added that this was a rare opportunity for the company to become well known. “Ek hi din ke andar poori India mein hamein famous kara diya.” (In one day, they have made us famous in the whole of India.)

Mittal seems to have fancied himself as Phunsukh Wangdu, the reclusive genius played by Aamir Khan in 3 Idiots. In an interview to movie portal Cinemirchi, he said: “I used to try to do new things (while doing B Tech). In 2009, I had created an app to control fans and lights of my room through Facebook. Then people started calling me Phunshuk Wangdu.”

Facebook and other social media platforms would eventually become his means to millions.

Mittal floated Ablaze in 2010. Social Trade.biz, which calls itself a social media exchange market portal, came in August 2015. “Our concept is to provide digital marketing. We have to hamper the business of other social media platforms,” Mittal told Cinemirchi in December.

Two months later, the Enforcement Directorate has registered a case of money laundering on the basis of an FIR registered by the Special Task Force of Uttar Pradesh Police for running a multi-level marketing/Ponzi scheme at Noida.  Simultaneous searches at five premises at Kanpur, Ghaziabad and Noida were conducted by ED. Other agencies such as the Income-tax Department have also joined the probe.

According to the Special Task Force, Mittal would take deposits from people, ranging from Rs 5,750 to Rs 57,500, and promised to pay them Rs 5 for “liking” a social-media page, the link to which would be sent by Mittal’s team.

“The accused persons propagated a false story that the promotional web pages linked on these international social media portals pay Rs 6 for a like, out of which they pay Rs 5 to the user,” says an official source. “The accused also promoted four systematic investment plans offering various incentives depending upon the investment made by the user.”

Some of the investors who didn’t get paid for the “likes” are known to have complained to the police. A cash deposit of Rs 6 crore made by the company after demonetisation was announced on November 8 is also said to have alerted the investigators.

Preliminary investigations show the money taken from investors was invested in real estate, the source says.

A deserted office

In east Delhi’s Patparganj, opposite a renowned private hospital, is a shopping mall that is the registered address of Ablaze. It is a small room on the first floor of the two-storey mall.

It’s Tuesday and the office is shuttered. The mall itself is relatively unoccupied. Adjoining offices include an accountancy firm, a diagnostic lab and an online car-trading outfit.

When asked about Ablaze, some people say that its signboard was taken off three days ago when news about the alleged scam broke in the media. The few people who claim to know about the company say they have never seen Mittal on the premises. Others in nearby offices say a couple of employees used to work here and that hardly any visitor would come to the office.

Ablaze had paid up share capital of Rs 1 lakh as on March 31, 2016, which was split equally between Mittal and “Mrs Sunil Kumar Mittal”. Ablaze reported a loss Rs 4.3 crore for FY16. Though its revenue zoomed to Rs 26.37 crore from Rs 8.3 lakh in FY15, expenses also went up from Rs 2.7 lakh to Rs 30.38 crore, resulting in the loss.

The three main heads of expenditure — commission expenses (Rs 8.19 crore), sub-contract expenses (Rs 12.71 crore) and professional expenses (Rs 9.3 crore) — suggest Ablaze was acquiring customers aggressively.


Investigators suggest some transactions could have been off the company’s books: the membership money paid by investors, for example. All membership plans ran up to 1 year and after that, investors needed to renew them. Several hundred agents seem to have been working to get in members, for a commission, collecting cash like most multi-level marketing schemes do.

Mittal lived in style. Photographs of Mittal and his wife, Ayushi Agarwal, who is also a director in his companies, with Bollywood stars Sunny Leone and Amisha Patel taken during his birthday party on November 29 in Delhi have surfaced recently. Cops say they might call Leone for questioning, if necessary.

The other companies

Of the four companies named by the investigators, the other three — Intmaart, Social Trade and 3 W Digital — are fairly new and have a capital of Rs 10 lakh each. They have not reported any other major transaction and would be filing their statements only after completing their first financial year in March.

Mittal started these ventures towards the end of last year. He incorporated Intmaart India, Social Trade India and became a director of 3W Digital. He also became the director of Empress Infrastructure based in Shakurpur in December but quit in January, records with the Union ministry of corporate affairs show.   

Ayushi Agarwal, Mittal’s 28-year-old wife, joined Ablaze as a director in September. She is on the board of the other three companies too. Emails sent to official IDs of these companies did not elicit any response.

Intmaart ran the e-commerce portal Intmaart.com. Mittal wanted to call this social commerce platform and expected it to grow like Flipkart and Snapdeal. 3W Digital was floated by Ghaziabad-based couple Naresh Vashishta and Shubhi Vashishta. Mittal became a director of this company in January and moved its registered office to Sector 63 in Noida. The business objects of this company, which originally wanted to produce television serials and other media content, were amended to include e-commerce, social media, social trade, internet and other related activities.

It is from this Noida office of 3W Digital that Mittal and his associates were picked up by the Special Task Force.

The investigators have frozen the Rs 500 crore lying in the bank accounts of the company. The money trail will be investigated to ascertain the investments made by the accused.

All about Ablaze Info

Founder: Anubhav Mittal

Age: 27

Qualification: B.Tech

Companies:

* Ablaze Info was launched in 2010
* Social Trade.biz in 2015
* Intmaart, Social Trade and
* 3 W Digital in 2016
 
Paid-up capital:  Rs 1 lakh (Ablaze)
 
Financials:  

* Ablaze reported a loss of Rs 4.3 crore in FY16

* Revenue was at Rs 26.37 crore