CHENNAI: In August 2009, N Baskar walked into a private bank and asked for a personal loan. The reason? To invest in what seemed a no-loss proposition. A close friend of his had referred him to a company called City Limouzines, promising a return of 48 per cent on investment.
Baskar was wowed, took a high interest personal loan and put in Rs 1.5 lakh. “It was the worst mistake of my life,” he told Express on Wednesday, six years later. The company shut down on August 15, 2009 and Baskar hasn’t yet seen a paisa of his hard earned and borrowed cash.
Baskar is not the only one hoodwinked by the masterminds behind what has come to be known as the City Group Scam. Even as the Swiss Federal Gazette has made public the names of Sayed Mohamed Masood, who helmed the ‘City Group’, and his wife as account holders in Swiss Banks, thousands of people, including over 35,000 who haven filed claims with the Tamil Nadu Economic Offices Wing, languish — some even now in debt and severely depreciated life savings.
“I broke some deposits made for my son to make the investment in the company,” narrated a bitter Zulfiqar Ali Khan, advocate and investor, who has represented over 50 fellow investors’ claims over the past few years.
Not only did Khan represent other investors, but he and a few other advocates also formed the South Chennai City Group Investors’ Welfare Association. “Not many have come forward to join though. Even as several routinely come to every hearing on the case to hope for their money back,” he pointed out.
Accounts of investors in Chennai point to an insidious cycle of referrals, big investments and good returns, always on time and as promised, as the number of investors in the immense Ponzi Scheme grew.
“But once the company shut down and came under the eye of the authorities, it was the end,” said K Rajendra Prasad. Prasad’s and Khan’s occupations and incomes show that it wasn’t only the less-informed who had been lured by the promise of a 48% return on any investment — Prasad is a Central government employee.
“I had made several investments before the final one. I always got my EMI checks on time and without trouble. Which is why for the final investment, my biggest, I took personal and jewel loans, not to mention a property mortgage. It wasn’t the best decision,” he said.
Prasad is still owed around Rs 10 lakh. The promise which brought in such investments was a 48 per cent return, disbursed in monthly equal installments over five years. Plus a bumper final payment at the end.
The aftermath of the closure, investigation, arrest and adjudication process has been nightmarish for some. Baskar, a BPO employee had such trouble repaying his personal loan that he had to borrow from friends and family, finally even resorting to selling his bike to make the closing payment. Prasad had similar trouble, lasting years.
For investors, at least those who filed claims though, there seems the ordeal may be coming to an end. Around Rs 180 crore has been sent to the official liquidator and claims are being accepted in Mumbai.
“We think the settlements will start coming in 5 or 6 months. The order is to give an interest of 24 per cent on investment from 2009 to when the liquidation order was made. Different for different City Group companies,” said Khan.
Only a fraction though have filed claims. Some very big investors have not come forward, says Khan.
Those who have not can still file claims, even though the last date has gotten over. “We’ll help them out,” said Khan. Perhaps there could finally be some light at the end of a very long and dark tunnel.