KASARAGOD: In August 2007, Chitra Bhaskar (named changed) invested Rs 1.80 lakh in IUML leader MC Kamaruddin’s gold business. The receipt, signed by Kamaruddin and two other directors, was in the name of Fashion Gold Mahal Pvt Ltd. The receipt acknowledges that she is a shareholder.
Thirteen years later, Chitra found that Fashion Gold Mahal Pvt Ltd does not exist and she is knocking on the doors of lawyers to help her legally.
Kamaruddin, MLA, started four companies between 2006 and 2012 to sell gold jewellery and raised around Rs 140 crore from 749 common investors. All of them are in trouble as the business has gone kaput.
At least 31 persons — most of them women — have pressed charges of cheating against Kamaruddin and his business partner T K Pookoya Thangal, a member of Muslim League.
Chitra was baffled when she realised that she was issued a share certificate in the name of a non-existing company by Kamaruddin. In 2017 — 10 years after Chitra was deceived --- Naseema of Padna invested Rs 8 lakh in cash and gold jewellery in the gold business of Kamaruddin and Thangal. She said that was the alimony she got when her husband divorced her.
Naseema used to collect Rs 8,000 on the second of every month from Kamaruddin’s jewellery store.
The agreement between them was the company would pay Rs 8,000 every month and return her investment on a three months’ notice. “I’m dependent on the money to raise my two daughters,” she said.
In July 2019, the company halved Naseema’s fixed dividend to Rs 4,000, and in November 2019, it stopped paying her.Advocate C Shukoor, who is working with the complainants, said the company took money even after the stores folded up in 2019. “That clearly means the intention was to deceive,” said Shukoor, who quit IUML recently and joined the CPM.
Fashion Gold had stores in Kasaragod, Cheruvathur, Payyannur and Thalassery. Between October and December 2019, all the stores were shut.“Even when the company was sinking, they took deposits from common people. Was the company taking money to repay the older investors?” Shukoor asked. “Several companies do such things. But Kamaruddin is a people’s representative. He is supposed to have a commitment towards people,” he said.
In 2006, Kamaruddin registered his first jewellery company called Fashion Gold International Pvt Ltd. The firm was registered at the address of Pookoya Thangal, the Sunni leader.
In 2008, they registered another company called Kamar Fashion Gold. In 2009, they registered Nujoom Gold Pvt Ltd. In 2012, they registered Fashion Ornaments Pvt Ltd.
Interestingly, the unique Corporate Identity Number (CIN) mentioned in the shareholder’s receipt given to Chitra Bhaskar in 2007 belonged to Fashion Gold International. But the company’s name mentioned in receipt was Fashion Gold Mahal Pvt Ltd.
“That’s deception and violates company law,” said a chartered accountant in Thiruvananthapuram.
Kamaruddin, Pookoya Thangal and Kappanayil Sainudheen are the common directors in all the four companies. Several other directors figure on the board of at least two other companies.
The authorised share capital of the four firms combined is Rs 25.40 crore, which is the stock units or shares they can issue according to their memorandums of association.
Cumulatively, their paid-up capital is Rs 9.42 crore, which is the amount of money the four companies received from shareholders. However, Shukkur said the companies raised around Rs 150 crore from 749 investors. “That means Kamaruddin and Pookoya Thangal raised Rs 140 crore from common people as a loan,” he said. The MLA was running a collective investment scheme (CIS) by raising money from more than 50 persons, said a market expert in Kolkata. “But to run a CIS, you need the approval of the SEBI,” he said.
Moreover, his interest rates had all the trap of a Ponzi scheme, he said. For example, the company was paying Rs 8,000 every month to Naseema for an investment of Rs 8 lakh, which means the interest rate was 12%.Noorjahan, who invested Rs 10 lakh in 2008 was collecting Rs 12,000 per month, which means she was getting an interest of 14.4%. “Such high-interest rates are classic features of Ponzi schemes to seduce people,” said a stock market expert in Kolkata. To put the interest rates in perspective, he said the bonds fetched around 8% to 9% and banks gave just 5% to 6% as interest. “So when the inflow of money stopped, it became difficult to sustain the servicing of the loans,” he said.
CPM points fingers at IUML leadership
T’Puram: The CPM has demanded a high-level probe into the jewellery scam involving Manjeshwar MLA M C Kamaruddin.
The CPM alleged that the IUML leadership has been in the know in this regard. An investigation should also be carried out into other allegations raised against the MLA and other IUML leaders, it demanded. In a statement here, the CPM state secretariat alleged that the IUML leadership has been protecting the MLA.
Investors were attracted by giving the impression that it was an establishment run by IUML office-bearers and those close to it. Initially, many were reluctant to file complaints due to pressure from IUML leaders.
Investors filed police complaints as the leaders did not keep their word, the CPM alleged. “Right from the time of the Manjeshwar bypoll, such complaints had risen and some IUML leaders had warned it could backfire. However, the IUML leadership stood behind Kamaruddin,” alleged CPM. IUML cadre have come out against the party leadership for protecting the MLA, it said.