HYDERABAD: The Enforcement Directorate (ED) on Thursday attached assets worth Rs 31.63 crore belonging to Haryana-based eBiz.com Pvt Ltd, under the provisions of Prevention of Money Laundering Act in a Multi-Level Marketing (MLM) pyramid fraud case.
The attached assets include interest accrued on the already attached 105 fixed deposit accounts, bank balances, mutual funds and gold jewellery found in the locker of the main accused Pawan Malhan, the Managing Director, and his son Hitik Malhan.
Earlier in 2019, the ED had provisionally attached immovable properties purchased at Rs 34.60 crore and bank balances amounting to Rs 242.25 crore in 124 different bank accounts belonging to eBiz.com and its promoters. The 2019 provisional attachment order of ED for a total value of Rs 277.97 crore was confirmed by the PMLA Adjudicating Authority and the ED has already taken possession of the same, the ED said in a release.
Under guise of direct sales
The ED initiated investigation based on the FIRs registered by the Telangana police against eBiz.com Pvt Ltd, its directors and associates, for cheating the public by propagating false promises of earning quick and easy money and luring gullible public to their pyramid scheme.
Money laundering investigation by the ED revealed that they were running a pyramid scheme in the guise of direct sales of products like CDs containing free computer education packages. The purpose of introducing such sub-standard overpriced 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 exceedingly high commissions were paid to existing members for enrolment of new members in the lower links of the pyramid structure.
Rs 1,064 crore collected from 12 lakh people
The promoters conducted mega conventions and flaunted their lavish lifestyle and used social media like Facebook to lure gullible investors. They had collected around Rs 1,064 crore from around 12 lakh subscribers through a chain of agents spread across the country. The funds collected were illegally diverted into the personal accounts of the directors, their family members and other associates under various expenditure heads including dividends, high salaries and incentives.
The ED has already filed a preliminary prosecution complaint against the accused before court. The second provisional attachment order is issued now to attach further assets worth Rs 30.42 crore in 105 accounts maintained in the name of the company, its two directors and their family members and associates. This includes Rs 64.94 lakh worth of mutual fund investments and Rs 55.74 lakh worth of gold jewellery.
Taste of good life
The promoters conducted mega conventions and flaunted their lavish lifestyle and used social media like Facebook to lure gullible investors.