Hyderabad: Six people were arrested for allegedly promoting an illegal inter-state money circulation scheme under the guise of direct selling and multi-level marketing, Hyderabad Police Commissioner V C Sajjanar said on Thursday, June 11.
The police’s swift action prevented a massive financial fraud amounting to Rs. 5,000 crore, he added.
Addressing reporters, Sajjanar said Hyderabad police had busted what it described as a major financial fraud operation by arresting six accused from Kerala, West Bengal, Delhi and Uttar Pradesh for promoting IGNITE’s Indian front company, Indi Konnect Ventures Pvt Ltd.
The six accused, arrested in connection with three FIRs registered in the city, include an IGNITE team leader/recruiter and two directors of Indi Konnect Ventures Pvt Ltd.
According to the preliminary investigation, IGNITE (joinignite.com), a multi-level marketing scheme headquartered in Hong Kong, is the latest incarnation of three earlier entities—Gold Quest, QuestNet and QNet—against which thousands of cases have been registered across the country, he said.
Its founder, Pathman Senathirajah, has been named as an accused in an FIR registered by the Mumbai Economic Offences Wing and is currently evading arrest in Hong Kong, he added.
Such schemes ostensibly market wellness and dietary products, but allegedly operate illegal money circulation networks in the background by rewarding recruitment and enrolment rather than genuine product sales, he explained.
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Three complaints were lodged by victims in Hyderabad between June 5 and 6.
The complainants allegedly paid between Rs 61,639 and Rs 63,899 each, amounting to a total of Rs 1.87 lakh, after being recruited through different channels by the accused.
All three victims were directed to transfer money to the same bank account, indicating a coordinated collection mechanism, he said.
In all three cases, the victims were allegedly told that refunds would be processed only if they recruited two new members into IGNITE or maintained USD 200 in their IGNITE e-wallet.
“This confirms that the product purchase is merely incidental and that the enrolment fee is the real transaction. This is the defining characteristic of a prohibited money circulation scheme,” Sajjanar said.
Indi Konnect Ventures Pvt Ltd was incorporated in Chandigarh on May 18, just weeks before the FIRs were registered on June 9.
According to the preliminary investigation, the Indian entity was created by a group of senior QNet leaders who are now associated with IGNITE.
Its Memorandum of Association openly states that commissions, bonuses and rewards would be paid for enrolling and recruiting direct sellers, provisions that fit the definition of a money circulation scheme under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, he said.
The commissioner further said that the domain indikonnect.in was registered nine days before the company was incorporated, suggesting a pre-planned and professionally coordinated international operation with extensive Indian links.
Based on the investigation into the collection of funds and their subsequent transfer into IGNITE accounts, Hyderabad City Police suspect the involvement of an international financial network operating behind the scheme, he said.
The investigation is ongoing and further arrests are expected, police said.
Overseas-based accused are also being pursued through international cooperation channels, they added.
(With inputs from PTI.)
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