Thursday, November 8, 2012

The government has decided to crack the whip on fraudulent multi-level marketing companies (Ponzi)

Ponzi, that have duped hundreds of investors in the country by blocking their websites and tracking their online transactions.
Corporate Affairs Ministry, the nodal department in this regard, has decided that its investigative arm - Serious Fraud Investigation Office (SFIO) - will coordinate with Department of Information Technology and Central Economic Intelligence Bureau (CEIB) to identify suspect websites and transactions and take strict legal action.
Sources said such companies, operating from various locations within the country, have defrauded the public for amounts which could easily run into hundreds of crores.
"There are various entities (multi-level marketing) doing business in India through websites and many such entities do not have a registered office within India. Therefore, in order to prevent funds being transferred outside India, the website of major establishments doing multi-level marketing business need to be stopped through gateways by Department of Information and Technology (DIT).
"This issue will be taken up with DIT very soon and details of such companies will be provided to it for blocking the payments," an official privy to the development said.
For multi-level marketing websites operating clandestinely and conducting hidden transactions, the Ministry will ask the Financial Intelligence Unit under Finance Ministry to track and supply snoop data on them so that SFIO can take action.
The FIU is mandated to generate suspicious transaction reports based on inputs provided by banks and other financial and economic bodies.
The Ministry is mulling adding an enabling provision in the Companies Act to initiate legal action of attachment of properties of individual directors of such companies by moving the Company Law Board (CLB) in this regard.
The Ministry, during a recent meeting of the SFIO and its regional directors, mooted a plan to activate its marketing intelligence unit to keep a tab on fraudulent innovative systems developed by such companies to cheat the public and investors.
Source: 7th Nov. 2012