Double Your Money – Scam

Recently, we all got to know how a Citi bank employee took for a ride to about 100 wealthy investor including  a Venture Capitalists and one of the group companies of the number one bike producers in our country. Do not be mistaken that the scams or frauds are at a metro location or happens in big financial companies. If you are a middle class person thinking that you cannot be a victim of a fraud, you better read the below news, which got published recently in Dainik Bhasker.

The mis-selling is happening every where. No matter which economic bracket you fall into. There are lot of “Puri” clones who are living right in our neighbors and have excess to information of our earnings and social status. These small run-away outfits have just one modes operandi to operate and run away after collecting a few crores:

1)      First these companies open a main office (which they will call a HEAD OFFICE) in the state capital. This office will be in a cheap area usually near the bus stand or the railway station so that even if a smart investor wants to check, he can drop in to see old furniture and lame staff who will say the “manager is in field or sir to bambai gaye hain”. See in the above company, the HO is in Jaipur with branch offices at Jodhpur and Balotra.

2)      They will give advertisements in the local newspaper and that too in the city addition for the recruitment of the agents. The advertisements appear some what like this “earn double of your salary or commission agent baniye aur 5%-10% tak commission paiye”. These guys are now advertising through SMS now days.

3)      When people apply they make agents providing them literature of a multilevel scheme or deposit which is “registered” under some micro finance act or the SEBI. Even if the agent ask how they will double, he is made to believe that the company is engaged in a business (may be construction, jewels or mining) which is giving them such huge returns.

4)      During recruitment the basic check is that the agent is well networked in his village or community and also he represents the same caste which the majority of the residents have. In the above case the “Meghwals” were taken as agents who reside around Jodhpur and Pokhran Area.

5)      Usually the cycle of operation is 1-2 years so to “charge” and “motivate”, the company organizes the annual function or the agents meet and agents get bicycles, sewing machines, mobikes, televisions to maruti 800. This ensures that the company gets the publicity and people maintain the faith that the company is cash rich.

6)      When the maturity time comes and investors are normally said that the maturity cheques are just on the way or payments will be made end of the year. In come case the PDCs are also given and than MAGIC…. Moment the cheque bounces the employee at the branches and the HO go hiding. People just gather around the closed offices with help of the agents, media and police in expectation, that some day they will get the money back.

This is so simple and yet we fall to these tactics. So next time when any of your so called neighbor or a caste honcho approach to invest in these schemes just do these 2 things:

1)      Call your Financial Advisor, and ask him his advice.

2)      Hand over the scan or print out of the above news article. At least with you he also is protected, as he  may not be aware that he is also in mess.

One more thing…. Till date I have not seen, heard or read, that the money which is cheated returned back to the common investor. In some cases the police has caught hold these smelly brains but, did the investor get his money back is a question. If you or someone you know has managed to get the money back, do share the process in the comments below.

This article is written by guest author Madhupam Krishna. A Post Graduate in Finance, currently he heads sales function for Rajasthan for Principal PNB Mutual Fund.

Disclaimer: This post represents the opinion of its author only, and does not in any way reflect the opinions of  the author’s employer, The Financial Literates or the other authors who write content for this Website.