Just a click away... Ponzi Disaster

It is time those thousands of investors who are still in the clutches of multi-level marketing plans sit up, especially after India's first social network-based ponzi scheme where an online fraud of Rs 3,700 crore came to light in Noida recently that duped nearly seven lakh people.

The craze to make profits by just sitting at home and performing routine tasks automatically attracts a large number of investors as they hardly have to invest an hour of the day to earn lucrative profits. But the fallouts could prove to be quite severe.

On one hand where majority of the population is finding it hard to earn a meal for themselves twice a day, people involved with various Ponzi schemes have been earning hundreds and thousands of rupees daily by just clicking the like button of a few links from wherever they want.

Like any other student, Anubhav Mittal also had dreams of his own. Hailing from a small town like Ghaziabad he was pursuing his final year of engineering when he came up with an idea to start a company of his own. In 2010, he laid the foundation of a company named Ablaze Info Private Limited and got it registered with an address in Chandni Chowk, Delhi.

Five years after the company began its operations; the yearly turnover was just Rs 3-5 lakh. Unsatisfied with the profit made, Anubhav got into the 'click like scheme' and changed his business model from software development to a multi-level marketing company.

Dubbed as 'social trade,' Mittal and his friends started convincing people to invest their money into the scheme. He ran a portal called 'socialtrade.biz' where investors could register themselves. Once you become a member with a payment of anything between Rs 5,750 to Rs 57,500, investors were told that they would be paid Rs 5 per click on links sent to them.

Abdul, a resident of Bulandshahr district, Uttar Pradesh, invested his life-time savings in a natty company as he trusted his friend who was also a member of the company. And then his life took a lethal turn. Abdul's friend told him that this company was giving him fringe benefits by just clicking on links. Abdul's avarice made him invest his savings of approximately Rs 57,500 in this company.

Initially, he started getting money in hundreds. So, he developed avidity in this scheme and thought if he could get money from one ID, he could make more money from multiple IDs and could get the amount in thousands then. The first thing he could do was to use his wife's ID and went on to invest Rs 57,500 more to get a new ID.

But as it is said, greed commonly causes injury to the person who displays it. There was a day when the company did not give him money which he usually got at the end of the day. One day, he decided to visit the company. But the guard did not allow him to enter. He again visited the company along with his friends and insisted to meet the Managing Director (MD) of the company. The MD gave him an assurance that he would get his money in his account within 15 days.

Abdul was shocked to see the news on television which said that the company he had invested his money in, was a fraud. Abdul realised that he had lost all his savings.

There are several such Abduls whose money was duped in this manner. Over seven lakh investors including foreign nationals believed in this scheme and suffered losses.

On February 2, 2017, Anubhav Mittal,the kingpin of the scam, along with his partners Shreedhar Prasad and Mahesh Dayal were arrested by the Noida Police for a virtual ponzi scam with Facebook likes being traded for quick money.

Soon after the arrest, thousands of people subsequently protested at Jantar Mantar against the 'wrongful arrest' of Mittal, who they believed to be visionary.

According to them, Mittal had always fulfilled his promise and that his arrest was the result of a conspiracy by rival companies. A Delhi-based social trade user informed that he could earn back the money by clicking on 125 links every day. He was paid Rs 625 and after a tax deduction, around Rs 475 was deposited in his account every day. All social trade payments were made through an NEFT transaction.

According to social trade users, Ablaze Private Limited was in a flux in 2016-end. They were changing their business model in accordance with the new regulations brought in by the Ministry of Consumer Affairs.

While it is difficult to corroborate this reasoning, it would be remiss to mention that on September 9, 2016, the Ministry of Consumer Affairs released new guidelines on direct selling and multi-level marketing. And so, Ablaze Private Limited diversified into 3W Digital private Limited and Intmart Private Limited.

One of the main products of 3W Digital Private Limited was Frenzz Up — a social media platform similar to Facebook premised on digital media marketing. Users were informed that their accounts and 'e points' would be migrated to Frenzz Up, which is ostensibly where the delay in payments comes in.

Investors of this Ponzi scam want Anubhav Mittal to be released, keeping the delay in police investigation and previous multi-level marketing scams in mind where investors didn't get their money back. So, investors are surmising that this is the only way to get their money back. For this, they are going for hunger strikes and protests demanding Mittal's release and starting of this scheme again.

But now, they want police to keep an eye on such schemes so that nobody can cheat investors. Though circulation of money this way is not legal according to the Price Chits and Money Circulation Act 1978 but investors are distressed as they are worried about the future of their investments and they cannot see any other way out to come out of it.

This whole scam has various shades. The first unadorned one could be Anubhav Mittal's greed that made him swindle investors. The other one could be that probably he had good intentions of returning the money to investors but because of demonetisation he failed to keep pace.

If not for the demonetization drive, this scam would not have been unearthed. There can be several smaller ponzi schemes but this scam came into limelight because of the large amount of money involved in it. But regardless of its impact and outreach, it is a matter of deliberation whether ponzi schemes are of any benefit to those who invest their money or just another source of income as long as the good times remain and the returns flows in.