The state government has ordered a CID probe into a Ponzi scam unearthed in the Bengaluru Rural district, Revenue Minister R Ashoka said Wednesday.
According to him, over 2,000 investors have been cheated to the tune of Rs 40-60 crore on the promise of returns of up to Rs 25,000 every month on an initial investment of Rs 2-2.50 lakh. The scam was operational in districts bordering the Bengaluru Urban district, he said.
The prime accused in the case are Ramit Malhotra, Jojo Thomas and Madi Nair, who opened five different companies and lured people to invest in them. The companies are Yellow Express Logistics Limited, Yellow Express India Pvt Ltd, Yellow Finance and Earnings Ltd, Login India Finance and Earnings and Laxmi Carzone Pvt Ltd.
The companies lured investors to deposit Rs 2-2.50 lakh and promised them that the funds will be used to buy cabs. “They assured them that the cab will be registered in their name and attached to a cab aggregator. Revenue generated by running the cabs - between Rs 10,000 and Rs 25,000 per month - was assured to the investors,” Ashoka said.
The scam came to light when the Reserve Bank of India wrote to the government pointing out that the companies were not non-banking financial companies. “Hence, it is not authorised to accept deposits or undertake any NBFC activity such as lending, investment etc,” the RBI said in its letter to the government, adding that the companies were not in the list of registered entities as per Securities Exchange Board of India.
During the probe, it was found that the companies had attached only 63 cars registered to investors with the cab aggregators, despite investment by more than 2,000 people, Ashoka said. “Officials also noted that as many as 240 cars were registered in the name of the owners of the Ponzi firms. We are investigating whether registration documents are fake.”
Ashoka said the business model was suspicious as the owners had to have a monthly profit anywhere between
Rs 2-3 crore to pay investors what they were promised. “But their monthly income was only around Rs 15 -20 lakh.”
In the wake of the scam, the revenue department has directed deputy commissioners to submit a report on financial firms in their districts to identify those running potential Ponzi scams. “The DCs will have to submit reports in the next three months about such institutions in their districts,” Ashoka said.