Saradha and Narada were supposed to be the biggest ponzi scams but there is another one much bigger than what happened in West Bengal and North-East having international ramifications called the QNet Scam is tumbling out in other parts of India. The trauma, agony and financial losses of the common man in this scam again have alleged Congress connections
Prashanth Vaidyaraj & Nishant Kr Azad
In May 2018, Gurupreet Anand of Mumbai petitioned the Governor of Karnataka, seeking to prosecute the then Chief Minister Siddaramaiah of the Congress for ‘aiding, protecting, promoting and abetting the cheating of citizens in a Ponzi scheme run by QI group of companies…”. His petition that ran into 29 pages provides details of the nature of the QNet scam, how it works, impact on victims along with charging Siddaramaiah of holding a one-on-one meeting with the absconder Vijay Eswaran (Founder of QNet) in a foreign land in 2013 (At WEF in China) and inviting to do business in Karnataka and promising him to provide all help to do the illegal business. The charges went public and there was a hue and cry for sometime before the assembly elections. TV channels debated about it for a while and also exposed the way the scam unfolds. However without official sanction there was nothing Gurupreet or the victims of QNet could do. The BJP leaders had promised to pursue the case if they came to power. However, after elections and much political maneuvering, a Cong-JD(S) combine took over the reins of the State. Consequently, Gurupreet’s prayer is in a limbo.
Former Karnataka Chief Minister Siddaramaiah (right) with the founder of QNet Vijay Eswaran
Though the allegations against QNet are not recent, there are numerous new cases being filed against it across the country. Lakhs of victims claim to have lost lakhs of rupees and some estimates by the Financial Frauds Victims Welfare Association (FFVWA) suggest the this money could be over 20,000 crore. This in effect is much more than what Nirav Modi and Vijay Mallya owe to the Indian banks. With hundreds of cases being filed against QNet, it is indeed surprising how the company has been able to run its operations almost unabated. Yes, the cases against it have reached the Supreme Court and many of its office bearers and Independent Representatives (IRs) have been arrested in many cities. But the business model of the company continues to recruit new people into its network, garnering crores of rupees in investment across the country. Mind you that the QNet continues to operate despite the police officials and EOW’s from Mumbai Hyderabad, Bengaluru, Delhi, and Chennai requesting people to be vigilant and not become victims of the scam. This begs a question if the QNet continues to operate due to the support it enjoys from the high and the mighty? Siddaramaiah is the latest among the high profile individuals who have knowingly or unknowingly lent their support to the organisation. Earlier many Bollywood stars and sportsmen have extended support to the company by the way of appearance in their events or by being brand ambassadors for their products.
People protesting against QNet Scam
While on one hand victims of the QNet scam are crying their hearts out for losing their hard earned money and for undergoing untold mental agony, on the other hand the accused company continues to operate wantonly with the support of those in power or prominent positions.
Chi-Pendants, Bio-discs and Watches sold to victims claiming to have magical powers to energise the body
QNet Scam - A Timeline
QNet is also known by other names such as GoldQuest, QuestNet and QI Limited, and is owned by the QI group. In India, the company employs very few directly and operates through its affiliates and IRs. Affiliates are companies floated by IRs or a group of IRs of QNet to continue the business on its behalf. One such affiliate is Vihaan Marketing India Pvt Ltd that was floated by ace billiards champion Michael Ferreira. IRs are those who sell QNet products, explain their business plans and recruit new IRs. Though the company claims that it is not a MLM or does not operate in the binary system like other ponzi schemes, the way it conducts its business, the promises made to new recruits, monetary returns promised follow the typical MLM way and the pyramid model binary in nature. As the victims of the scam narrated to Organiser, all its products are over-priced and are of poor quality.
Ananth Kumar, Victim
QNet offers products like bio-discs (claims to have magical powers to energise the body), watches, jewellary, luxury trips and personal care products. One can earn by buying and selling these products at a higher price or by recruiting people who would buy products and in turn help recruit more people in the line. As several complaints against QNet and the victims recount, the company is secretive about the origin of its products, rationale behind pricing, its godowns and even its employees. All that IRs deal with is other IRs. The products are brought through its web portal and new IRs are also registered online. The opacity in the way the company operates and its so-called business plans are ripe ingredients for a scam.
Ananth Kumar’s innumerable mails to QNet demanding refund and cancellation of his membership were either outright rejected or was told that a higher up will take up the issue which never happened.
In August 2013, the economic offences wing (EOW) of the Maharashtra police registered a case against QNet for “selling plastic and glass products to thousands of investors while claiming that these products would cure diseases like cancer”. Reports in the media suggest that nearly 24 FIRs had been filed against QNet way back in 2013 across the country primarily in the cities of Mumbai, Hyderabad, Bangalore and Delhi. It was reported that the collective loss of the victims who complained was nearly Rs 5,000 crores. Though most complainants did not follow their cases or withdrew after they got a refund, Gurupreet Singh pursued his case in the hope that the company will be taken to task and would prevent others from getting conned.
Gurupreet who filed petition to the Governor of Karnataka seeking permission to prosecute the then Karnataka Chief Minister Siddaramaiah of the Congress
Based on the complaint of Gurupreet Singh in 2013, the EOW registered a case against QNet and its business. Gurupreet in his complaint alleged that his wife was duped of Rs 30,000 by independent representatives of QNet who had tried to sell her a bio-product claiming that it could be used to treat their son’s brain-related ailment. His fight was the beginning of the long struggle to stop the scam. He later started the FFVWA to fight for the legal rights of the QNet scam victims. It was based on the efforts of Gurupreet that billiards champion ended up being arrested in the QNet scam.
As per 2011 Registrar of Companies filings published by MoneyLife, Michael Ferreira and Malcolm N Desai were its shareholders. While Ferreira owned 80 per cent stake, Desai held the rest. In 2016, the EOW had filed a chargesheet against Ferreira and 30 others in the alleged scam involving QNet. The accused were booked under various sections of the IPC, the Maharashtra Protection of Interest of Depositors (MPID) Act and the Drug and Magic Remedies (Objectionable Advertisements) Act. Ferreira was subsequently arrested on September 30, 2016 and was granted bail in March 2017 by the Supreme Court. But the accused and QNet filed counter affidavits in the top court and in March 2017, the SC ordered for an interim stay on all further proceedings against QNet and its sub-franchisee, Vihaan Direct Selling. This stay was claimed by QNet as a victory and portrayed it as legitimising its business. But QNet has a long dark history in the MLM business which has left thousands of victims still demanding justice.
Big names in Bollywood like Shahrukh Khan and cricketers have been served notices by the Cyberabad Police in Hyderabad over their role in promoting QNet. The police have served 500 notices as part of their investigation into the scam.
Few years earlier in 2009, GoldQuest and QuestNet, MLM companies run by QI group, had to cease their operations in India following numerous complaints against them. GoldQuest was banned in Sri Lanka and many other countries following allegations of fraud and financial irregularities. The then MD of QuestNet India was arrested for duping the investors of Rs 160 crore under the Prize Chits Money Circulation Schemes (Banning) Act of 1978.
As recent as Jan 9, 2019 Hyderabad Police have arrested 58 persons, including 14 techies, for involvement in the QNet scam. EOW officials froze Rs 2.7 crore in these techies’ accounts and are further investigating the case. As many as 14 complaints pertaining to the scam were received by the economic offences wing in Hyberabad. The city Police Commissioner warned the public against roping in more people into the scheme, as by doing so, they will be held liable for fraud too. Earlier too the Hyberabad police had cracked down on various parts of Telangana, Andhra Pradesh, Bengaluru and New Delhi in this regard.
While on one hand victims of the QNet scam are crying their hearts out for losing their hard earned money and for undergoing untold mental agony, on the other hand the accused company continues to operate openly with the support of those in power or prominent positions Reports in the media suggest that nearly 24 FIRs had been filed against QNet way back in 2013 across the country primarily in the cities of Mumbai, Hyderabad, Bangalore and Delhi As the QNet continues to operate in different states, scam whistleblower Gurupreet Singh has written to the Chief Minister of Maharashtra Devendra Fadnavis demanding transfer of the probe of QNet scam to the Central Bureau of Investigation (CBI) for a ‘free and fair’ inquiry
However, the QNet scam did not ebb as it had its tentacles spread far and wide with victims emerging from many cities.
Victims Expose the Modus Operandi of QNet scam Ananth Kumar, a software engineer from Chennai was trapped in the QNet scam as recently as June 2018. He spoke to Organiser and narrated his harrowing experience. He tells us how the IRs of the company keep a track of everything in their personal and professional lives. Whenever they meet they would paint a poor picture of his job and claim that they are in a business which is already earning them Rs 50,000. “They will never reveal the name of QNet or the business model or the products. They will regularly post false and misleading posts on social media with photos in front of high end cars. Those having a tough time in their jobs and personal lives are easily lured by such claims.”
Raghavendra Makena Victim
Investments Down the Drain
Getting a refund or exiting the QNet network is another painful experience. Brainwashed IRs do their best to retain people and urge them to get more people by showing a bright future for self and families. Ananth says that they are given self-help and marketing books written by famous authors which have nothing to do with QNet or its business. “We are supposed to read these books in a month. The refund period is also one month and by the time we understand the true nature of the business, one month would have passed and the company conveniently rejects our claims of refund. My complaints over their IRs creating fake email IDs of my mother and sister have also fallen on deaf ears”.
Most people who invest take personal loans from banks. Ananth had taken a loan of 4.5 lakh. “I signed-up my mother and sister by paying 1.5 lakh each. I was told that the remaining 1.5 lakh is for the trip to Malaysia for a annual meet of QNet. After few months, when nothing happened I questioned my uplines, who said that I have not put enough effort into the business.” Venkat tells that after he met top honchos of QNet in Pune, he thought of giving it a try. “Hence, I tried to get more of my friends hoping that the promises made will come true. Just like me, they too invested lakhs to get into the business. After a year, when nothing happened my friends who had invested because of me started to ask me for the money. When I tried to contact my upline, his mobile was switched off. I had to secure a loan to repay my downlines who were after me. I had to immediately part with 3 lakh. My mails and requests to QNet went unanswered.”
Raghav explains the nature of the fraud scheme. “Say we invest Rs. 4 lakhs by taking a personal loan the EMI of which will be around 15,000. Then we are to recruit two new people under us. The 10% of our investment which is 40,000 is to be given to them only to show them that they are earning while it is only a part of my loan which I have given them. This continues for months before we realise the true nature of the scam. By this time, we would have taken loans to the tune of 8-10 lakh and are in deep debt already. When we start to question the model and the business, they quote advertisements in popular news channels of QNet and ask us not to doubt the company. They say that the company has many high profile ambassadors and try to convince us of its legitimacy”, says Raghav.
Another victim Venkat from Hyderabad narrated his distressing experience. Venkat hails from a small village in Ongole district of Andhra Pradesh. His father is a barber earning hardly Rs 200 per day. “I being a son of a barber dreamt of a good life. It is easier for people from small towns and villages to get trapped in such scams because of the tall promises they make. Young people come in search of jobs to cities like Hyderabad and fall prey to such scams. I got into the QNet network in 2012 through a common friend. They use their friendship and trap the innocents. They will entice us into the business by promising huge income in a few years. Once we are inside the network, it is very difficult to get out. Getting into the QNet scam is like getting into the Chakravyuha. They will try every way to stop us from going outside, including blackmail.”
QNet, the main subsidiary of the QI Group, was founded by Vijay Eswaran and Joseph Bismark in Hong Kong in 1998. Trevor Kuna, who joined QNet in 2008, was the chief marketing officer and is said have been appointed CEO of QNet.
Mr Michael Ferreira and Mr Malcolm Desai are the shareholders of Vihaan Direct Selling Pvt. Ltd, which operates in a number of countries like India, Philippines, Cambodia, Nepal, Indonesia, Turkey, Saudi Arabia, Russia and more.
In India, QNet has appointed Vihaan Direct Selling Pvt. Ltd. as its sub franchisee. Mr Dilipraj Pokkella and Mr Md. Imthiyaz are said to be the directors of Vihaan Direct Selling Pvt. Ltd.”
QNet backed by the high and mighty?
An independent investigative website http://www.abinet.org/ claims that the controversial Hong Kong-based multilevel marketing (MLM) company QNet India has been accused of cheating investors across the globe. The company has been allegedly using the name of Mahatma Gandhi to woo investors and has embezzled lakhs from unsuspecting investors since its inception.
The website claims that Bollywood stars Shah Rukh Khan, Aamir Khan, Boman Irani with son Danesh Irani, politicians like Nalini Chidambaram, some IAS and IPS officers are among the beneficiaries. Along with Michael Ferreira, his son and daughter-in-law are also accused of being the perpetrators of the scam.
From sponsoring several sport series/teams, QNet also signed on ace bowler Mutthaiah Muralidharan and former women's world number one tennis champion Martina Hingis as its Brand Ambassadors.
Modus Operandi of the scam
The Q-net/Vihaan promoters give motivational lectures to unemployed youth and homemakers, saying that their business project will yield them huge profits. Once the customer joins by paying cash or through online transaction to the upliner/introducer, or to the Vihaan account (QNet franchisee), a username and password is generated, only giving access to the upliner in the QNet web.
Initially the promoters approach the newcomers with business projects, such as cost-optimization business, health and wellness products, watches and jewellary, personal care and beauty, tour packages, education packages (SMC MBA Certification) etc. They trap them by sweet talking, saying that they will be part of the QNet kingdom where they can build their own future. They also promise a refund within a month if they want to back out, but purposely drag the time period through training sessions etc. Once the newcomer joins through a referrer/promoter, he becomes an Independent Representative (IR). After paying the money, the newcomer gets some products while the promoter gets commission. The promoter then asks IR to enrol two other members to the commission. As the number of persons increases, the upliners get more money as commission. The business model is a simple pyramid scheme, wherein early entrants earn money as the number of IR increase. Those who join late do not earn enough to cover their first outlay and the model collapses.
It works as a binary scheme. Down the line the number of persons to be added becomes difficult or impossible and the scheme collapses. The company has combinations of product-based packages, based on their payment. But the new entrants will not have any idea about the products and quality. They do not bother to verify quality, as they are interested only in monetary returns promised to them.
Raghav from Hyderabad recounts a similar tale. “Most important aspect of the QNet scam is that those close to us and many of whom we know could have become the victims of the scam. They make use of common friends to get us into the network. They claim that in 4 years we can make 4 crores. We are added to different WhatsApp groups which are full of fake claims and over the board reactions which will impact the new entrants emotionally. People end up recruiting their own family members as happened in my case. None of the details of the business, QNet, or product details are divulged to the newbies”
While QNet claims that individuals become IRs or buy their product with prior consent, there are many cases where people have been made part of the network without their approval. Nitin from Bengaluru says that his acquaintance lured him into the network by claiming that he had good opportunity to save income tax! Nitin tells, “People become part of the network in a hurry without giving much thought about the claims made. Even in my case I lent the money to a friend thinking that it will save tax. I was away in my hometown for few months and also met with an accident. After I came back I realised that a QNet account was created in my name. I also realised that accounts were created in the name of my mother and sister too without any of our consent. Accounts were created using fake email IDs of them. QNet products were brought on our behalf with the money I had given my friend. When I questioned my upline, I was told that its a business where we can earn crores and tried to convince me that I have to be part of their training to understand the business. When I attended their sessions, I understood that it is MLM and told that I was not interested to pursue it.”
Other Companies involved in MLM and accused of fraud
Various accounts of the victims of fraud MLM businesses and ponzi schemes suggest that there are more than 200 such dubious companies and business model operating in India. The SFIO, EOW of state police, and victims organisations have exposed and warned people to be wary of such businesses and companies. Below are a few prominent one, other than QNet who have been accused of defrauding investors using MLM or ponzi schemes
Speak Asia: Singapore based Online Networking Marketing Company accused of cheating customers by making them believe that they were conducting surveys for big companies. They were asked to recruit more people to get good returns.
Unipay2U: Bengaluru based company part of Unigroup defrauded investors claiming that they trade in gold and that their investment will grow manifold in a few years. Most investors lost lakhs before the company shut shop with owners absconding.
Way2Life: Another MLM company which claimed to sell health products. Thousands of investors lost their money in useless products. Changed its name to WealthLine but shutdown after causing a loss of hundreds of crores to its investors.
Bikmark: The CEO himself was arrested after it was exposed that he was planning to decamp with more than 100 crores of investors money. The company claimed endorsement of Dr. APJ Abdul Kalam. Investors were supposed to buy their products and recruit more people to earn commission.
N-Mart: The firm offered attractive incentives and commissions for its representatives who would buy and sell their products. Investors wealth was used by the promoters for personal purposes leaving thousands on investors in the lurch. The firm had collected Rs. 661.51 crore from gullible investors across the country.
QNet in its defence has put out a statement claiming that it has spoken out strongly against allegations of false claims and duping investors and insisted that it is a legitimate direct selling company. The petition of Vihaan Direct Selling in the SC in 2017 states that the business model followed by them is not a money circulation scheme as alleged and does not fall under the purview of the Prize Chits and Money Circulation (Banning) Act 1978. But the secretive way it operates its business, unknown origin of its products, unprofessional conduct and almost no help or proper communication from the company with the investors raises lot of questions.
Ananth Kumar’s innumerable mails to QNet demanding refund and cancellation of his membership were either out-rightly rejected or was told that a higher up will take up the issue which never happened. Much to his chagrin, his attempts to contact his uplines over refund were first met with disdain and then kept on postponing the dates. Few days later, they were incommunicado and soon absconded. When complained to QNet, he never received satisfactory reply from the company which washed its hands of its IRs who had defrauded him. (The complete trail of his mails to QNet and his messages to IRs is with Organiser)
Phanindra from Hyderabad has a unique story to narrate. He is a victim who turned into a whistleblower and exposed the way QNet operates. He had invested 4.5 lakh into QNet in August 2018 through a friend who did not disclose the nature of business and was not even given his login credentials to the QNet portal. “I fought against my uplines and demanded my login credentials. After much pestering I was given the login details. When I logged in I realised that others had logged into my account and brought QNet products in my name just an hour ago. I then countered my uplines on why they did it, they told that it was for my own good! I immediately stated that I wanted to return the products and demanded a refund. I was told that my money is with the company and so I have to request the company for refund. My friend who introduced me refused to help me and also denied that I had paid the 1.5 lakh in cash. I then started calling QNet to demand a refund. There was no response nor any help from them”, he recalls.
Mental Agony of the Victims of QNet “I went through lot of mental agony. I was not able to sleep and hardly slept for 2 hours every night. I could not even talk about it to my wife. Fortunately she was very supportive and asked me to forget the episode and the money for the sake of mental peace. It was only after her support that I came back to normalcy “, says Ananth. Another victim Nitin says, “I had sleepless nights and was able to recover only due to the support of my near and dear ones. But those who sign-up strangers for the business end up being pressurized by them for refund and will be under tremendous pressure”.
Venkat who hails from a humble background says that he has lost more than 10 lakhs to the QNet scam. “I was under tremendous pressure to repay the loan and also to repay those whom I had introduced to QNet. I had even tried to commit suicide due to the mental agony I had to endure. Being from a humble background and with my father being a barber, they were expecting me to tide over the financial distress at home. Hence there was no way to ask them for financial help.” A common thread most victims tell is that the QNet IRs ask new entrants not to narrate their experience to anyone saying that they will not understand the business model and could spoil their dreams.
“Due to my involvement in QNet, I did not have money on me during my marriage. I have been in the software industry for 6 years now, but I have not been able to buy even a 2-wheeler as most of my earnings goes into replaying the loans I had to borrow to repay my friends”, says Venkat in a choked voice. He says that he also suspects that some banks and the cafe Coffee Day (CCD) outlets are hands in glove with QNet scamsters. “Personal loans are sanctioned within a day when QNet is quoted and many meetings of QNet happen in CCD outlets with their knowledge”, he says.
Along with money, most victims say that they also lost valuable relationships with many friends and relatives. Such is the nature of the scam that most victims go into a shell and become introverts. Many could have taken extreme steps like suicide or becoming violent to recover their lost money. Several victims who spoke to Organiser categorically said that they considered committing suicide during the phase when they were under severe pressure and financial distress due to the scam. On the other hand, Phanindra says he knows of cases where the victims have attacked, kidnapped and even threatened to kill the IRs if their money is not refunded.
Did UPA Government Knowingly Neglect SFIO Report?
Despite such harrowing experiences of the victims being in public, hundreds of cases being filed, many politicians and stars continue to support QNet. Speak Asia, another MLM company that defrauded hundreds across the country, went to town using its proximity to several leaders of the Congress especially Oomen Chandy, who was the then CM of Kerala.
SFIO (Serious Frauds Investigation Office), under the Ministry of Corporate Affairs, in its report filed in March 2012 had revealed several damning things about QNet. The report categorically stated: "To avoid detection the Company (QNet) has tried to mislead the investigations by playing with the data. Thus, the companies are not only conducting an illegal business but are also keeping and submitting falsified documents to the regulatory agencies. Their business, operations and conduct are thus totally unfair and prejudicial to the public interest. They are also a potential threat to national security as this scheme as well as all such type of such illegal schemes (eg. Speak Asia) are being run by overseas operators and State as well as Central Government employees, either directly or through their family members / wives are also members of these schemes in large numbers and these include persons from Defence services and Ministries especially.”
The report further states, “All the persons who have earned commissions through this scheme have been recommended to be proceeded against for recovery of illegally earned money as per Prevention of Money Laundering Act.”
The SFIO report had been in knowledge of UPA for more than a year when Siddaramaiah went to China. The chargesheet filed by the Delhi Economic Offences Wing mentions Vihaan Direct Selling which is at Manyata Tech Park in Bengaluru. Further, the QI group of companies and its alleged fraudulent schemes had been discussed in the parliament in March 2013. It is hard to believe that the Chief Minister was not aware of the EOW warrant against a company in the State’s capital or the proceedings in the country’s Parliament.
Despite these evidences and grave charges against QNet and its subsidiaries, Siddaramaiah as a state’s CM found it prudent enough to meet the founder of QNet Vijay Eswaran in China in September 2013 where he had gone as an invitee to the World Economic Forum (WEF). Was this a case of ignorance or a part of a larger conspiracy to cater to the demands of his central party leaders?
Political Patronage for QNet under UPA and Cong in Karnataka
The complaint to governor of Karnataka by Gurupreet alleges that the QI group of companies were given political patronage by the UPA Government. In para 11 of his complaint he claims, “This QI group of companies and its shell companies were given political patronage by central ministers including Mr. P.Chidambrain (Mrs Nalini Chidambaram, wife of P Chidambaram was endorsing the said companies). After its bluff was called in other parts of the country and sensing that they may no longer be able to get such protection, the said Company shifted its focus to Karnataka, as Mr. Siddaramaiah, the Chief Minister of Karnataka offered them patronage and protection.”
Chidambaram and his wife have been accused of many financial irregularities and have been named in many cases of financial frauds from Aircel-Maxis case to the Rose Valley scam. It is hardly surprising that the duo are alleged to be part of yet another scam tainted company. Many victims have alleged that QNet continues to operate due to the political patronage it enjoyed under the UPA.
While Siddaramaiah meeting Mr Vijay Eswaran in China was in the news, the letter of Gurupreet claims that Siddaramaiah assured QNet of all support in Karnataka. Vijay Eshwaran by then had been proclaimed an absconder in the chargesheets. After September 2013, QNet supposedly scaled up its operations in Karnataka. Between 2014 and 2017, Gurupreet alleges that though many victims of the scam approached the police authorities with proof, the police deliberately refused to initiate investigations. The SEBI had forwarded the complaints to the state government and the EOW, but the police failed to act on them he alleges.
Victims Fight Back the Behemoth QNet
While most victims chose to remain silent sufferers and neglect their loss, many have fought back against QNet and its promoters. Gurupreet filed a case that brought the QNet fraud out in the open in 2013. He also formed an organisation to pursue the cases against QNet. Many victims all over the country have fought the scam in their own ways.
Ananth says that when he realised his folly, he thought of exposing the racket. “Even though I had been conned I wanted to stop others from getting into the fraud business. I contacted other victims and was able to gather more than 20 people in Chennai who had been conned similarly. We filed a complaint at the Chennai crime branch which was later transferred to the Economic Offenses Wing. We had also filed our compliant at the CM’s Office. I pursued the case so that others don’t get conned similarly. Many contact me to get their refunds from QNet scam. We have created WhatsApp groups to stay in touch, help each other and pursue the case”, says Ananth proudly.
Nitin from Bengaluru said that when he understood that he would not be getting his money back, he approached the police and lodged a complaint. “After the police raided couple of places where the QNet IRs meet, I got a part of money back from my friend. But my complaint against QNet was being pursued by the police. Unfortunately, the inspector who was investigating was transferred from the case after the 2016 Cauvery disturbances. The new inspector did not have either the knowledge or the wherewithal to pursue the case as it was new for him and it was a complex case to understand. “I did not know about the cases filed in Mumbai or other cities but I pursued my case so that others would not get scammed in this way and also wanted to make people aware of the QNet scam.”. Nitin further says, “I believe that we cannot lead good lives just my keeping our house clean. We must also ensure that our surroundings are clean and only then we can lead a healthy life. Likewise, if we think that whats happening to others in our city is not our concern, then we will also be affected eventually.”
Phanindra always wanted to join the military or the civil services to serve the country. Though he could not get into the military, his temperament has been that of a guardian of the society. When he realized that he was scammed the first thing he did was to track down the culprits and take the case to a logical conclusion. His efforts have led to the arrest of many employees of QNet in Bengaluru and IRs in Hyderabad. His request for refund were rejected and products were forcefully shipped to him which he refused to collect. In a true filmy episode, Phanindra traveled to Bengaluru and tracked down the godown from where the QNet products here shipped. After this episode, QNet refunded him but Phanindra had resolved to teach the fraudsters a lesson. In the 1st week of January this year, based on his complaint, the Hyderabad police sent a team to nab the culprits. QNet had already arranged a battery of lawyers to defend the accused. The accused were brought to Hyderabad and the police appraised the public of the scam and requested anyone with a grievance to approach them.
“Though they got bail and many more were arrested in subsequent days, I tried to help more people who were victims of the scam. I wish to continue to do so. I wanted to join the Army or the civil services and serve the country but I consider this as an equally important service to the society. It is this temperament that helped me to fight against a behemoth like QNet and continue my struggle against the scam”, says Phanindra.
QNet Scam Continues to Defraud the Youth
According to the Direct Selling Guidelines, 2016, issued by the Ministry of Consumer Affairs, Food & Public Distribution, an MLM model (pyramid scheme) where revenue is generated simply on the basis of recruiting new subscribers/distributors is prohibited. Along with this, as per the Prize Chits And Money Circulation Schemes (Banning) Act, 1978, enticing new subscribers to join a quickmoney-making scheme where revenue is generated by the enrolment of new members is a cognizable offence. But in reality, many companies use a business model which serves as facade to portray it as legitimate, while underneath lies a Ponzi scheme. Companies like SpeakAsia, which was in the magazine and survey business, PACL and Saradha, in which Nalini Chidambaram is an accused, have turned out to be scams which were perpetrated with political patronage. Though cases against QNet’s are still in courts, the company continues to recruit more people while using its advertisements and star endorsements to imply credibility and legitimacy.
As the QNet continues to operate in different states, scam whistleblower Gurupreet Singh has written to the Chief Minister of Maharashtra Devendra Fadnavis demanding transfer of the probe of QNet scam to the Central Bureau of Investigation (CBI) for a ‘free and fair’ inquiry.
The Bombay High Court in May 2016, while rejecting the anticipatory bail applications of the accused including Micheal Ferreira, in the QNet scam had observed that "the deceit and fraud is camouflaged under the name of e-marketing and business". The order said, "The motto of the company 'sell more, earn more' appears very attractive and innocuous. However, this motto is fully camouflaged. The company stands on a basic statement that people can be fooled. Thus, the true motto is 'sell more earn more' by fooling people. In fact it is a chain where a person is fooled and then he is trained to fool others to earn money. For that purpose, workshops are conducted where study and business material is provided with a jugglery of words, promises and dreams. Thus, the deceit and fraud is camouflaged under the name of e-¬marketing and business. It has very grave and serious impact on the economic status and mental health of the people on a large scale.” It further observed that, “It is necessary for the prosecution to take injunctive steps against this business activity, which is prima facie, illegal. Though by stopping this business, a large group of people may get financially affected, however, it will save larger groups of people from becoming prey of this activity," the Bombay HC said.
Raghav, a victim-turned whistleblower says, “QNet kind of scams are affecting the economy and productivity of the country. This is because most of those who get into the QNet network are between the age of 20 to 28 and wish to make quick money. The country is losing out on their productivity when they are in their prime. Among those who have been scammed, their personal and professional lives have been badly affected. They are becoming under-performers in their jobs affecting the productivity. Along with reducing their confidence, this is affecting the confidence of the entire system. This is because, your confidence in investing money would have gone down and you will fear investing in genuine companies, shares or stock market. In effect, the country is the loser. The rotation of money within the country is affected thus crippling the backbone of our economy. Mind you, all this money people put into QNet is not within India but is going out to Malaysia or Singapore or some other country”, warns Raghav.
As revealed by the victims and activists like Phanindra and Raghav to Organiser, the QNet business model continues to defraud people because of two primary reasons. One, the government and police have to come together to crack down on fraudsters without coming under the influence of the high and mighty; Two, lack of knowledge about the scam in general public, especially the youth who wish to make quick money. Unless and until this happens, it would be near impossible to stop the scam. The media too has a role to play in highlighting the cases time and again until the authorities take serious note of it and in the process educating more and more people to not fall into the trap of such fraudulent schemes. Gurupreet, Phanindra, Ananth Kumar, Nitin, Venkat and others are only a handful of individuals who are standing against the might of a conglomerate and their high and mighty backers. They are doing it only to avoid others from falling into a trap. The country today needs more such individuals who see it as their duty to stay alert and fight it out against the offenders of the country rather than only demand our rights or just being a mute spectator.