Publication:Bhadas 4 Media

Date Of Publication:02-05-13

New Delhi : In 1919, Carlo Ponzi started the scheme for which he became famous: he paid off early investors with money taken in by later investors by creating a consumer stampede with hype of phenomenal returns within a very short period of time. Ponzi exploited the investor market by approaching people most likely to trust him — his family and friends, his Catholic priest, and some neighbors from whom he collected a total of about $1250. Ninety days later, he returned $750 in “interest”. His ecstatic original investors unwittingly did his marketing for him — they told everyone they knew about this “bonanza,” and investments snowballed.

The party did not last. Within a year, a suspicious Boston Post’s front page questioned the legitimacy of the enterprise. Investors panicked and demanded their money back. It’s a bit difficult to give it back once it’s spent! Without the false hype to induce new participants, Ponzi’s scheme folded. Most of his 40,000 investors lost everything they had invested.

Fast forward to 2013, the scene hasn’t changed much; only the operators, victims have new faces. Ponzi changed name to MLM- Multi Level Marketing. Of course, the magnitude has undergone a sea-change, heading north. One of the most unsavory aspects of globalization and a growing economy is that this aspect of white-collar crime, has gained wings. Fraudulent mass-marketers reach victims via all modes of communication—postal service, telephone, e-mail, Internet sites, television, radio, and even in person. Viable multi-level marketing fraud groups require a variety of resources to operate, including the means to target and communicate with prospective victims, obtain and launder illicit proceeds, and evade law enforcement detection and investigation. These include legitimate business services, communications tools, payment processors, fraudulent identification documents, and even counterfeit financial instruments.

As a whole, nowadays, fraudulent multi-level marketing operations are increasingly transnational, interconnected, and fluid, with groups shifting alliances according to the particular needs of a scheme.

The results are unbearable, tragic.

§ For some victims, the risks extend well beyond loss of personal savings or funds to include physical threats or risks, loss of their homes, depression, and even contemplated, attempted, or actual suicide.

§ Multi level marketing fraud has a substantial impact on economies and markets by undermining consumer trust and confidence in legitimate businesses.

Operators of MLM fraud schemes are highly adaptive, rapidly changing their methods and techniques to reduce the risks of law enforcement detection and investigation and to respond to consumer and business awareness of their current methods.

But what all these scams, one after another, reveal is we haven’t learned any lesson from our previous outings. We make a huge hue & cry, play the blame game for a while, and very soon forget everything till the next attack!

When the outrage is over ‘rape’ we blame the Police authorities who in turn fortify the roads for a few days, force shut the shops early and relax thereafter, till the next victim surfaces.

When it a financial scam, whoever pulls it, the easy way out is ‘blame it on Chit Fund’, with an attitude of who cares what is a chit fund?.

The authorities, even those hand-in-gloves with the unscrupulous, Politicians, and more importantly the media who in their pursuit to garner more TRPs/Readership and outwit competition turn their backs to the facts and hurry to find a scapegoat, which can sensationalize the whole issue for a while, till the next ‘breaking news’ .

Unfortunately, more often than not, it’s is a financial scam and the scapegoat; always is ‘Chit Funds’. In the case in question the ‘Saradha Group’ it could be seen that they had varied business interests with around hundred and odd companies which were in Realty, Construction, Tours & Travels, Exports, Agro, Livestock, Foods, Multipurpose, Ad agency and of course, presence in media with their 24 hour ‘channel 10’ and also newspapers and magazines. However, what is quite glaring is that they did not float any ‘Chit Fund’ company, yet their scam/failure is attributed to Chit Funds!