Two of the alleged kingpins of the scam surrendered before a court over the weekend after complaints by people who said they had been duped drove them underground over a month ago, and forced the police to issue a lookout notice for them.
Following a high-level meeting in Kochi on Sunday, state DGP Jacob Punnoose said initial investigations indicated that the alleged scam could be worth Rs 1,000 crore.
"A money-chain dealer had deposited Rs 300 crore taken from investors into 14 accounts opened in a bank using fake identities," Punnoose said. "The police will investigate whether banks were also involved in the scam."
Cases would be registered against the money-chain dealers and their agents who had brought thousands of people into the network, the DGP said. A money-chain scheme works by offering incentives to investors who bring in more investors into the scheme.
Police began investigations into dubious financial institutions offering large returns in a short time after a flood of complaints about Kochi-based real estate developer Apple A Day Properties Ltd. Investors who had bought villas and flats complained that they had suffered a cumulative loss of Rs 150 crore after the company defaulted on its promise to hand over their properties.
The complaints from the customers of Apple A Day — whose promoters surrendered on Saturday — quickly spun out into similar complaints against several other real estate developers in Kochi, brought into focus thriving money-chain networks across the state. Some of these fraudulent investment schemes allegedly offered monthly returns of Rs 10,000 on an investment of Rs 1 lakh.
In the manner of a classic Ponzi fraud, initial investors were given the promised returns, and incentivised to bring in more and more people into the scheme.
Investigating Officer P P Sadannandan said a Chennai-based company had defrauded investors in Kerala of Rs 370 crore through the scheme. "The company had accounts in prominent banks, but took the money out before the police raided. We have arrested two senior agents who brought around 20,000 people into the network," he said.
At a public function yesterday, Chief Minister Oommen Chandy said his government had been "forced to take action against financial institutions which lure depositors with tall promises".
SOURCES : The Indian Express
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