The Enforcement Directorate (ED) conducted extensive raids across Kerala, Maharashtra, and Chhattisgarh as part of a money laundering investigation against HighRich Online Group, a Kerala-based company accused of duping depositors of approximately Rs 1,500 crore through a Ponzi scheme.
The raids, which commenced on June 11, targeted the company’s promoters and resulted in significant findings, including:
- Freezing of Rs 32 crore in various bank accounts belonging to the company, its promoters, and their family members.
- Seizure of Rs 70 lakh in cash, jewelry, and four vehicles.
- Identification of immovable properties worth Rs 15 crore, acquired using the proceeds of the crime.
Modus Operandi: MLM Disguised as Crypto Trading.
HighRich Online Group has allegedly conducted activities in multi-level marketing schemes disguised as cryptocurrency trading and membership programs. Some key highlights of its operations have included the following:
HR Crypto Coin:
- It issued its own crypto coin, which it marketed in exchange for Indian Rupees and USDT – a crypto pegged to the dollar.
- Prospects were assured of a 15% annual return as well as referral rewards of 30% when they brought in new customers.
Sales of Membership
- The Digital ID were sold as memberships offering credentials that allow access to their site, www.highrich.net.
- Members earned commissions by selling these digital IDs to new recruits, thereby creating a pyramid.
Lack of Real Business:
- The ED pointed out that no real business or sale of goods existed.
- Funds collected from new members were redistributed as rewards to members at the top of the pyramid, which is a hallmark of Ponzi schemes.
The scale of the Fraud
The ED revealed that HighRich Online Group amassed Rs 1,500 crore through this fraudulent MLM scheme.
- Rs 250 crore was siphoned off as profits by the promoters, K.D. Prathapan and Sreena Prathapan, through family members and associated entities.
Further Revelations
The investigation revealed that the promoters were trading in cryptocurrencies through multiple exchanges. Their cryptocurrency transactions were intricately interwoven with the Ponzi scheme, making it even more complex and wider-reaching.
A Wake-Up Call
This case shines a light on the growing danger of Ponzi schemes masquerading as legitimate business models, particularly in the realm of cryptocurrency and multi-level marketing. Investors need to be vigilant and verify the authenticity of such schemes before parting with their hard-earned money.
Further investigation is undergoing by the ED to recover other assets as well as bring the perpetrators under the judicial net.
