Ponzi scheme promising a 400% return crackedhttps://indianexpress.com/article/news-archive/web/ponzi-scheme-promising-a-400-return-cracked/

Ponzi scheme promising a 400% return cracked

Rs 1,300 cr unearthed; officials of four Indian banks,FIIs involved

India’s economic intelligence and enforcement agencies have cracked an international ponzi scheme called Private Partnership Programme involving officials of four Indian banks as well as foreign investor institutions and unearthed Rs 1,300 crore of allegedly unaccounted income.

The amount detected by the income-tax department apparently relates to just three individual cases linked to the scheme. The scheme promises a 400 per cent return if an investor blocks Rs 10 crore or more in an Indian bank account for 41 days. Investigators suspect that it is a ploy to route money stashed abroad through banking channels.

On April 26,the Central Economic Intelligence Bureau wrote to the Enforcement Directorate requesting it to probe the case under the Prevention of Money Laundering Act and Foreign Exchange Management Act to hunt the perpetrators and detect the returns earned through the scheme.

The move came after the income-tax department expressed its reluctance to conduct a criminal investigation and requested the government to involve the ED,EOW,NIA,CBI,FIU and IB. the income-tax department had submitted a status report to the Economic Intelligence Committee meeting chaired by Finance Minister P Chidambaram on February 8 and submitted details of the Rs 1,300 crore.


“The information was received from CEIB regarding investment programmes called as Ponzi schemes or Private Placement Programmes,in which high networth individuals/corporate as investors,agents or middlemen as commission receivers programmers/representatives on behalf of sponsors of this scheme are main players (sic),” says an income-tax department note accessed by The Indian Express.

“It was revealed that certain agents along with programmers of ponzi scheme have been trying to perpetrate some sort of crime as the case may be on gullible investors and also financial institutions such as banks. It is also found that bank officials have actively connived with the fraudulent investors by creating safekeeping receipts on the basis of bogus documents,forged demand drafts of reputed banks,fake FDRs. It is also detected money laundering,benami concerns,gold in lieu of cash,entry operators providing bogus bills to evade taxes…(sic).’’

The income-tax department also has documents signed by bank managers,who certified that the money being blocked under PPP is clean and free from encumbrance.

The main features of the ponzi scheme is that the investor should have a minimum of Rs 10 crore and the money should not be linked to crime and should be routed through banking channels. The Indian investor will be required to authorise a foreign trading company to obtain a line of credit from a foreign bank on the basis of the deposits made in Indian banks. The deposits in Indian banks should be kept for a specified period and the Indian investor has to give information as required by KYC norms of Swiss banks.

Sources said that the revenue secretary has directed investigating agencies to take the probe to a logical conclusion and unearth the returns,if any,deposited in banks.