ED raids Kerala-based ponzi company that duped depositors of ₹1,500 crore

There is no real underlying business of sale of goods and this is the typical modus operandi of a Ponzi scheme, it said.

ByPTI

Published Jun 15, 2024 | 12:48 PM Updated Jun 15, 2024 | 12:48 PM

Financial fraud (Creative Commons)

The Enforcement Directorate Friday, 14 June, said it raided multiple locations in various states as part of a money laundering investigation against a Kerala-based company that allegedly duped depositors to the tune of ₹1,500 crore through a ponzi scheme.

The searches were launched on 11 June on the premises of the promoters of HighRich Online Group in Kerala, Maharashtra and Chhattisgarh.

The money laundering case stems from multiple FIRs filed by the Kerala Police.

The searches have led to the freezing of around ₹32 crore of proceeds of crime in various bank accounts of the company, promoters and their family members, seizure of about ₹70 lakh in cash, jewellery and four four-wheeled vehicles, the central agency said in a statement.

“The search also led to tracing of immovable properties worth ₹15 crore with promoters and various leaders of HighRich Online group which have been acquired out of the proceeds of crime.”

Trading in cryptocurrency

“Searches have also revealed that the company and its promoters and leaders were involved in trading in cryptocurrency on few exchanges and sold their own so-called crypto coin named HR Crypto Coin,” it said.

The crypto coin, the agency claimed, was sold in exchange for Indian rupee and USDT (a type of crypto currency) and it was also a part of ponzi scheme where people were lured to invest their money for which they got 15 percent interest per year.

When the customer introduced a new customer, they got 30 percent direct referral income, it said.

The agency said the company was selling the memberships in the form of digital IDs which consisted of the user credentials (user name and password) of the individual investors to access the website—www.highrich.net.

“The members would further sell the memberships/digital ids to other people to earn commission,” the ED said.

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Modus operandi

It was found that the company would give incentives to these individuals when they refer new members to join the marketing scheme which is nothing but sharing of the commission received on joining of new members, the agency said.

There is no real underlying business of sale of goods and this is the typical modus operandi of a Ponzi scheme, it said.

“The total amount collected from people at large in this Ponzi type MLM (multi-level marketing) scheme is approximately ₹1,500 crore, ” the ED said.

The collected money was partly redistributed as rewards to the members of the scheme at the top of the pyramid and the profit of around ₹250 Crore was siphoned off by the promoters of the company like KD Prathapan, Sreena Prathapan through their family members and various entities, the agency said.

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