Balasore court awards 7-year RI to Gwalior based chit fund firm’s staff for duping 500 people in MLM scheme

OPID court in Balasore on Thursday awarded seven-year rigorous imprisonment to a person from Gwalior who allegedly cheated as many as 500 people in MLM scheme. The court also imposed a fine of Rs 3.4 lakh on him.

The accused has been identified as Babu Singh Kushwaha who is the Director and promoter of M/s Auroxa Deal Multitrade (OPC) Pvt. Ltd.

Similarly, up-line members Sarat Kumar Nayak and Pravat Ranjan Das were also held guilty and sentenced to undergo rigorous imprisonment for five years and slapped a fine of Rs 1.25 lakh on each.

As per the order of the court, on default of fine all the convicts will undergo further imprisonment of one year each. Further, the company represented through Khushwaha was found guilty and sentenced to pay fine of Rs 2 lakh.

As per reports, the case was registered pursuant to an enquiry conducted by EOW on a petition filed by Chandra Kanta Dash and others against the company and its Director on the allegation of duping as many as 500 gullible depositors of more than Rs 10 crore under false promise of high returns on their deposits and investment in different schemes launched by the company.  

The company is registered with ROC, Gwalior in Madhya Pradesh. The convict Kushwaha is its lone Director. The company under various lucrative schemes and packages promoted direct selling of various household goods and electronic goods with high returns having cash back offers. The collection of deposits by the company under the cover or mask of direct selling was nothing but running of Ponzi schemes. The business model of the company is pyramidal MLM in nature, working as a MLM in which the early entrants are profited, and as the number of investors and depositors increases, the scheme collapses at certain point. Thus, the new and down line members are made to suffer. Thus the fraud was camouflaged under the name of direct selling and marketing of different commodities.

The company had floated various lucrative schemes and packages under which products like LED TV, smart TV, trolley bag, mixture grinder, LED smart fan are being offered to the public under direct selling with high returns having cash back offers like 10% matching income and bonus for enrolling investors downline.

As per the offers, there was daily cash back for 250 days and booster income and bonus for every two direct sponsors. As per the brochures circulated by the company, there are eight number of schemes ranging from the investment amount of Rs 1500 to Rs 1,00,000- carrying daily cash back offer of Rs 11 to Rs 800 for a period of 250 days. Besides, the company also offered various reward incomes like star achiever to Emerald star achiever with reward income of Rs 5000, mobile phone, furniture depending upon the target achievement within 30 days to 150 days for enrolling down line depositors.

However, as found on investigation, the company through its Director Kushwaha and up-line members Sarat Nayak and Pravat Ranjan Das has collected Rs 10 crore from more than 500 investors. The Company had its activities mainly in Balasore and Bhadrak districts and their peripheral areas.

During investigation, Kushwaha was arrested from Gwalior whereas Nayak and Das were arrested from Balasore. Two charge sheets were filed in the case on June 8, 2022 and December 12, 2023.