Hyd cops bust multi-level marketing scam worth Rs 1,000 cr

The police said that the company was established in 2001 and had allegedly cheated over 7 lakh people across the country.

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The Cyberabad Police on Tuesday busted a fraudulent Multi-Level Marketing (MLM) scheme that allegedly cheated over 7 lakh people to the tune of more than Rs 1,000 crore. The police said that the company in question, eBiz.com Pvt Ltd, had cases registered against them at Warangal and Adilabad in Telangana besides many other cases across the country.

"eBiz.com Pvt. Ltd is a Money Circulation company (MLM Company) established in 2001 based in Noida in Uttar Pradesh. It was registered with Registrar of Companies (ROC) in New Delhi. Its Managing Director is Pavan Malhan. His wife Anitha Malhan is director and his son Hitik Malhan looks after the company affairs. The Company has got around 7 lakhs representatives as its members. The promoters give motivational lectures to the public especially targeting students and unemployed youth stating that there is a business opportunity project which will yield huge profits to them. Their main focus was to enroll students," the Cyberabad police said in a press note.

Elaborating on the modus operandi, the police said, "At first, the promoters say to the newcomers that there are various business opportunities to earn easy and quick money along with e-learning projects. The promoters trap the new comers (students) stating that they will be a part of the eBiz 'kingdom' where they can build their own future. They say that if the newcomers who paid money don’t like eBiz business packages, they can claim their refund within a month. But in fact, the promoters will drag the one-month period by giving motivational classes, training sessions and also providing books."

The police said that once a newcomer is convinced to pay money through someone who has referred them to the company, they become a representative.

"The promoter then says to the representatives that to get money, he/she has to enroll three other members. As the number of persons increases down the line, the ones on top get more money as commissions. The eBiz business model is a simple pyramid," the police added.

The police said that one person was arrested and a case was registered under Sections 406 (Criminal breach of trust), 420 (Cheating), 506 (Criminal intimidation) of the IPC besides relevant sections of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978.