Duo in India caught carrying out ₹12 billion multi-level marketing scheme

• Radheshyam and Surender Singh worked in cohesion to dupe nearly 2 million people out of ₹12 billion.
• Together they ran a multi-level marketing scheme (MLM) scheme promising quick returns on investment.
  
• The Cyberabad Police has detained the two perpetrators but a third is still on the loose.

A class VII dropout and a graduate worked hand-in-hand to carry out a multi-level marketing scheme (MLM) in India conning over 2 million people out of ₹12 billion ($166 million). While Radheshyam and Surender Singh are in custody, a third perpetrator is still on the run.

The Economic Offences Wing (EOW) of the Cyberabad Police in Hyderabad, India confiscated ₹2 billion from the bank account’s of the accused after a citizen from Kukatpally altered the authorities about suspicious activity.

Modus operandi

Their plan was simple. Set up an investment company and use a binary scheme to lure in people with the promise of quick returns on small investments. All the while, aim for gullible individuals who would fall for the promise of a high income.

According to the police, the duo set up Future Maker Life Care Global Marketing Pvt Ltd (FLMC) with Radheshyam as the chairman and Surender Singh as the distributor three months ago. They even registered it with the Registrar of Companies.

Thus, began their operation in Hyderabad of entrapping more than 20,000 customers, most of whom were from the states of Haryana, Madhya Pradesh, Maharashtra and Orissa. The target demographic was youngsters, homemakers and retired employees.

The scheme itself was a binary model. Once a person signed up for it with an initial fee of ₹7500, they would have to get two more people to sign up creating a never-ending chain. And since it’s a never ending chain, it leads to a mathematical impossibility and ultimately cheating.

It’s the simplest version of a pyramid scheme. Recruitment came with the promise ₹500 commission on top of the ₹2500 that would be paid out every month for the next two years.

That’s a total of ₹60,000 ($830) in two years with a principal amount of ₹7500 ($104).

They’ve been charged under Section 3 of the Prize Chits and Money Circulation Schemes (PCMCS) Act of 1978, where it’s not only illegal to initiate such scheme but it’s also illegal to participate in them.

Any propagators of the scheme are held liable under Section 420 of the Indian Penal Code.