MARKET RISK
by Ajay Sukumaran in BangaloreA
Ponzi scheme gone bust, its pro-
moter on the run and thousands
of depositors left high and dry.
An all too familiar story has
been playing out in Bangalore
since the I Monetary Advisory
(IMA) group, which promised inves-
tors high returns, downed shutters in
early June. Every day, scores of people
have been queuing up to file police
complaints—nearly 42,000 complaints
have been received so far, according to
a Special Investigating Team (SIT) that
has been set up to probe the scam
which, estimates suggest, could run
upto Rs 1,500 crore.
The unravelling was dramatic eno
ugh—a viral audio message purportedly
by the firm’s founder Mohammed Man
soor Khan talking about ending his life
and accusing politicians and officials of
ruining him. Khan has been absconding
since. He surfaced this week with a video
message saying he was ready to return to
India to face the probe and help pay back
investors. Again, he cryptically ‘thanked’
a slew of local politicians and businessmen for his current situation.
The Bangalore police have got his pass
port suspended and have initiated an
Interpol blue corner notice for Khan who,
they suspect, is in UAE. Meanwhile, the
Enforcement Directorate has issued him
summons for a probe into money laun
dering. All the while, complaints from
depositors have been pouring in.
“The investigation is at a preliminary
stage,” says an SIT officer, adding that
about Rs 250 crore worth of property—
gold and real estate—have been identified
so far. Investigators now say that Khan
was running a ponzi scheme using the
facade of a limited liability partnership
firm to convince his depositors, mostly
Muslims, that the business was Sharia
compliant: that they weren’t earning int
erest, which is forbidden according to
Sharia law, but getting a share of profits
primarily from his bullion trading busi
ness. Khan had started the IMA group in
2006 but it was only in the last few years
that he became really popular, building
up a chain of gold jewellery outlets,
pharma retail and grocery stores besides
getting into real estate development.
Investigators say that Khan merely rotated money, paying depositors high ret
urns from the new clients who came in.
Now IMA’s depositors are in utter des
pair, and confusion. “Why would he run
away if he had these many assets?” asks
an MNC employee who had put in part of
his insurance money into IMA in
November. Like many, he too had heard
of IMA from friends and relatives who
had parked their money there. “It looked
legitimate because he was running many
businesses. I had been to their office
thrice and they explained that the
monthly profits we were getting came
from these businesses,” says this person.
He had received ‘profits’ on his invest
ment every month until March, when
they suddenly stopped coming.
The lure of high return attracted people
from all strata of society. Police say some
of them even mortgaged property to inv
est in the firm. There were about 72,
people on the books, according to a senior
officer. Even as late as June 5, Khan put a
message to investors on his company’s
YouTube channel assuring that pending
monthly payments would be cleared soon
and that some hiccups were being sorted
out. The police say he left the country onIn Karnataka, a Rs 1,500-crore ponzi scheme
leaves 75,000-odd investors in the lurchThe Hen
Faked Gold
10 OUTLOOK 8 July 2019