Following a raid on various locations belonging to a ‘direct selling’ business that is alleged to have defrauded numerous investors, the Enforcement Directorate (ED) has frozen 36 bank accounts totaling more than Rs 90 crore.
The Indian Direct Selling Association defines the term ‘direct selling’ as simply selling directly to end users through a retail channel that is utilised by both major international brands and smaller, entrepreneurial businesses to market goods and services to consumers.
In connection with a money laundering case against Vihaan Direct Selling India Private Limited, the master franchisee company of Qnet Ltd in India, the ED searched five locations in Mumbai, two locations in Chennai, and two locations in Bangalore on Tuesday. Various incriminating documents and digital devices were seized as a result of search operations.
The federal agency said in a statement on Wednesday that it had ‘frozen a total of 36 bank accounts related to various companies, individuals, and proprietorship connected with the case with amounts involving more than Rs 90 crore’ during the searches.
Based on a FIR filed by the Mumbai Police’s Economic Offences Wing against Qnet Ltd, Vijay Eswaran, Vihaan Direct Selling (India) Pvt. Ltd, and other businesses and people, the ED opened a money laundering case.
The ED found during its investigation that Vihaan Direct Selling India Pvt. Ltd, a master franchise of M/s Qnet in India, used/floated multiple shell companies/dummy proprietorships for the purpose of rerouting funds received from a significant number of investors. According to an ED statement, ‘Vihaan Direct Selling India Pvt. Ltd. has defrauded a significant number of innocent investors in India by having them invest their hard-earned money in the Ponzi scheme under the guise of direct selling business.’
According to the agency, the investors were defrauded of their hard-earned money under the guise of huge profits without being informed of the nature of the business or the specifics of how their invested money was used.
The estimated proceeds of the crime, according to the EOW FIR, total about Rs 4,000 crore. However, it was found during the course of the investigation that these entities opened numerous shell companies in order to transfer more than Rs. 2,000 crore.
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