Search This Blog

Labels

Tuesday, May 28, 2013

Ponzi scheme .... cheating..... away - Amway India CEO arrested in Kerala

One need not only be good; but has to be in good company too… this is nothing on IPL or on match-fixing

Head of this Italian businessman - Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi !  Even the most intelligent and thoughtful sometimes slip and fall….a few years ago, somebody promoted scheme wherein you put money, then enroll friends under you – the friends enroll more people and money would keep flowing …. A chain scheme and you get introductory gifts and many more….. me, though not averse to indulging in forms of gambling still was not attracted – some of my friends did and………………………………….

You sure know this ~ perhaps directly – knowing, buying or even selling its products… ‘Amway’ - (short for American Way), an American multinational direct-selling company that sells a variety of products, primarily in the health, beauty, and home care markets to consumers and independent business owners. mway was founded in 1959 by Jay Van Andel and Richard DeVos. Based in Ada, Michigan. Amway conducts business through a number of affiliated companies in more than a hundred countries and territories around the world. Many believe that Amway products are good quality though somewhat expensive.

Amway has no shops; you would not find its products in Supermarkets ~  but sells through MLM. Multi-level marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of the other salespeople that they recruit. This recruited sales force is referred to as the participant's "downline", and can provide multiple levels of compensation.  It is also known as ‘pyramid selling’. Most commonly, the salespeople are expected to sell products directly to consumers by means of relationship referrals and word of mouth marketing.

In West Bengal there is news of another death…… 18th since the Saradha Group meltdown in West Bengal. Reports state that Swapan Majumdar (42) hanged himself from the iron railing of the terrace of his two-storeyed house at Belghoria in the northern suburbs of Kolkata around Saturday midnight. Majumdar was an agent of Ramel Group of Industries, a Kolkata-based money marketing company. He had collected Rs 16-17 lakh from around 65 depositors in the Belghoria-Sodepur region over three years.  Formerly a private tutor, Majumdar was known as a man of integrity and was implicitly trusted by depositors, his family said. Despite payment defaults, he didn't face threats or abuses but was on the edge  when hundreds of the depositors protested in front of the Sodepur office asking for their money.

From Kerala comes the news that Amway India CEO, MD  is arrested for financial fraud.  First Post quoting Mathrubumi  reports that the Kerala Crime Branch has arrested Amway India Managing Director and CEO William Scott Pinckney and two other directors of the network marketing company. Amway has been accused of selling low- priced products at inflated prices. The arrests have been made in relation to two cases of fraud registered against the Pinckney in Wayanad district of Kerala, the report said. He was in Kerala to secure anticipatory bail in these cases. He has already got a bail in another case registered against him in Kozhikode district.

According to a report in India Today, Pinckney, Sanjay Malhotra and Anshu Budhraja were questioned earlier this month and asked to report to the police on Monday, when they were again interrogated by the Economic Offences Wing and later arrested by the Wayanad police. Earlier, the Crime Branch had seized products worth Rs 2.5 crore from various go-downs across the state and arrested the Kerala chief of the company. After this arrest, the crime branch had decided to probe Amway’s insurance business, an earlier Mathrubhumi reportsaid.

There were complaints that Amway had supplied new products to distributors at high price. Lakhs of rupees thus collected was invested in the insurance business, the report said. A probe into the multilevel marketing firm found that products that were Rs 37 was sold to consumers for Rs 395 as MRP. The investigation was conducted after Vishalakshi from Kozhikode complained that she lost Rs 3 lakh on selling Amway products.

Now coming to Ponzi ~  Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from profit earned by the individual or organization running the operation. The scheme is named after Charles Ponzi.   This Italian businessman became known in the early 1920s as a swindler in North America for his money making scheme. Charles Ponzi promised clients a 50% profit within 45 days, or 100% profit within 90 days, by buying discounted postal reply coupons in other countries and redeeming them at face value in the United States as a form of arbitrage.

With regards – S. Sampathkumar

28th May 2013

No comments:

Post a Comment