Victims of fraudulent investment schemes talk about humiliating times

Victims find financial relief as EOW's Refund Unit starts returning money to those who had invested in fraudulent schemes, but say that memories of humiliation will remain; cops hope exercise will help build better relations

The Refund Unit office at Byculla. Pic/SAYYED SAMEER ABEDI
The Refund Unit office at Byculla. Pic/SAYYED SAMEER ABEDI

"Things may not change much with this money," says Nalasopara resident Sunil Manchedar as he holds a cheque for Rs 400 in his hand, but adds, "However, it has our faith in the police."

Manchedar, 38, is among several people who have been cheated via various fraudulent investment schemes in the city, and are now beginning to receive their money back thanks to directions by the Maharashtra Protection of Interests of Depositors Act (MPID) Court to the Economic Offences Wing (EOW) in 2016.

Manchedar, who works at a private firm, says he was just a teenager when he heard of the Kokan Park scheme [see box: The schemes that duped thousands]. "They had an office at Dadar's Manish Market. My parents — father was a mill worker and mother, a househelp — had some savings and we decided to invest Rs 10,000 in the scheme. The company claimed it would double within six months. I remember how we planned what we would do with the profits."

Their dreams crashed when within a month, they realised that they had been duped. "Their office shifted. We were shocked, Rs 10,000 was a big amount."

The call a few weeks ago from EOW informing them that they'd get the amount, albeit in parts, was a relief.

"I received a cheque of Rs 400 initially. This was unexpected. I thought I wouldn't get a single penny…"

Push for a separate team
When the Special MPID court in April 2017 instructed EOW's Unit 7 to start refunding money to victims of CU Marketing firm's cheating cases, EOW officials realised that they had a mammoth task at hand — delivering over hundreds of crores of rupees to over 30,000 investors.

With a staff strength of 17, lower rung EOW officials suggested to joint commissioner of police (EOW) Ashutosh Dumbre and DCP Parag Manere to constitute a dedicated unit for the job. With help from the then session judge Dinesh Surana of the MPID court, the two senior officers then drafted a proposal which was approved by Mumbai police commissioner Datta Padsalgikar. The Refund Unit started operating out of the Byculla traffic police training center in June this year.

The cell has started proceedings to return nearly Rs 489 crore to 35,000 investors of nine companies all of which were floated between 1997 and 2005. The new unit plans to refund over Rs 3,000 crore to over 2 lakh victims in one year.

Senior inspector, EOW, Sudarshan Paithankar says the refund was delayed due to the question over the validity of the MPID Act.

On September 5, 2005, the Bombay High Court had declared the Act to be "unconstitutional," saying it was outside the competence of the Maharashtra legislature to enact such an act, as banking was in the Union List under the Constitution. In May 2011, the Supreme Court set aside HC's judgment and declared the MPID Act valid.

Mumbai police spokesperson DCP Rashmi Karandikar said, "Setting up the Refund Unit is a small step towards keeping the public's faith in the system. The one window system will ensure timely refund, as per court's order, in systematic and transparent manner to the investors."

With inputs from Anurag Kambale and Sailee Dhayalkar

Since 2005, Geeta Kamath has attended nearly every court session, travelling from Vasai Village to Fort. Pic/SATEJ SHINDE
Since 2005, Geeta Kamath has attended nearly every court session, travelling from Vasai Village to Fort. Pic/SATEJ SHINDE

'Aside from a handful, no one will return my money'
Geeta Kamath
55, Vasai
Duped by: Medicare Life Insurance India
geeta kamath worked as a post office collection agent before joining Medicare Life Insurance India as an agent. Kamath, whose husband is an auto-rickshaw driver, today regrets leaving the old job. Not only did the new firm cheat her of her own money, but also put her in a sticky situation with the several people she convinced to invest in their dubious schemes.

Kamath had invested Rs 26,000 in 2002 in the company as the company's director Manohar Pol and his wife Kusum were once her neighbours. Not just did she invest money with a hope of a 10 per cent annual return, but also brought in 45 more investors, including relatives and friends at a 8 per cent commission for each. While the firm, till 2002 paid the money to investors, in 2003 it started defaulting on payments and, by 2004, stopped returning money entirely.

"Associating with them was the biggest mistake of my life as I not only lost money but was blamed by investors who held me responsible for being their money, a total of Rs 15 lakh," she adds.

"I was harassed, taunted and humiliated in public at the hands of these investors. I was left with no option but repaying them from my own pocket. I took loans, sold jewellery and managed to pay back about Rs 4 lakh."

"It was a moment of joy for her when the judge announced that the money would be returned," says Kamath who duly attended every court session for 12 years. "It has been a period of sorrow and struggle. The worst part is that those to whom I returned the money will now also get compensated by the court, but aside from a handful, no one will return my money. No relations or friendships remain intact when money is involved.

Yet, alls well that ends well," she says.

Priyanka Bamne got 62 others to invest in the scheme. Pic/SATEJ SHINDE
Priyanka Bamne got 62 others to invest in the scheme. Pic/SATEJ SHINDE

'I paid nearly Rs 60,000 to investors from my own pocket'
Priyanka Bamne
54, Borivli
Duped By: Medicare Life Insurance India
Like Kamath, Priyanka Bamne was an agent at Medicare Life Insurance India and was associated with them from 1994 till it shut down in 2002. Over this period, she roped in 62 investors and says she never got the promised eight per cent commission.

"The investors harassed me even though they knew that I was not responsible for their loss. I was abused and humiliated in front of my neighbours and even on the street by investors who would confront me in public. To escape them I would often lock up my home and stay out for the whole day. I'd regularly change my route and spend an entire day on Borivli station to avoid embarrassing encounters with investors. I was suffering as if I had committed the fraud. In order to prevent further harassment to my family, I repaid nearly Rs 60,000 from my pocket. Many of these investors would now be get twice the money they invested, but none have said anything about returning my money." Like Bamne and Kamath, Uma Bhave and Shraddha Devrukhkar are among a handful of agents who fought the legal battle.

Sunil Vichare tried to pay the investors from his own pocket
Sunil Vichare tried to pay the investors from his own pocket

'Lost my house and savings to ponzi sceme'
Sunil Vichare
46, Bhayander
Duped by: Medicare Life Insurance India
"My heart would start racing each time my phone rang, thinking it would be an abusive call from an investor," says Sunil Vichare, who had invested Rs 63,000 in the Medicare Life Insurance India Company and, as an agent, made 17 relatives and friends invest too.

A few months ago, he received double the amount (Rs 1.26 lakh) from EOW but the journey here has been stressful. "My only mistake was that I told people to invest in this company so that they would also benefit as I had. Investors would come home, abuse me, taunt me, stop my kids while on their way to school and ask about me . This destroyed my family's life," he says, adding that he sold his house in Virar, a general store and even encashed a fixed deposit to generate money to pay the Rs 5 lakh that people had invested through him.

"Today, I'm living on rent with my wife and four kids. I had stopped going to court thinking that the money would never return. But recent developments have upped my faith in the police and legal system. I was about to deposit R2 lakh in the investment scheme, but was prevented by a well-wisher."

 

The schemes that duped thousands
The EOW team is looking at refunding money to those duped by nine companies — M/s Medicare, M/s Cosmos Publicity, M/s Konkan Park, M/s C U Marketing, M/s Cimatic Finance, M/s Adventure Group, M/s VJS Group, M/s Parle Finance and M/s Shivanand Finance.

Many of these companies or investment schemes lured people with lucrative returns on investment. Many claimed they would return double the amount and would first win their trust by returning profit in initial stages and encouraging investors to bring in more investors. Later, they'd slowly start defaulting on payments and then shut their offices. By the time investors approached the police, the perpetrators would have disappeared.

Many of the accused are facing trial. Most are out on bail. A few accused in previous cases were found guilty and sentenced to a minimum of five years under the MPID Act.

How EOW gets money to refund
As per law, the investigating officer (IO) of a case, during the probe, identifies movable and immovable assets that the accused acquired from the money earned through fraudulent practices. The IO collects strong evidence to support this, and then, approaches court, requesting attachment of the properties in question. The court then appoints an authority (mostly a deputy collector) to auction the properties, and directs the investigating agency to distribute the money collected through the auction to the investors, an EOW officer said.

What the MPID Act says
Any Financial Establishment, which fraudulently defaults repayment of deposit on maturity along with any default by financial benefit in the form of interest, bonus, profit or in any other established form as promised or fraudulently fails to render service assured against the deposit — every person including the promoter, partner, director, manager or any other person or an employee responsible for the management of or conducting of the business or affairs of such financial establishment — shall, on conviction, be punished with imprisonment for a term which may extend to six years and with fine which may extend to Rs 1 lakh.

700 Total no. of investors in Medicare Life Insurance India between 1999 and 2002
Rs 3.24cr The amount that Konkan Park got from 950 investors in 1999

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