The Cyberabad Police of Telangana have busted a multi-level marketing scam here and arrested Baki Srinivas Reddy, the Managing Director of SERFA Marketing Private Limited. They have seized computer hard disks from the Hyderabad office.

“The Visakhapatnam-based company is luring home makers, retired people, students, the unemployed youth by offering part-time job to run the money circulation schemes,” Cyberabad Commissioner V C Sajjanar said.

Such schemes are banned in the country under the provisions of Prize Chits and Money Circulation Schemes (Banning) Act 1978.

“We again request the public not to look for easy or quick money. There is no short cut to earn easy money,” Commisioner added.

Acting on a complaint by Kannekanti Tulasi, a resident of Hyderabad, the police conducted an investigation which led to the arrest.

The police have cautioned the public not to fall prey to such money circulation schemes that are being promoted under the garb of multi-level marketing, network marketing, referral marketing, chain marketing and direct selling. “Whatever may be the name, they are all money circulation schemes,” he warned.

According to the police, the accused had joined a similar MLM scheme called QNet in Hyderabad and lost about Rs 13 lakhs. With the experience he gained there, he set up his own MLM business SERFA Marketing in Visakhapatnam with branches in over 16 States.

It lured about 5,000 people as its members by promising a lucrative business opportunity.

“It is a simple pyramid scheme in which the early entrants earn money. As the number of representatives goes up, finding more representatives would be a difficult task,” he said. “As a result, the pyramid collapses at one point of time.”

In the present scheme, a member is required to pay ₹12,000 to join the scheme. He needs to add two more members, who in turn would have to pay the fee and add two members each. Each time, a new member joins the scheme, the members above in the chain will get a commission.

The scheme is expanded to 16 States and two Union Territories of Lakshadweep and Andaman Nicobar Islands.