The Cyberabad Police have arrested Pawan Malhan, Managing Director of eBIZPvt Ltd, and his son Hitik Malhan for duping people by luring them into multi-level marketing schemes.
Hitik Malhan looks after the company affairs of eBIZ.
An amount of Rs 389 crore in various bank accounts of the company has been frozen.
The police have asked the people not to fall for the money circulation schemes that are being promoted through multi-level marketing, network marketing, referral marketing, chain marketing, direct selling campaigns. "Money Circulation Schemes are banned in India under the provisions of Prize Chits and Money Circulation Schemes (Banning) Act 1978," the Commissioner of Police of Cyberabad, has said in a statement.
The police suspect that the promoters must have duped the people to the tune of Rs 5,000 crore in various parts of the country.
"We have received complaints against the company. A case is also registered in Enforcement Directorate and is under investigation," he said.
The firm offers a simple pyramid scheme, which allows the early entrants earn money and as the number of members grows. As the network grows, it becomes tough to add new members, making it difficult for the late entrants to realise money. This would lead to the collapse of the model at some point.
Initial investigations find that victims predominantly hail from Hyderabad, Bangalore, Chennai and Delhi, Uttar Pradesh, Maharashtra, Karnataka, Tamilnadu, Goa, and Jammu and Kashmir.