Kasaragod: Police have frozen at least eight bank accounts and launched an investigation into a company that promises 80 percent annual returns on deposits, post-tax.
BigPlus Fin Trading, run from the sleepy village of Kundamkuzhy in Bedadka grama panchayat, has attracted crores of rupees as deposits, based on its claim to double the money in one year. A special branch officer tracking the company pegged the money raised at Rs 800 crore.
"In all likelihood, it is running a money chain, that is, taking money from new depositors and paying off the earlier investors," said Shibu M Philip, an investigating officer.
Bedakam police have registered a case under the Banning of Unregulated Deposit Schemes Act, 2019.
BigPlus Fin Trading is run from the first floor of a nondescript building, decked up with potted plants, at Kundamkuzhy junction, five minutes by car from Bedakam police station.
Before the police action, around 50 to 100 persons from faraway places such as Kozhikode, Kannur, and neighbouring districts of Karnataka used to arrive in cars to invest in the "money doubling schemes" of the company, said a lottery seller on the ground floor of the building.
He was also asked to put his money in the doubling scheme. "I told them I am happy with the Rs 500 I make at the end of the day."
But when Onmanorama visited the office in the afternoon of November 9 (Wednesday), there were no customers and the 15-odd executives were sitting in a huddle and chatting among themselves. The lottery seller said the footfalls have fallen to almost zero after the police action.
The manager of the company said she was not authorised to speak to the media and shared the mobile number of the promotor Dambethamoole Vinod Kumar.
Rs 2,000 crore assets
Vinod Kumar promotes BigPlus under an entity called Global Business Group (GBG). On his website (drvinodgbg.com), he claims to have a "stable asset of (Rs) two thousand crores".
But in 2015, he had a run-in with the law and was banned from owning a company for five years. A group led by him had raised money from people in Kannur and Kasaragod districts to start Kannur Grameena Super Market Limited on a franchise model. The project went kaput and investors lost crores of rupees, said the sub-inspector. "Vinod Kumar had raised Rs 31 crore in Kasaragod district," the officer said.
The Kannur Crime Branch charged him and 21 others with cheating, criminal breach of trust, conspiracy, and sections under the Prize Chits and Money Circulation Scheme (Banning) Act, 1978.
The Chief Judicial Magistrate Court, Thalassery, is now framing the charges against the accused. The next hearing is scheduled on December 26.
The Registrar of Companies (ROC) under the Ministry of Corporate Affair prohibited Vinod Kumar from registering any company in his name for five years, said SI Shibu Philip.
The ban period ended on October 31, 2020. Twelve days later, Vinod Kumar registered GBG Nidhi Limited with ROC in Ernakulam, the officer said.
According to the Department of Corporate Affairs, 'Nidhi' companies can be formed with the only objective of "cultivating the habit of savings" among people. A Nidhi company can raise money only by taking deposits (fixed, recurring, and savings) from members. The money raised can be used only to give loans, again only to members.
But for the past year, GBG Nidhi Ltd has not given loans to any of its members, said Shibu Philip, who was part of the police team that raided its office on November 7. "How can a finance company survive if it takes deposits but does not extend loans," the officer wondered before answering his rhetorical question: "Vinod Kumar might be using GBG Nidhi Ltd as a cover to attract deposits for his money chain scheme."
A video soliciting deposits posted on BigPlus Fin Trading's YouTube channel on July 27 gives currency to the officer's suspicion.
The five-minute video says any ordinary person can attain financial freedom by joining the 'BigPlus Trading Company'.
And how can one join the company? The video says: "A person can be a part of Big Plus Trading Company by becoming a shareholder of GBG Nidhi Bank (sic)".
The company has packages to accept deposits from Rs 10,000 to Rs 25 lakh. "If you invest Rs 1 lakh in the GBG company, the money will be transferred to Big Plus Trading Company, which is GBG's own platform. There, the money will be traded and the gains will be transferred to the customer's account daily."
In 200 working days or 10 months or 40 weeks, Rs 1 lakh will be turned into Rs 1.80 lakh, after tax. "Before tax, it will be Rs 2 lakh," the video says.
Depositors can earn more if they bring in new customers. The company says it will give 10% of the deposits made by new customers to the persons who referred them. When the next round of customers comes through referrals, they will get 7%, a classical pyramid scam where the focus is on bringing in more depositors.
Violations galore
To be sure, the company has not yet defaulted on paying its depositors. But soliciting deposits, accepting deposits, promising assured returns on the investments, and diverting deposits from Nidhi to another company all violate the laws of the land, said the officer.
The Bedakam police have charged Vinod Kumar with Sections 3 and 5 of the Banning of Unregulated Deposit Schemes Act, 2019. The sections prohibit companies from running unregulated deposit schemes and ban them from soliciting and accepting deposits in such schemes, and making a false, deceptive or misleading forecast.
If found guilty, he will face a maximum imprisonment of seven years and a maximum fine of Rs 30 lakh under Section 21 (1), (2), and Section 23 under the Act.
But investigating officers said Vinod Kumar could not have started a Nidhi company in the first place if he was found guilty in the supermarket case.
The Department of Corporate Affairs bans convicted persons from becoming a director of Nidhi companies. But the wheels of justice turn slowly, they said.
But Bedakam police, investigating the money doubling scheme, said they froze the bank accounts of GBG Nidhi Ltd and BigPlus Fin Trading Company at South Indian Bank at Cherkala. The two accounts had Rs 8.87 crore.
The police also froze GBG Nidhi's account in ICICI Bank in Kanhangad.
The bank accounts of the directors of Global Business Group were frozen in the State Bank of India, Kanhangad, Axis Bank in Kasaragod and three accounts in Axis Bank in Hassan in Karnataka. "We are yet to get statements of these accounts but the ball-park figure could be Rs 50 crore," said Shibu Philip.
The special branch officer quoted in the first instance said the company was getting around Rs 30 lakh to Rs 35 lakh as deposits every day six months ago. "By the first week of November, it rose to Rs 80 lakh to Rs 1 crore," said the officer who has a source inside the company.
Vinod Kumar did not attend to calls made by Onmanorama in the past two days. A 10-question email has been sent to him and the report will be updated when he responds.
"It's greed"
Around 50 metres from GBG Nidhi Ltd is the Bedadka Farmers Service Cooperative Bank Ltd. Its managing director Suresh Payam said the bank was 67 years old and had 24,000 members. "But we have not been able to touch Rs 100 crore business yet," he said.
The cooperative bank offers an 8.15% interest rate to senior citizens on their fixed deposits. "That's the best rate in the state. How can GBS offer 80% returns?" he said.
Going by the prevalent interest rates in the country, it takes around nine to 10 years to double the money. "GBG is doing it in 10 months!"
"Why should any youngster go to work? They can sell their motorcycle and deposit Rs 2 lakh in GBG and earn Rs 36,000 every month," he said.
He said GBG has affected the growth of the cooperative bank. "We used to grow at 8 to 10% every year. Now we have stagnated. The new money must be going to GBG," Suresh said.
In 2015, Vinod Kumar rented a building right opposite where GBG Nidhi Ltd is now to start his supermarket business. "Of course, it was just a smokescreen to fool the investors. The irony is that those who lost money in the supermarket business are investing in GBG again to make quick bucks," said Suresh. "It is not business. It is greed."
