Highrich scam: Promoters siphoned Rs 250 crore, assets worth Rs 260 cr seized, says ED

Kochi: The Directorate of Enforcement (ED), investigating the multi-crore Highrich scam, raided the houses and businesses of 14 promoters and "leaders" in Chhattisgarh, Maharashtra and Kerala on Tuesday, said Prashant Kumar, ED's Special Director for Southern Region.

Those whose houses and businesses were raided included the couple promoters of Highrich Online Shoppe Private Limited Sreena Prathapan and K P Prathapan, he said. The others belonged to the top of the hierarchy of the multi-level marketing scheme and allegedly benefited from the fraud, the officer said.

The searches at Raipur in Chhattisgarh, Nagpur in Maharashtra, and Kannur, Kozhikode, Thrissur, and Ernakulam districts in Kerala led to the "freezing of around Rs 32 crore in various bank accounts of the company, promoters and their family members, seized Rs 70 lakh in cash, jewellery and impounded four four-wheeler vehicles", the Enforcement Directorate said in a statement released on Friday, June 14.
ED also traced immovable properties worth Rs 15 crore with the promoters and various leaders of the Highrich group. According to the agency, these properties were bought using the proceeds of crime.

On January 23 and 24, ED searched the promoter couple's offices at Cherpu in Thrissur and found that the company and its promoters Prathapan and Sreena Prathapan have parked Rs 212.46 crore in 55 accounts at four private banks. ED froze all these accounts.
With this, the total proceeds of crime frozen or seized in the case to date is Rs 260 crore, said the statement.

'Highrich crypto was a Ponzi scheme'
The searches on June 11 revealed that Highrich promoters and leaders were running a Ponzi scheme using their cryptocurrency called HR Crypto Coin.
In a Ponzi scheme, exorbitant returns are given to earlier investors using money from newer investors, rather than from the profit from running a legitimate business.

ED said Highrich promoters and leaders raised money with their HR Crypto Coins in exchange for rupees or USDT. (USDT or US dollar Tether is a type of cryptocurrency whose value is pegged to the US dollar, making it more stable and preferred than cryptocurrencies.)
People were lured to buy HR Crypto Coins with the promise of 15 per cent returns per year and 30 per cent direct referral income if they introduced new customers to the scheme.

The Highrich promoter couple also raised money by selling membership to their company, Highrich Online Shoppe, ostensibly an online grocery business. The membership was in the form of digital IDs, consisting of a username and password, to access www.highrich.net. The members would further sell the memberships/ digital IDs to other people to earn a commission. The company would give a commission to members who bring in new members. "It is nothing but sharing of the commission received on joining of new members. There is no real underlying business or sale of goods. This is the typical modus operandi of a Ponzi scheme," the central agency said in the statement.

It said Highrich promoters collected around Rs 1,500 crore through these multi-level marketing Ponzi schemes. The collected money was partly redistributed as a reward to the members of the scheme at the top of the pyramid. The profit of around Rs 250 crore was siphoned by the promoters K D Prathapan and his wife Sreena Prathapan through their family members and entities.

But Chief Minister Pinarayi Vijayan in a written reply to Ernakulam MLA T J Vinod said in the Assembly that Kerala Police found Highrich received Rs 3,141.34 crore as investments from people in Kerala and other states.
Several police stations in Kerala registered cases under the Banning of Unregulated Deposit Schemes (BUDS) Act, 2019, after scores of people complained that they lost money after investing in the scheme.
In January, Kerala Police recommended a CBI inquiry into the fraudulent company after finding it was "operating across India and has more than 1.5 crore members".