V R OTHISAMY Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THE greed for extracting money without realising the pitfalls has resulted in public being misled into investing in Multi Level Marketing Scheme (MLMs). Such kind of scheme is a pyramid scheme which is stated to be a non -sustainable business model, involving exchange of money primarily for enrolling other people to earn more by simple method of introducing new members to grow in the pyramid. Such schemes are stated not to be falling under direct jurisdiction of any regulators or departments and thus, there is no monitoring.

(2.) IN order to regulate the MLMs, various State Governments are stated to have framed guidelines and even draft Bills.

(3.) THAT apart, in respect of the particular case in question, cases have been registered against the fraudulent financial establishment and the accused have been secured from the hideouts. Investigation was conducted and it transpired from their statements that they could not have paid such a high rate of interest i.e. 102% per annum, as there cannot be a business model of this kind. The financial operation of the present Scheme has been only rotation of depositors' money itself for paying the assured returns and commission amounts and after having collected Rs.800 crores from the general public, stopped payment of assured returns. The matter is stated to be pending before the Special Court at Coimbatore in C.C. No.15 of 2013 . Attachments have been made of various properties under Section 3 of the Tamil Nadu Protection of Interests of Depositors (in Financial Establishments) Act, 1997. Ultimately, the accused have been enlarged on bail.