QNet scam: SC grants bail to Michael Ferreira
The Supreme Court ordered the release of Michael Ferreira in the QNet multi-level marketing scam. The court ordered Ferreira's release along with his business partner Malcolm Desai on a bond of Rs. 25,000 each. Ferreira and Desai argued that their business module was in compliance with guidelines issued by the consumer affairs ministry. The guidelines were released in September 2016.
QNet and Vihaan
QNet is a Hong Kong-based company founded by Vijay Eswaran, in 1998. QNet functions on the direct selling and multi-level marketing model, offering its products in more than 20 countries across the world. In India it operates through its master franchisee Vihaan Direct Selling (India) Pvt Ltd. Vihaan is headed by four directors including - Michael Ferreira, Magaral Balaji, Srinivas Vanka, and Malcom Desai.
What is the scam?
QNet allegedly lured investors with a ponzi scheme involving investment between Rs 30,000 - 7,00,000. It reportedly sold products like magnetic discs with healing properties, herbal medicines etc. Apart from duping the customers, the firm was accused of using the banned 'binary pyramid model' for its marketing activities. Close to 5 lakh customers were allegedly cheated.
Binary Pyramid scheme
Binary Pyramid model is a multi-level marketing (MLM) model, in which a recruited individual pays to enroll as a member and earns money by recruiting more members who also make a payment. Recruiter receives a part of this payment as 'commission' and gets a cut on future payments as the new recruits go on to enroll more members. This is illegal in many countries.
Banned in other countries
QNet's other companies, GoldQuest and QuestNest, which followed similar marketing models, were declared as fraud companies by Ministry of Corporate Affairs. GoldQuest was also banned in other countries like Saudi Arabia, Rwanda, and Sri Lanka.
EOW registers case against QNet
After receiving several complaints for defrauding investors, CBI's EOW (Economic Offences Wing) registered a case against QNet in August 2013. This came after an FIR was filed by a complainant who was duped into buying bio-products that claimed to treat the complainant son's brain damage. Further, Vihaan's Mumbai and Bangalore offices were raided, and assets of mid-level management were frozen.
Billiards champion Michael Ferreira arrested in QNet scam
Former Billiards champion and Padma Bhushan awardee Michael Ferreira, along with three other directors of QNest India, was arrested in connection to the multi crore QNet scam. They were handed over to the Hyderabad police for further investigation. Early October, Ferriera surrendered after failing to get an anticipatory bail from Supreme Court. So far, Economic Offences Wing (EOW) arrested 19 people in this case.
Boman Irani's son questioned by ED
Actor Boman Irani's son Danesh Irani who has been under the scanner for his role in promoting the QNet marketing scam, was questioned by the Enforcement Directorate (ED). His statements were recorded under the Money Laundering Act.