Ponzi schemes and the role of EOW of Mumbai Police
Abhay Datar 18 July 2016
Only those who lost money to the Ponzi schemes of the 1990s would probably remember how they used to lure people into their trap. The entrapment continues even today and people lose tens of thousands of crore rupees to a variety of Ponzis that are proliferating even today. But I want to share a story that has a happy ending, thanks to the work of one upright police officer.
 
In the 1990s, many of us were lured by a phone call from an unknown person claiming we had won a lucky draw and were to receive a gift?  The modus operandi was simple. The caller would tell us, the target victims, that we would have to attend seminar on a particular date, time and place to claim the gift. On the day of the event, there would be another  call confirming attendance, and once we agreed to attend, we would be asked to come along with one’s spouse and not forget to bring a ‘cheque book’ along. 
 
Neatly dressed, we used to enter into a spacious hall to a warm welcome. A man would lead us to a table. Some so-called representative would attend to us with a glossy brochure about an investment scheme – there was also high tea on offer. The representative would describe the whole scheme, its benefits, a rosy future and attractive returns. The schemes were usually a plantation company offering unusual benefits, a holiday time-share scheme, goat farming or some such, which would apparently yield extraordinary returns because of a new technique of operation. The smooth talk of the presenter and the ambience of the hall worked like a charm and people invariably fell for into the trap and handed over a cheque to the person.
 
In 1999, two such companies, Adventure Plantation and Adventure Country Resort attracted people through such calls.  My maternal aunt invested in the first company and I invested in the second one.  Adventure Plantation, was supposed to use the funds collected for purchase of teak (saag) trees and promised extraordinary returns over 20 years. The terms for early withdrawal were very stringent and no return was offered until then, except a tour of the plantation every two years. Adventure Country Resort, issued bonds with an attractive return of 12% per annum payable on maturity, which was 10 years.  Another attractive feature was that the bondholder could enjoy a free stay at one of its hotels, once every two years accompanied with spouse and children below 12. There were also some coupons that could be encashed by selling them at a specific value to other members after a three-year lock-in. I fell for this, despite being a banker along with other professionals and wealthy people. 
 
After a few months, the scheme was exposed as a fraud and we were shocked. The Economic Offences Wing (EOW) of the Mumbai Police intervened, there were some arrests and the EOW asked victims to file written complaints. We also lodged a complaint, but without any real hope of getting back our money.
 
After a few years, we were surprised to receive a letter from the EOW asking us to attend the court and sign some papers. It is then that we met Assistant Commissioner of Police (ACP) Avadhoot Chavan for the first time.  We attended the court three or four times. Mr Chavan, who was invariably surrounded by eager investors used to explain every procedure to us and was also kind enough to share his mobile number. His patience, dedication and untiring effort in answering all our queries was noteworthy. 
 
Two years ago my maternal aunt got back the principle that she had invested in Adventure Plantation and last week I received my principle investment in Adventure Country Resort. I called up Mr Chavan to thank him for the ‘thankless job’ he had done for us.  He informed me that he has retired, but is still associated with this investigation as a special case. He felt satisfied to receive my call.  Being a good citizen of Mumbai, was it not my duty too to thank him and Mumbai Police? I have also written to the Commissioner of Police, Mumbai to share my thoughts.
 
Only those who have lost money in a Ponzi scheme would know how rare it is to recover funding from such companies and then distribute it to investors. Yes, it was only the principle and it took decades. It would be nice if the system worked better, but at least this is rare positive news for lakhs of hapless people who have been taken for a ride by such scamsters. 
 
I wish Avadhoot Chavan a happy and healthy retired life.
 
(Mr Abhay Datar is a retired banker who is now a well-known consumer activist. He volunteers his time every Thursday to guide members of Moneylife Foundation on consumer issues, banking and insurance matters). 
 
Comments
S Thambi Raj
6 years ago
Poor investers money should be returned to them with immediate effect and it is the prime duty of Lodha committee
Sharad Jain
6 years ago
Hats off to Abhay for finding time to help others! May his tribe grow.
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