Police arrest two employees of firm operating illegal scheme
A foreign exchange trading scam in which investors have potentially suffered losses amounting to several crores has been unearthed in Bangalore.
Sources in the police confirmed that four First Information Reports (FIRs) have been filed and two employees of the company operating the illegal scheme arrested. Police sources confirmed that the FIRs had been filed before the Fourth Additional Chief Metropolitan Magistrate, based on complaints by several investors at the Ashoknagar police station.
They confirmed that the scheme is a serious infringement of the Foreign Exchange Management Act (FEMA), which prohibits resident Indians from trading in foreign exchange.
Quick returns
Bangalore-based Rochester Investment Consulting Pvt. Ltd. lured investors seeking quick returns from a volatile forex market since 2009. Several investors and an ex-employee of the company told The Hindu that the company funnelled their investments to Master Field Financial Consultants, a company based in the British Virgin Islands, a tax haven.
Rochester’s modus operandi was to lure customers through ads with a promise of high returns on investments. Krishna Kishore Reddy, a former employee at Rochester, told The Hindu that investments were routinely transferred to Master Field’s account in the Singapore branch of the Development Bank of Singapore (DBS). “The first couple of trades for most investors (relatively small amounts) invariably yielded profits, but after the third or fourth trade, we gradually lost our money.”
No trade at all
Asked about the modus operandi, Mr. Reddy said the actual software platform was a “dud”, one on which no real forex trade took place at all. The software was provided “free” by Rochester, he said regretfully. He was so taken in by the initial profits, he got 18 more investors to invest in the illegal scheme.
Attempts to speak to Rochester’s senior officials were unfruitful.
Mr. Reddy said investors were told in June 2011 that the company’s agreement with Master Field stood terminated. Employees were told that the new partner, Pacific Index International Ltd., would handle the investments. However, Rochester’s associates — Master Field and Pacific Index — shared the same postal address in the Virgin Islands. Both also had bank accounts in the same branch, he said.
They lost heavily
A couple of other investors also confirmed that they initially profited from the scheme, before losing heavily. “Rochester did not allow me to encash the profit from my first trade. But after a few more trades, my entire investment of about U.S. $20,000 (Rs. 11.39 lakh) was wiped out,” said Priya Sridharan, a postgraduate in International Finance.
N. Dwarkanatha, an expert in project finance, claimed he lost his entire investment of $75,000 (Rs. 42.75 lakh) made between December 2011 and March 2012. Mr. Reddy said Rochester was only the tip of the iceberg; at least 15 similar schemes were still operating in Bangalore.
Keywords: forex trade, illegal trading, FIRs
thanks for the information. Need some more clarifications. Is trading in other currencies also a problem? Like USD-GBP pairs.
They recruited many people to work on commission basis to lure
investors and invest with the company . Many of these employees also
face charges today. The employees also claim that they were not aware
of the company's illegal activities despite working there long.
Absolutely no moral responsibility taken.
I am providing no justification, but I have been questioned and i wont
be wrong if i say harassed by the legal authorities of this country
stating why i invested with this company. I have been blamed for my
mistake again and again. Sometimes i get the feeling that the acussed
have been treated better than this. My only plea is justice been done
to me.
regards
Priya
I missed my parents so decided to return in March 2010. For 5 months i sat at home without a job. Despite having 7 yrs of work exp. I was offered very low salary . My EMI was 40000pm and i was offered only 25000pm. I had actually gone for an interview to the above company. I was asked to work on commission basis , i refused and returned. My then fiance now husband went for an interview in the same company he was convinced that there was a great opportunity to earn with this company.
He advised that we invest money. We were told that we can make 60000pm minimum. That did it , i thought at least i can pay off the loan of Rs40000. And as the our FIR states we lost the money in a Span of three months.
Please note that the people who run this company are very smart and have very well fabricated the minute details. There many people who have invested in this company and still think that they have lost all of it because of their wrong trades.
There are many such rip offs operating in Bangalore even under the
cover of so called legal agreements between clients and the operators
of the company which the candidates are pressurized into signing.
Once the con is set in motion by these confidence tricksters the
customer realizes that he has been duped, hook, line and sinker and
that there is no place for him to appeal. The most dastardly scheme
is the fraudulent online job companies which ask the candidate to
invest a sum upfront with the promise of online jobs. But the QC
norms are so unethical and the job so impossible to execute even for a
software expert that they end up pocketing the money invested and also
the data entry job undertaken by the candidate. The candidate ends up
getting nothing for his investment, labor, effort, time, expenses. It
is high time that the cyber wing of the police department takes
serious note of these goondas fleecing the public under the garb of
online jobs, investments, high returns etc.
There is an advertisement in this very page of The Hindu by a company
called 'IForex' which offers free training in forex trading. The fine
print in their advertisement talks about risks involved, but nowhere
states that it is prohibited by the Indian govt.
People have become highly materialistic and over greedy which has resulted in losing hard earned money. India does not allow its citizens and permanent residents free conversion of rupees in to foreign currencies. When a company is registered in a foreign country which is a tax heaven it is difficult even for the government to get details. Even after studying about so many con transactions people still indulge themselves in these activities. Government should take immediate efforts to arrest persons behind this nefarious activity and try to get back the lost money to the investors.
For justice to prevail the likes of a postgraduate in International
Finance, expert in project finance et al., apart from losing their US
dollars must also now face criminal charges for participating in such an
illegal scheme.
Perhaps if the customs and revenue people offer out similar "schemes" in
the open market they can ensnare a few of these illegal money
manipulators or at least act as a deterrent to others.
These are called forex bucket shops, mostly originating from HK and some in Singapore. They fraud the customers by using fake software platforms that replace the international forex spot rates with their own rates and misrepresent the rate movements such that the investor will always lose after a while. The software provided by them to the customer is rigged and the rates adjusted as per his transactions so that he lose in the end.
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