Cyberabad Police on Tuesday announced the arrest of two head honchos of a Noida-based multi-level marketing company, eBiz, and estimated the magnitude of the alleged scam to be ₹5,000 crore.
Police identified the accused as Pawan Malhan (62), managing director of the company, and his son Hitik Malhan (31), who is in-charge of company affairs.
Acting on a complaint of 19-year-old student Mohammed Sharooq, police booked a case against the father-son duo under relevant sections of the Indian Penal Code, including cheating.
So far, as much as ₹389 crore have been frozen in the accounts in the name of the company, its directors and other accused persons.
Police said while other accused are yet to be arrested, a thorough investigation is being carried out.
Explaining the modus operandi, police said eBiz follows the simple pyramid scheme, working on a binary principle, in which those who join early make money as the number of representatives increases. Late entrants do not earn enough to cover their first outlay and the model later collapses. As the representatives under the early entrants grow, he or she receives massive commissions.
Entrants join by paying ₹16,821. They are expected to recruit three members each in the right and left legs of the pyramid.
The eBiz model with 12 hierarchical levels has ‘orbits’ with six ‘cycles’ of varying incentive percentages.
Police have advised people not to fall prey to such MLM schemes.
