The Cyberabad police on Tuesday said that they apprehended an official of eBiz Pvt Ltd, a multi-level marketing (MLM) company, and froze over ₹70 crore deposited in various bank accounts.
Accused Hitik Malhan (31), who was apprehended in the case, is the son of eBiz managing director Pawan Malhan and director Anita Malhan.
Speaking to the media, Cyberabad Commissioner of Police V. C. Sajjanar said the Noida-based MLM company was popular among students.
Its other target groups were unemployed youth, women and retired persons. “Unlike other MLM companies, eBiz charged a low joining amount — ₹ 16,821,” said Mr Sajjanar.
The MLM scheme provided online ‘educational packages’ for students, which acted as a lure. The package included programming language courses such as C and C++, and scripting languages like HTML and Java Script. Students would also be given motivational classes and books to read. Upon completion of a two-month course and passing a quiz with a score of 50%, the student would receive a ‘Certificate of Achievement’.
Police said they were acting on a complaint filed by Samalla Vivek, a B.Sc. second year student. A case under Sections 420, 506 and 406 of the IPC, and under the Prize Chits and Money Circulation (Banning) Act of 1978 was registered at the Madhapur police station.
The Cyberabad police said eBiz was based on a ‘simple pyramid model’. Early entrants earned money based on the number of new representatives they got on board. They were required to get three new entrants ‘down the line’. The scheme worked on a binary ratio of 2:1 or 1:2. However, sustaining a larger number of representatives ‘down the line’ becomes unsustainable.
Mr Sajjanar said eBiz had two incentive plans divided into ‘Orbit Groups’ with incentives ranging between 3.5% and 9% depending on business volume targets.
Police said eBiz claimed that it would refund new entrants the ₹ 16,821 within a month in case they did not like the scheme, but this had been seldom done.
Cases against eBiz had been registered in Adilabad and Warangal as well, said Mr Sajjanar.
