IMA got away right under eyes of government agencies

With no complainants coming forward in Nov. 2018, the police, too, couldn’t act

June 13, 2019 11:37 pm | Updated 11:37 pm IST - Bengaluru

The activities of the scam-ridden I Monetary Advisory (IMA) Group of Companies went on unchecked until recently, though the firm was under the lens of the State Level Coordination Committee chaired by the chief secretary and it was being probed by multiple agencies for floating a potential ponzi scheme.

Its managing director and chief executive officer, Mohammed Mansoor Khan, who is absconding, stands accused of cheating thousands of investors in a multi-crore scam. One senior police official said across Karnataka, they have received nearly 25,000 complaints against IMA.

The company was first flagged by Market Intelligence Unit of the RBI, Bengaluru, in early 2018. However, they were unable to take action on account of the way investment into the company was structured, two members of the SLCC told The Hindu , on condition of anonymity. “The company has used a loophole in the law and got away,” said one of the officials.

Another senior official said the the firm, registered as a commercial company under Registrar of Companies (RoC), claimed to be a ‘halal’ investment firm.

“They did not take ‘deposits’ and pay ‘interest’. Instead, they took investments from the public towards the capital of the company and issued Limited Liability Partnerships to all investors making them partners. The firm invested the money in gold bullion and jewellery trade and later in diversified interests to make a profit. What it paid them every month was termed a ‘dividend’,” he said.

Sources said within the SLCC there was much debate on the legal provision to initiate action against the firm. “Monitoring agencies were of the opinion that the modus operandi did not allow them to take action as it could neither be defined as a collective investment scheme nor a non-banking financial company,” said a source.

It was proposed that the State government take action against the firm under Karnataka Protection of Interest of Depositors in Financial Establishments (KPID) Act, 2004 – a State law. The State Revenue Department and Economic Offences Wing of the Criminal Investigation Department is also authorised to take action under the above law. Both agencies did launch probes, but they did not end in punitive action.

Last year, L.C. Nagaraj, AC, Bengaluru North, issued a public notice against three firms – Ambidant Marketing, IMA Group and Hindustan Infra. All three firms had been flagged by the RBI in November 2018, seeking complaints from the public.

“We received over 7,400 complaints against Ambidant Marketing and over 2,000 complaints against Hindustan Infra Pvt Ltd, but not a single complaint against IMA Group,” Mr. Nagaraj told The Hindu .

No action was launched against the company for want of complaints. “While several investors who lodged complaints against Ambidant Marketing were also investors in IMA Group, they refused to lodge complaints against Mansood as at the time, (November 2018), the firm was paying the monthly ‘dividend’ regularly without fail,” said another revenue official in the know.

The matter then moved to the Economic Offences Wing, CID, which submitted its report to the State government in January 2019, arguing that no action could be launched against the firm under KPID Act.

“The definition of ‘Deposit’ under the KPID Act and under The Banning of Unregulated Deposit Schemes Ordinance, 2019, explicitly excludes: amounts contributed as capital by partners and as a limited liability partnership, exactly how IMA got their investment,” a senior official said. Following this, in March 2019, the revenue department also recommended that the case against the firm be closed.

As IMA is registered as a commercial firm under the Registrar of Companies, action then shifted to the agency. If each investor is taken as a limited liable partner, they have to be declared so with the RoC.

“IMA Group has declared thousands of them as limited liable partners. But the numbers do not match that of the investors now lodging complaints with the police. There are some compliance issues with the company. The office of Regional Director, Hyderabad has launched a probe, which is under way,” said a senior RoC official.

Thus the firm couldn’t be held to account even though multiple agencies probed the activities of the firm.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.