UAE investors hit as dodgy 'halal' firm folds up in India
Life-savings lost in suspected Ponzi scheme
Dubai: Scores of Indian expats in the UAE have been left devastated after losing their life savings to a dodgy ‘halal’ investment scheme run by India’s I-Monetary Advisory Group (IMA) whose founder-owner Mohammad Mansoor Khan has reportedly fled to Dubai after threatening to commit suicide.
Indian police issued a lookout notice against Khan shortly after IMA, headquartered in Bengaluru, shut shop last week causing panic among thousands of investors, almost all of them Muslims.
36
Launched in 2006 as an Islamic banking and halal investment firm, IMA attracted huge investments.
Incredible returns
Lured by 36 per cent annual returns, Indian Muslims, both within the country and outside, put their hard earned money into the company which grew from strength to strength, diversifying into jewelry, real estate, bullion trading and healthcare.
Spectacular fall
However, IMA fell as spectacularly as it rose when an audio clip, purportedly of Khan, claiming he was on the verge of committing suicide was circulated on WhatsApp. In the nearly five minute long audio Khan is heard saying that he’s ending his life as he was “tired of bribing corrupt politicians and bureaucrats” . He also accuses Congress leader and local MLA Roshan Baig of not returning the Rs 400 crores that he had given to him.
800,000
As soon as the audio went viral, thousands of investors thronged IMA Jewels office in Bengaluru seeking refunds and demanding action against Khan. Till Sunday, around 35,000 police complaints had been filed against the company and the numbers are rising daily.
Alarmed by the developments, Karnataka Home Minister MB Patil has set up a Special Investigation Team (SIT) to probe the ‘financial fraud’ and ‘secure’ Khan
UAE investors left shocked
IMA investors in the UAE said IMA’s collapse has left them shocked beyond disbelief. “I don’t know what to do. I am speechless,” said Dubai resident Fiaz Ghani, who invested around Dh400,00 in IMA in 2016. A similar predicament faces Abu Dhabi-based IT professional Mohammad Aamir (name changed). He pegs his losses at Dh410,000. Curiously, both Aamir and Ghani had also burn their fingers in another shady Indian company called Heera Group, losing Dh 250,000 each to their Ponzi schemes disguised as Halal investment plans.
I stayed away from my family and toiled alone in the UAE to save money ... I had just started construction of
a house back home and was also in the process of setting up an IT firm in India. Now everything has been
put on hold. This was all the money I had.
“This is like the proverbial last straw. For 14 years, I stayed away from my family and toiled alone in the UAE to save money only to lose it all. I had just started construction of a house back home and was also in the process of setting up an IT firm in India. Now everything has been put on hold. This was all the money I had,” said Aamir, 41, who has been investing in the company since 2015. “They were giving us profits regularly but I kept on reinvesting them. I was blinded by the word ‘halal’ and thought IMA had a legitimate business model. It appears that was not the case,” said the father of three, originally from the city of Mysore, located at a distance of 150km from Bengaluru.
Ghani, 58, who works as a mechanical engineer at a Swedish multi-national company in Jebel Ali, said he invested Rs two million (Dh105,100) in IMA while his wife Reshma pitched in with Rs 5.6 million (Dh294,550). “The company used to share online reports to show how our investments were doing. We never suspected anything,” said Ghani, who has been living in the UAE since 2007.
Victims seek refund
“I urge authorities to get to the bottom on this scam and help us recover our money. It’s discomforting to learn that the man who wrecked our lives is believed to be holed up in this city,” said Keralite Mohammad Khalid from Sharjah who lost Dh10,500. He had joined IMA in June 2018 after being encouraged by his brother-in-law who lives in Bangalore and had also invested in the company.
Seven directors of IMA have surrendered to Indian police so far.
IMA’s founder Mohammad Mansoor Khan, who has been charged under IPC sections 406 (criminal breach of trust) and 420 (cheating), has been untraceable since June 8. The police suspect he has fled to Dubai. Meanwhile, a news report has emerged saying that Khan worked briefly at Hyderabad-based Heera Gold Group and learnt the tricks of the trade from its CEO Nowhera Shaik, currently in jail facing fraud charges.
Political war on Twitter
In the welter of all this, an ugly twitter war has erupted between India’s ruling Bhartiya Janta Party and the JD(S)-Congress government in Karnataka. It all started on June 11 when BJP posted a picture of Karnataka chief minister HD Kumaraswamy sharing a meal with IMA’s founder and main suspect Mansoor Khan. The accompanying caption read: “& when ‘I eat, you too eat’ is a way of life in @JanataDal_S, frauds like Mohammed Mansoor Khan tend to eat, loot & scoot. Btw @hd_kumaraswamy’s biryani day with frauds speaks a lot about acceptance. Must be tough acknowledging it. Isn’t it”
By Monday afternoon, the tweet had been shared by 555 and liked by 1,600.
Not one to take things lying down, Kumaraswamy hit back at BJP. “It’s sad that @BJP4Karnataka stoops low again to misguide and demean by using an old picture out of context. This has always been the BJP troll strategy. #IMAfraud is a serious issue and the culprits will be punished,” the chief minister tweeted.
BJP’s response was quick: “Good to know you have known this fraud for a long time. Should help you catch him soon. Your job is to catch the fraudster & not cry victim on Twitter. Get your priorities right” BJP said. In yet another tweet, BJP demanded an enquiry into the scam by India’s premiere investigative agency, CBI (Central Bureau of Investigations) saying “victims of IMA jewllery fraud will be denied justice if investigating is carried out under the watch of @hd_kumaraswamy govt”
Alarming numbers
In recent years, dubious investment plans have wiped out the life savings of tens of thousands of UAE residents. Nearly 3,500 lost their hard earned money in Heera Group, 6,000 in Sunfeast Infotech, 4,000 in SpeakAsia, 1,500 in MMA Forex, 2,000 in Gold AE, 40 in Ferryland Tourism 5,000 in UT Markets 7,000 in Exential Group and 1,000 in Ambidant and Morgenall.
That’s 30,000 people duped out of roughly Dh3 billion in just a little over four years – Dh100,000 per person on an average.
What is a Ponzi scheme?
Ponzi scheme is an investment scam where investors are promised, and seemingly delivered, unusually high rates of return. Scam artists pool funds received from victims, living off some and paying a portion back to the investors as interest or gains.
Red flags to watch for; How to spot a Ponzi scheme
■ Low risk, high returns: Schemes offering unusually high/guaranteed returns with minimum risk.
■ Very consistent returns: Returns that hardly vary, should raise questions.
■ Complex business model: The nature of their business is usually complicated
■ Difficulty receiving payments: If you face trouble trying to withdraw money or not receiving any promised payments on time, you may be involved in a Ponzi scheme