Former Karnataka minister arrested in IMA Ponzi scam

Dubai: A former Congress minister in Karnataka has been arrested by India’s premier investigative agency in connection with the multi-million dollar IMA (I-Monetary Advisory) Ponzi scam.

An earlier Gulf News report revealed how the audacious racket left a trail of devastated investors across India and several Gulf countries, including the UAE.

Roshan Baig, 67, a seven-time member of the Karnataka Legislative Assembly, was taken into custody by the Central Bureau of Investigation (CBI) on Sunday. He is currently lodged in Parapanna Agrahara jail in Bengaluru.

A team of 12 CBI officials raided his Bengaluru residence on Monday morning.

Baig was produced before a special judge and sent to 14-day judicial remand. His name first figured in the scam in June 2019 when IMA founder-owner and prime accused Mansoor Khan fled India and released a video accusing Baig of not returning Rs 400 crores (Dh198 million) which he owed to him. Khan was arrested in July 2019 after he returned to India. He is in jail since.

Baig, who was disqualified from the Congress last year after he revolted against the party, has maintained that he knew Khan but had no financial dealings with him. Baig joined the BJP along with 16 other Congress and JDS MLAs in July 2019 and helped the BJP form a government under BS Yediyurappa by ousting the Congress-JDS coalition. The IMA scam was being investigated by a special investigation team until August 2019 when the BJP handed to the CBI after coming to power. In October this year, the CBI filed a supplementary chargesheet against 28 accused. Baig was one of them.

Headquartered in Bengaluru, IMA was launched in 2006 as an Islamic banking and halal investment firm and attracted huge investments.

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 jewellery, real estate, bullion trading and healthcare.

However, IMA fell as spectacularly as it rose after an audio clip of Khan, claiming he was on the verge of committing suicide, was circulated on WhatsApp in mid-2019. In the five-minute long audio Khan was heard saying that he’s ending his life as he was “tired of bribing corrupt politicians and bureaucrats”. Khan also blamed Baig for not returning Rs400 crores in the message.

As soon as the audio clip went viral, thousands of investors thronged IMA Jewels office in Bengaluru seeking refunds and demanding action against Khan. Within weeks over 40,000 police complaints were filed against the company.

But investors in the UAE had no such recourse. Dubai resident F.G. said he lost Dh400,000. Abu Dhabi-based IT professional Aamir (name changed) pegged his losses at Dh410,000 while Keralite Mohammad Khalid from Sharjah told Gulf News he 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. Before launching IMA, Mansoor Khan reportedly worked for the Heera Group which is also accused of disguising a Ponzi scheme as halal investment opportunity.

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.

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.