Ponzi schemes: Govt orders SFIO to probe 187 companies

As per the list provided by the minister, complaints of financial fraud have been received against PACL, three Sai Group firms, eight entities related to the MPS Group, including MPS Greenery Developers, MPS Food Products, MPS Resorts and Hotels.

The government has ordered SFIO to conduct probe against 187 companies that had allegedly floated Ponzi, or multi-level marketing, schemes, Parliament was informed on Tuesday.

Ponzi schemes are fraudulent investment operations that lure investors with promise of high returns.

"The ministry has ordered investigation through SFIO under. . . the Companies Act into the affairs of 187 companies (as on April 13, 2016) against whom complaints had been received regarding alleged collection of funds through MLM/Ponzi activities in different states of country," Corporate Affairs Minister Arun Jaitley said in a written reply to the Rajya Sabha.

Of these 187 companies, probe has been completed against 83 while investigation is 'under progress' in the case of remaining companies.

As per the list provided by the minister, complaints of financial fraud have been received against PACL, three Sai Group firms, eight entities related to the MPS Group, including MPS Greenery Developers, MPS Food Products, MPS Resorts and Hotels.

Besides, the list includes several entities connected to Chakra group firms like Chakra Infrastructure, Chakra Agrotech, Chakra Wealth Management Advisory, Chakra Hotel and Leisure.

On steps initiated by the government to check such cases of deposit-taking activities and protect interest of investors, Jaitley said 'fraud' as a substantive offence has been introduced in the Companies Act, 2013, and statutory status to the SFIO has been granted under the Act.

Besides, stricter norms of corporate governance and their implementation have been granted under the Companies Act, he added.

In a separate reply, Jaitley said an inter-ministerial group has finalised its report and suggested enactment of a comprehensive central law -- the Banning of Unregulated Deposit Schemes and Protection of Depositors' Interests Bill'.

The Bill has defined an unregulated deposit scheme and provides for penalty associated with schemes.

The IMG report and the proposed Bill has been circulated among state governments, union territories and regulators for their comments.

The IMG was constituted for identifying gaps in the existing regulatory framework for deposit-taking activities and suggest measures including formulation of a new law to cover all aspects of deposit-taking.