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Kerala fertile for money swindlers: MLM company Highrich mops up Rs 25, 000 cr duping millions

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By Suresh Unnithan

Thrissur: The arrest of Prathapan Kolatt Dasan, owner of Highrich Online Shoppe Pvt Ltd, a Thrissur-based multi-level marketing (MLM) company, once again affirms that Kerala is a fertile land for money fraudsters offering “get-rich-quick’ or ‘earn-huge-return’ schemes.  Though the the Highrich was probed for online scam to the tune of over 25,000 crore rupees, it is astounding, the company’s managing director Pratapan was arrested on charges of GST evasion. Many surprise, despite an attachment order of the entire properties of Highrich and its owners for committing a mega financial fraud why its directors were not booked under Banning of Unregulated Deposit Scheme Act 2019? Senior Congress leader Anil Akkara alleges, “the GST related arrest was to salvage Prathapan and those closely connected to the Highrich financial fraud and not at the interest of the millions of investors who were duped by the fraud company.” Those in the know of the “illegal” financial operations of Highrich also share the same view. 

Prathapan Kolatt Dasan and wife Kuttukaren Shreedharan Sreena

Prathapan Kolatt Dasan, one of the two directors of Highrich was arrested by the GST intelligence Kasaragod unit on December 1 and remanded to Judicial custody . Surprisingly the other director, Kattukaren Shreedharan Sreena (Sreena K S}, wife of Prthapan, was not taken into custody.

Prathapan was arrested on December 1 by the GST intelligence for voluntary tax evasion, “but surprisingly, actions were not initiated on the attachment notice served against Highrich  by the competent authority under Banning of Unregulated Deposit Scheme Act 2019 and Prize Chits and Money Circulation Scheme (Banning) Act, 1978 for conducting illegal financial transactions and defrauding millions of depositors across the country.”  The Economic Offence Wing of the State Police, taking cognizance of a complaint, had conducted a detailed probe on the large scale financial fraud of Highrich, an MLM online company and the Competent Authority on 21-11-2023 issued directions to the concerned department heads to attach “all movable & immovable properties of Highrich Online Shoppe PVT Ltd, Capital Art Business Spaces, Neruvissery, Arattupuzha P O, Thrissur.”  (After over a fortnight Trissur District Collector Krishna Teja on December 6, 2023 has issued an order freezing the account and attaching properties of High Rich Online Shoppe Pvt Ltd.)

 The attachment order issued by Sanjay M Kaul IAS, Competent Authority & Secretary to Government of Kerala on ,  under section 7(3) of Banning of Unregulated Deposit Schemes Act (BUDS), 2019  says  “The Sub Inspector of Police, Cherpu Police Station as per letter read as 3 rd paper above has furnished report on the crime case No. 1070/2023 u/s 3 r/w 4,5,6 of Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and section 3 r/w 21, 4 r/w 22, 5 & 6 r/w 23 of BUDS Act registered against Highrich Online Shoppe Private Limited. The case is registered into the complaint that the Directors of Highrich Online Shoppe PVT Ltd, Capital Art Business Spaces, Neruvissery, Arattupuzha P O, Thrissur, Sri Prathapan and Sreena Prathapan have been accepting deposits from the public offering returns I/5958170/2023 by making them believe that by remitting Rs 750 or Rs 10000 they can enroll as members and for the deposit amount they will be provided dividends and other benefits after a fixed time period or on a monthly basis. It is reported that the deposit taking is akin to money chain model which is a punishable offence under Prize Chits and Money Circulation Schemes (Banning) Act. A prize chit or a money circulation scheme banned under the provisions of the Prize Chits and Money Circulation Scheme (Banning) Act, 1978 (43 of 1978) shall be deemed to be an Unregulated Deposit Scheme under the BUDS Act also.

Whereas provisions of BUDS Act are invoked in the crime case registered against Highrich Online Shoppe PVT Ltd, Capital Art Business Spaces, Neruvissery, Arattupuzha P O, Thrissur and the accused. Now, therefore in exercise of powers conferred under section 7(3) of BUDS Act, 2019, I, Sanjay M Kaul IAS, Competent Authority, hereby order the provisional attachment of all movable/immovable properties and all other deposits held by the Deposit Taker and the money or other property acquired either in the name of the deposit taker or in the name of any other person on behalf of the deposit taker…….”

The attachment order was addressed to the following:

  1. The State Police Chief
  2. All District Collectors
  3. The Additional Director General of Police (Crimes)
  4. The Inspector General of Police (EOW), PHQ
  5. All District Police Chiefs
  6. The Sub Inspector of Police, Cherpu Police Station, Thrissur Rural.
  7. The Inspector General of Registration Department
  8. The Transport Commissioner
  9. Registrar of Co-operative Societies
  10. General Managers of KSFE/District Managers of KFC/All Banks etc
  11. (through the District Collectors)
  12. The Finance/ Law/Revenue/Taxes Departments
  13. I & PR (Web & New Media) Department.
  14. Stock File/Office Copy

The Highrich financial scam could be the largest ever fiscal fraud, the state has recorded. According to a complaint registered with the Police the Thrissur base online MLM Company has mooped up anything around Rs 25,000 crore from over 25 million depositors. Interestingly, the State Administration has not taken much action against the fraudsters except booking a case against the fraudulent operators for nonpayment of GST. Though the managing director of the fraudulent company was remanded to judicial custody, the company is still in operation soliciting franchises. When contacted Highrich on phone (7356183049), to know if the company was still soliciting depositors, a lady by name Ancy Antony replied that they are giving franchise to those who enroll a minimum 250 depositors. The minimum deposit amount was 10,000 rupees per member.

As per Registrar of Company (ROC) records Highrich Online Shoppe is a Private limited company with two promoters Prathapan Kolatt Dasan and Kattukaren Shreedharan Sreena as directors.  The authorised capital of the company is Rs one crore and Rs 3,000000 is paid up capital.  The company, as per stipulations, was to conduct online shopping business similar to Amazon. But violating the norms, the company was engaged in collecting deposits, both online and offline, from clients across the country.

Since Highrich was neither registered as a NBFC nor had any license from the competent authority to perform financial dealings, accepting deposits from investors was a financial crime punishable under Banning of Unregulated Deposit Scheme (BUDS) Act 2019 and its predecessor Prize Chits and Money Circulation Scheme. (Banning) Act, 1978.

 According to a complaint received by the ROC, High rich has solicited and enrolled over 2.5 million investors collecting at average Rs 10,000/- from each “investor”.  Total deposit collected from the “investors” amount to a whooping Rs 25,000 crore.

Though the state has reported many number of such online frauds, the Highrich financial scam  could be the largest till reported in the history of the state of Kerala.

In fact  a private complaint lodged with the Economic Offence Wing  (EoW) of the Kerala Police and the ROC alerted the authorities and a police probe was initiated. The sub-inspector of Cherp police station was assigned the investigation and the probe brought out startling details of the continuing financial fraud of Highrich and the Competent authority initiated action on the ‘fraudsters” based on the police probe report.

However, Congress leader Anil Akkara suspects initiatives from certain power centers to protect the scamsters. Anil suspects “the involvement of Revenue Minister K Rajan and Finance Minister K N Balagopal in the case. Anil pointed out that when a case of financial mismanagement or tax evasion comes up, freezing the accounts of the particular company is the normal proceedings. Though Prathapan was arrested for a while his wife and co-director of the company, Sreena, is still running the fraud show soliciting depositors.”

A senior lawyer from Thiruvanathapuram who has been handling cases relating to financial frauds supports Anil’s argument. “Usually in such cases accounts of the company and the accused are frozen to bar any further transactions, including withdrawal of money. Here, though the case was detected on November 24, no steps were taken to freeze the bank accounts,” the lawyer said.

 According the congress leader, the Highrich case cannot be limited to simple tax evasion. It amounts to money laundering and the central agencies like CBI and Enforcement Directorate needs to step in for detailed probe.  “it is surprising  soon after the search (byGST intelligence), the company paid Rs 1.5 crore and Rs 50 crore on November 24 and 27, respectively. From where did the company manage this much of money in no time? The source needs to be investigated. Not just that, according to my understanding the company has offered to pay the rest 75 crores of rupees also (The GST intelligence has slapped a fine of Rs 126 crore to Highrich for tax evasion).”

Anil has shared certain documents with this correspondent to prove that Highrich has committed offences under BUDS Act 2019 and also was engaged in money laundering.

According to the documents collected by this correspondent Prathapan was convicted in several money swindling cases  in the past. (To be continued with exclusive documents)

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