MLM bomb set to blast in 2025

by Staff Correspondent
October 4, 2011

http://www.weeklyblitz.net/1862/mlm-bomb-set-to-blast-in-2025

Millions of people are already lured into various fake projects of a number of Multi Level Marketing [MLM] companies in Bangladesh, where they estimated to have invested more than TK. 15 thousand crore [US$ 2 billion]. According to information, one of the leading MLM companies in Bangladesh alone has by now collected 60 percent of the mentioned amount by alluring people towards the trap of so-called plantation project, offering large profit. Our staffs have investigated the cases of severe fraud by the MLM companies in Bangladesh and it was already disclosed that the largest MLM company in the country, which not only is aggressively investing in various genuine and fake projects but also have acquired a mentionable strength in the media is secretly set to declare itself bankrupt by 2025, while the promoters and directors of this company are already making investments abroad, buying properties and even obtaining immigrant status to simply flee after cheating millions of innocent small investors.

Multi Level Marketing companies are generally treated globally as fraudsters. In the past few decades, dozens of MLM companies have disappeared after looting cash from the people with various alluring projects. In Bangladesh, already a MLM company named Unipay2u has disappeared after taking away millions of Taka from the people, which this MLM Company collected with the alluring fake projects of high interest investments. This company told its investors that it was buying gold bullion with the amount collected from the investors. But later it was revealed that Unipay2u was not buying any such gold bullion from the market, thus the MLM Company was continuing to befool the clients and taking away their money.

The Anti-corruption Commission [ACC] in Bangladesh has already lodged a case against two top bosses of Unipay2u Bangladesh, on charges of amassing around Tk 2.46 billion [246.13 crore] by cheating people. Assistant Director of the ACC Md Toufiqul Islam filed the case with Shahbagh police station against Shahiduzzaman alias Shahin, and Muntasir Hossain, the chairman and the managing director of the MLM firm respectively.

The Unipay2u used the following trap to allure people:

If you open an account with US$65 [TK 4,500], you will be allowed to purchase up to 75 grams of gold worth TK 157,000. Once you deposit the money, the purchase is done.

The benefit is "guaranteed" - 10 percent a month - and will double in just 10 months. You are entitled to more: if you can convince others to open accounts, 10 percent of their deposited money will go into your wallet. Four packages called trading accounts are on offer. They range between US$65, US$120, US$260 and US$520 and you will get an investment opportunity in gold.

This is how unipay2u Bangladesh, the multilevel marketing company, has been luring people and amassing their hard-earned money from across the country. It claims the investment is safer, easier and better value.

The gold you buy is your personal tangible property, stored "economically" in the world's safest places in London, New York or Zurich.

Unipay2u started business in Bangladesh since November 2009 and it had at least 300,000 members till it shut down its offices and the promoters of this fraudster company disappeared.

The Unipay2u inside sources said they were giving "membership" through "authorized agents". The company has earned over TK 136 crore from account opening fees [US$65 per account] paid by 300,000 members, who have invested TK 630 crore with a minimum of TK 21,000 each.

Unipay2u is not the first to make such offers in Bangladesh. Neway, SAP, Doorway, FIC, A-1 System, Jubok and GGN had earlier come to the market and cheated thousands of people. Most of them have folded up.

"They are frauds. They earn by cheating people," said schoolteacher Faruque Hossain, who became a member of GGN with a deposit of TK 15,000 a decade ago.

"I got TK 3,000 by making a few others members of the company but they did not get any return," he said.

But the most revealing and shocking information reached our hands about a multi level marketing company, name of which starts with 'D'. According to cross-checked information, this company is selling trees at its so-called plantation project at the Chittagong Hill Tracts to various people in Bangladesh through its network of agents. Our investigators learnt that this company has engaged more than 300,000 agents throughout Bangladesh for collecting money offering high profit in tree plantation projects.

Though an initiative was taken in Bangladesh by the current government to draft and attempt to enact a Multi-level Marketing [Control] Act, 2011, the entire matter has been some how sent to cold-storage under the single-handed efforts of the largest MLM company in Bangladesh, which now operates several business projects, starting from herbal oil to airline company to cinema halls. Interestingly enough, the company owns a project in print media, where it loses more than TK. 3 million each month. Similarly the company is set to start an airline company, while it is learnt that, private airline companies like GMG are already suffering from acute financial setbacks. It is understood that, the MLM Company might have undertaken the airline project simply to attain confidence and trust of the investors, while it will suppress the dark side of losing millions of Taka in this project.

In some villages of Natore and elsewhere in Bangladesh, so-called members of Destiny 2000 manipulated simple villagers into becoming buyer-distributors of the company. Some victims of the delusion said they had borrowed money from co-operative credit schemes in order to register with the company, but now they find no-one to pass the buck on.

Biplob Sarker, one of the credulous, said, "I went wild with enthusiasm when they [Destiny distributors] explained to me what seemed like a fantastic way of making money. But, now I am in real trouble. The instalments of loan repayment to the co-operative credit union have become a constant headache for me."

Inside sources in the questioned MLM company told Weekly Blitz that, it already has lost at least 150-200 crore Taka in buying false properties in Dhaka and other parts of the country, which are being initiated by the directors of this MML company, in order to take away public money and invest in their private ventures. The source said, most of the directors of the said MML Company has invested significant amount of money in their private businesses in Dubai, London, Montreal and New York City.

"They all are set to disappear in a fine morning, latest by 2025" the source said.

Commenting on the tree plantation project of the MML Company, the inside sources said, "Where they will get such thousands of acres of land? Till August 2011, this company has sold trees to more than three million people and already collected TK. 5,000 crore as upfront payment. Now they are receiving "monthly instalment" of the tree from the members. The money is continued to be received by this MML Company, though there is no such existence of huge sized land to accommodate millions of trees, which already are sold to the investors.

The source further said, the company is set to pay "dividend" to the investors in tree plantation project from 2012 and it indicated that, while they will continue to pay off the previous investors [old investors], it will continue to collect new customers. So, the fact of fraud will only become clear to people maximum by 2025, when the company will already suffer from financial crisis, as the money collected from the people are freely invested and spent by the directors in various so-called projects, most of which are losing ventures.

"The company will even have problems in paying its existing clients of tree plantation project, once the government monitoring the activities of the MML companies. In such case, the tree plantation project will become another huge scam in Bangladesh, similarly as share market [stock market] scam or Unipay2u scam."

The law, which was initiated by the Ministry of Commerce, was supposed to be formulated by July 2011, to formulate 'direct sale' legislation for multilevel marketing [MLM] companies in an attempt to bar them from conducting 21 businesses. According to the Ministry of Commerce sources, the law is being drafted against the backdrop of massive allegations of cheating people by the companies and to bring them under tough monitoring. Sale of any imaginary product, tangible assets like trees, apartment, and land etc, any kind of bonus scheme, collection or disbursement of funds by instalment or savings, lottery ticket selling, trading of gold/platinum/bronze are remarkable fields where the MLM companies would not be allowed to do business. MOC sources said, once the law is passed, an authority will be formed to control MLM business in the country. In the new law, it has been proposed to allow the controller to punish the unscrupulous people of the companies with five years' prison or financial punishment or both.

Bangladesh has about 100 MLMs registered with the Registrar of Joint Stock Companies and Firms. MLM enticingly named Destiny 2000 had about 4.8 million clients. A premier bank in Bangladesh warned the people against investing in MLM companies that offer abnormal profits in a short span of time. Bangladesh Bank has already warned people to refrain from falling into the traps of the MLM fraudsters.

According to the office of the Registrar of Joint Stock Companies and Firms, around 100 MLM companies are operating in the country. Nearly two-thirds of them are involved in banking, which is illegal. The registrar's office admitted misdeeds by MLM companies, but said it is impossible for them to monitor whether the companies are operating within the permitted domain, due to inadequate manpower. The Registrar of Joint Stock Companies office said, most of the MLM companies have been selling sub-standard goods to customers at high price. Some have not even provided any goods but are collecting money from people for buying goods on behalf of them abroad. In the past many such business organisations vanished after collecting money from people alluring them in the name of providing huge profit. Hundreds of people lost their hard-earned money through this process. According to the proposed act, new or existing MLM businesses will have to take licence from the new authority along with registration from the office of the Registrar of Joint Stock Companies and Firms. They will have to take approval from the authority to include any new goods in their products list. Prices of the products have to be mentioned in their body. Alongside providing licence, the authority will monitor price and standard of products. If the prices of the goods are found higher than the market price the authority will file case against the marketing companies.

Commenting on the MLM companies, leading English newspaper The Daily Star said: "Multilevel marketing (MLM) companies are preying on regulatory and human weaknesses. They are managing funds and doing banking business illegally, but openly.

"Asset managers, merchant bankers, brokers or portfolio managers who manage others' wealth are subject to government licence to operate.

"But MLM companies in the country are growing fast in the absence of a regulation, investment analysts say. People's relentless efforts for financial security have made the moneymaking game easier for the fraudsters, they add.

"According to Joint Stock Companies and Firms registrar, some 70 MLM companies are operating in the country. Nearly two-thirds of them are involved in banking, which is illegal. The rest offers a very few products.

"Both concepts charge Tk 1,000 to Tk 10,000 for membership.

"There are many more companies spreading out countrywide and running business without a trade licence.

"Around 50 lakh people are involved in the business, says Al-Mahmud, managing director of Mway International Limited, an MLM company. And the money involved will be several thousand crore taka, he adds.

"Market players, however, blame each other.

"We are creating jobs for thousands of unemployed youths. MLM exists in many countries including in developed ones," said Gazi Md Zakir Hossen, chief executive officer of Uptrend Distribution (BD) Ltd known as uptrend2u.

"But a section of unscrupulous gang is cheating people by offering big returns, Hossen claimed.

"He points fingers at unipay2u, TVI Express, Visa Ray, Speak Asia, Legend Venture, Unigateway, GGN, Goldtrend, Neway and Destiny-2000 Ltd. Many companies have already folded up, he said."

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