MLM company worth Rs 347 crore busted

Hyderabad, Aug 30 (INN): The Central Zone team of Commissioner's Task Force on Tuesday busted an international money circulation scheme worth more than Rs 347 crore which was being operated in the name of selling Nano Technology products.

According to police, the main accused Harish Babu Maddeneni, the Managing Director of Nano Excel Corporation Ltd, who has been arrested used to sell products through the franchises or stock points allotted by his company at UAE and Philippines apart from India after entering into 'MoU' with them.

Presently, he was selling about '11' 'Nano Technology' products through his distributors in the name of Nano Care Products. Out of the '11' products, most of them are imported from Korea, Shenzen and China.

The accused company is supplying the products to the franchises as per the distributors price (DP) to sell the same to the customers through referral marketing, as selling the products of his company through retails outlets, shops is contrary to the business plan and sales policy of their company.

However, on enrollment as distributor used to be designated as 'Star Agent' 'Star Ruby' 'Star Pearl' 'Star Diamond', 'Double Diamond', 'Crown Diamond', 'Platinum Diamond' and 'Titanium Diamond' distributors and it used to fetch good commission ranging from 10 to 20% on the sale of products as Distributor Discount.

On further joining of distributors/members in large scale and on the sale of products in huge quantities by them one would get their 'Star Ranking' as mentioned above.

In the advertisement pamphlets of the accused company 'Business Plan' clearly shows the details of star ranking with corresponding commissions received by each of them according to the volume of their business done by the distributors down line.

In the month of Dec, 2007 the accused company started multi level marketing of 'Nano Technology' products through the chain of distributors enrolled with his company to earn money quickly.

As the accused company was paying good commissions to the distributors as per new members enrolled down the line, from time to time his business has been expanded to other states such as Kerala, Tamilnadu, Karnataka, Maharashtra etc.

In the company of the accused, the person on the top who enrolled/sponsored the other distributors would get the commission based on the business carried out by the last person on each item in the chain, which is the foundation for multi level marketing.

Police claimed that so far, the company is having 2,06,181 distributors/members. Every month end, the company was paying commission to the distributors, as per the business carried out by down line the previous month.

The company pays the distributors crores of rupees as commissions every year. The company has collected subscriptions worth Rs. 347 crore so far in all the three countries through his chain of distributors.

Several Criminal Cases were registered against the accused in different states and in Kerala alone he is wanted in 236 Cases which are under investigation. Police said that the documents seized proved that the company was involved in the multi level marketing.