Fraudsters always come up with new schemes and new mode of cheating. I have already stated this many a time. And the Supreme Court judgement in criminal appeals No 1044, No. 1045, and No 1046 of 2008 delivered on July 10, 2008, proved this once again. The Supreme Court has clearly stated in the judgement that whatever the scheme if there is quick and easy money and it is depended on future enrollment of members, it is a clear case of money circulation scheme.
In the first appeal, the accused promoted a scheme in which a member has to pay Rs. 625 and after the enrollment of 14 more members he is eligible for repayment of Rs. 1250. The accused has already collected Rs. 500 crore. The prosecution described the scheme as 'mathematical impossibility'. The Supreme Court upholding the High Court judgement stated that it is a money circulation scheme and liable for punishment.
In the second and third appeals, the member has to pay Rs. 625 and the scheme promoter would purchase lottery tickets in his name worth Rs. 350 fir 35 weeks at the rate of Rs. 10 each. If the member wins the lottery the amount would be given to him. The rest of the Rs. 275 would be used for the subscription of a magazine. After 35 weeks, the member would be returned Rs. 1250. In this case also, the promoters collected Rs. 500 crore. The Supreme Court held that the scheme is so grossly unworkable and the promoters made unworkable false representations. But inevitaly and inescapably later subscriers are ound to suffer unjust loss when they swallow the false promises and make payments and it attracts the mischief of Prize Chits & Money Circulation Schemes (Banning) Act, 1978. The Supreme Court also held that it is also a clear case of cheating under Section 420 and 34 of IPC.
The Supreme Court judgment is lauded as it is a trend setting and the same would be applied to the other companies like Amway, Herbalife and others. It is high time people realised the danger of dubious schemes and not to fall prey such schemes.