West Bengal leads in ponzi schemes; Gujarat tops in vanishing companies

NEW DELHI, 14 MARCH: The government today said it has found 87 companies across the country to have vanished after raising funds totalling Rs 342 crore through public issues and a majority of such firms were from the state of Gujarat.
Besides, 87 other companies are also being probed by the government agencies for duping the general public through illegal Multi-Level Marketing (MLM) or Ponzi schemes and West Bengal tops this list with as many as 73 such entities.
The market regulator Sebi has also detected as many as 669 companies to have duped investors of Rs 7,435 crore through illegal collective investment schemes, corporate affairs minister Sachin Pilot informed the Lok Sabha.

The entities are classified as 'vanishing companies' if they cease to file their balance-sheets and other documents after raising capital and the whereabouts of their offices or directors become untraceable.
In the Ponzi or MLM investments, the companies generally raise the money from general public and ask each investor to lure others into these schemes with a promise of huge returns. However, the operators disappear after some time, leaving the gullible investors in the lurch. Giving details of the entities running such Ponzi schemes, as also that of the vanishing companies, Mr Pilot said that chief ministers of various states have been requested to issue directions to their respective police authorities to take action against the erring companies.
Mr Pilot said he has also written to the finance minister to facilitate increased surveillance by the RBI over unauthorised NBFCs (non-banking finance companies) to tackle the menace of Ponzi schemes.
“The ministry takes prompt action against errant companies as and when complaints are received against them. At present, action has been initiated on complaints received against 87 companies relating to MLM/Ponzi schemes,” Mr Pilot said. 

Courtesy: The Statesman