Fifty-two-year-old Denise was the mastermind behind the online racket and is believed to have collected Rs 50 crore from unsuspecting individuals. The other suspects are Mohd Kurram (44), Kiran Modi (39) and Hitesh Modi (42). The CCB’s Fraud & Misappropriation Squad raided room no 225 of The Capitol Hotel, Raj Bhavan Road, and arrested the suspects.
The police are acting against the hotel management for not sending form C to the Foreigners Regional Registration Office and for abetting the suspects. Denise was running “YOBSN social media network MLM”, a web-based fraud company hosted from the United States through www.socialmediatechnologies.com.
Denise is the Asia-Pacific head of a US-based social media network. She has been staying at the Capitol Hotel since October 9 making power point presentations and holding marketing sessions to enrol members for the network.
Some CCB personnel also participated in one of the sessions, the police said.
Lure of big money
The suspects would lure new members with promise of big money in dollars by pushing the “Creating Your Own Social Network” tagline and encouraging members to ensure more enrolments in order to earn more.
They would claim that the chain will grow like a pyramid on the left and right side as new members are enrolled. They also claimed that a company like Facebook made huge sums from a social network and there was a similar opportunity with their network.
Denise also ran a website called Smart Media Technologies and advertised that any person could become a member by paying between Rs 8,000 and 25,000.
She would direct members to introduce more people to aid the pyramid’s growth in left and right direction and avail 25 per cent bonus each as commission.
During the investigation, the police found that if a new member failed to introduce more people then his/her investment went in vain.
The growth of the pyramid could get stuck at any point and “the chain is broken. As the chain breaks, all the members who have invested will lose their money, which amounts to cheating. Most of the members are youngsters,” said the police. Such circulation schemes are banned and is an offence, said a police oficer.
All members were given a unique username/password. The commission earned and the number of members introduced was meticulously accounted. Each user could see his/her pyramid and the commission earned, said the police.
Denise had 2,844 members on the left side and 29,495 members on the right side of the pyramid from across the world.
There are 2,000 members from the US, 1,700 from India, 28,000 from Malaysia, 500 from New Zealand, 200 from Dubai and 100 from Pakistan.
The Indian members include 300 from Karnataka, 800 from Maharashtra, 100 from Delhi, 100 from Punjab, 300 from Madhya Pradesh and 100 from Hyderabad, said the police.
Kurram told the police that he enrolled 2,000 members and collected $ 10,000.
Cases were booked under Sections 3, 4, 5 of Prize Chits and Money Circulation Scheme (ban) Act and Section 420 of the Indian Penal Code.
Other details like bank accounts, money transfer gateway, passport details are being verified by the CCB. The police are also sharing information on Denise’s arrest with New Zealand authorities.