Highrich MLM Scam: Director and CEO evade ED Raid and Arrest

Highrich MD and CEO evade ED Arrest and Raid in Black Car
Highrich - MLM - Scam - Director - CEO evade ED Raid - Arrest - TAXSCAN

The Director and CEO of Highrich, along with a Driver has escaped the raid and arrest by the Enforcement Directorate (ED). The arrest evasion occurred in a black car, as per reports

Prathapan Kolatt Dasan, the MD and Sreena Prathapan, CEO, the Co-Founders of Highrich, along with their driver Saran have evaded the arrest by ED officials. Search is underway at the premises with protection of armed officials.

A complaint of alleged Hawala Transactions of Rs. 100 Crores was filed by a Keralite and Ex-MLA Anil Akkara against Highrich Network Marketing.

The Kerala GST intelligence wing had arrested the director of Highrich Online Shoppe Pvt Ltd, the Thrissur-based MLM company, last month, on charges of tax evasion totaling Rs 126 crore, constituting the state’s most significant GST evasion case to date. He was released on bail shortly after.

Amidst allegations of goods and services tax (GST) evasion against Highrich Online Shoppe Pvt Ltd, a Cherpu police report submitted to the 3rd Additional District Sessions Court suggests that the fraud involving the company may reach Rs 1,630 crore, based on preliminary calculations. The report reveals that no complaints have been filed against Highrich officials, and the company’s assertion of having approximately 1.63 crore global customers is deemed fictitious. The investigation contends that Highrich, ostensibly marketing groceries through supermarkets, is operating a pyramid-scheme-based multilevel marketing chain.

Individuals can register on the company’s online platform and purchase products using vouchers of either Rs 700 or Rs 10,000. Upon recruiting another person to join the chain, the recruiter receives a commission of Rs 100 for a Rs 700 purchase and Rs 1,000 for a Rs 10,000 purchase made by the recruit. Each chain can extend up to 18 links, with commissions credited weekly to bank accounts. Police interrogated an investor who, by creating multiple IDs, was accumulating all commissions for the substantial purchases he alone made.

A company agent admitted to creating 39 IDs, purchasing Rs 10,000 vouchers for each, and enlisting 6,000 members. However, police clarified that it was 6,000 new IDs, not individuals, and the actual number of people involved needs further review. Consequently, the report exposes the falsity of the company’s claim of a customer base of 1.63 crore; instead, 1.63 crore IDs were created through its platform.

The company asserted having over 12 lakh customers on its HR OTT platform, but it garnered only 10,000 views. The Kerala Police traced 20 bank accounts of the company, currently frozen under orders from the district collector pursuant to the BUDS Act.

The Highrich scam has the potential to be one of the largest financial frauds reported in Kerala, necessitating an extensive investigation, as stated by the police in the report. According to the findings, all the company’s transactions occurred through its online platform, and it does not own any property; the godowns near Arattupuzha were rented, not owned by the company.

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