ED files charge-sheet against Ebiz.com, its MD in money laundering case

The Enforcement Directorate (ED) said on Friday that it has filed a charge-sheet before a special PMLA court against Ebiz.com Private Limited, its Managing Director Pawan Malhan and 26 others in connection with its probe into an MLM Pyramid scheme fraud.

The ED said in a statement that during the probe conducted under the Prevention of Money Laundering Act (PMLA), it was revealed that funds were fraudulently collected from the subscribers as membership deposit through a chain of agents spread across India.

“These deposits so collected were illegally diverted into the personal accounts of the directors, their family members and other associates under various heads – dividend, salaries/incentives etc. – and were utilised to purchase properties for themselves or their relatives,” it said.

The statement further said that the accused persons cheated the public by falsely claiming that their fraud pyramid scheme was a legitimate direct selling network scheme by introducing sub-standard products like suit lengths.

Earlier in 2019, the ED had provisionally attached various movable/immovable properties worth around Rs 277.97 crore of Malhan, his son Hitik Malhan and others.

The ED had registered a case on the basis of the FIRs registered by the Telangana Police against Ebiz.com Pvt Ltd and its directors or associates for cheating common public by propagating a pyramid scheme and luring gullible public through the false hope of earning quick and easy money.

It alleged that they were running this scheme in the guise of direct selling multi-level marketing business for sale of worthless products like computer education packages (which were downloaded freely from the internet), cheap suit lengths etc.

The ED said that the primary purpose for which the members were joining the scheme was to get commission from enrolments, and not for the products.

“They extensively advertised their commission model in which very high commissions were paid to sponsoring members for enrolment of new members in their down link of the pyramid. They used to hold large conventions in which top rung members of this pyramid scheme would give lofty speeches and display their new found wealth earned from commissions and encourage thousands more to join this scheme,” the ED said.

“The balance was being siphoned off by the Malhan family. Such schemes are inherently unsustainable and they collapse as soon as there is a run on the business. In such ponzi schemes, only the top members make sizable profit, leaving lakhs of members at the base of the pyramid poorer of their investment,” it said.