Author Topic: QNet, the MLM is back in India for fooling, duping more people  (Read 28116 times)

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Offline Ajai Singh

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QNet, the MLM is back in India for fooling, duping more people
« on: November 17, 2012, 15:37:07 PM »
http://www.moneylife.in/article/qnet-the-mlm-is-back-in-india-for-fooling-duping-more-people/29655.html?utm_source=PoweRelayEDM&utm_medium=Email&utm_content=Subscriber%23103507&utm_campaign=Weekly%20Newsletter

QNet, the MLM is back in India for fooling, duping more people
15/11/2012 05:47 PM |   

QuestNet and GoldQuest, which all but closed down in 2009, have emerged bigger and stronger as QNet.  But the hype and hard-sell by this MLM company to ensnare people into enrolling distributors and hawking lifestyle products such as watches, gold coins, bio-discs, herbal products and travel packages is worrying. Will it also go the SpeakAsia, Stockguru and NMart way while regulators do nothing?
 
QuestNet and GoldQuest, multi-level marketing (MLM) companies that had shut shop in 2009 following police action are back with a bigger bang. They now calls themselves QNet and is thriving in an environment where tens of thousands of Ponzis and MLM companies are able to lure people into believing that they have the formula to instant riches and a high growth career.
 
While QuestNet and GoldQuest, which mainly sold numismatic gold coins (they claimed they were limited edition coins that whose value would increase over time) in 2009 were forced to shut shop in India, their new avatar QNet offers a broader range of lifestyle ‘enhancing’ products (holiday packages, diamond watches, bio-discs, Chi-Pendants and herbal products for anything between Rs30,000 to Rs7 lakh), which promise fabulously high returns so long as new distributors are enrolled rapidly. Its product brochure says, “With 8 ways to earn and up to 50% of the sales paid out in commissions, QNET offers the most dynamic and innovative compensation plan in the direct selling profession.”
 
Read- Coin Game (http://www.moneylife.in/article/coin-game/421.html)
 
Like SpeakAsia, QNet is also registered in Singapore and has been banned in many countries, including Iran. It has a Hong Kong-based founder Dato’ Vijay Eswaran, a Malaysian by birth and an Indian by ethnicity, who is photographed hobnobbing with the Prince of Saudi Arabia, in order to enhance its credibility in the Gulf.
 
The last time around, QNet was being evangelised by former World Billiards champ Michael Ferriera, as well as some former national cricketers. This time, it is being hard-sold by senior corporate executives, including heads of multinational companies, who have been forced to quit in the 40s and 50s, having fallen off the career ladder. Moneylife has received emails from several worried readers asking us to bring the “QNet scam” to the attention of regulators before it dupes their friends and relatives already ensnared by the hard-sell.
 
One reader says, “QNet dealers are now targeting call centre employees, IT professionals and housewives on the promise of helping them earn extra income.” “QNet,” he says, “has small office, which it refers to as a “Grooming Centre” at Bandra in Mumbai. Its dealers and agents, however, rent out conference facilities for their rousing hard-sell which, like the Amway meetings, usually happens on a Sunday morning. To become member, you have to buy products—exquisite watches, holiday package, Chi-Pendants, gold and diamond jewellery—which are in the range of Rs1 lakh to Rs2.5 lakh and then to start earning commission; you have to make six other people to buy products”. But this is the simple option. The ‘packages’ go up to Rs6 lakh or more too. Also, there are apparently different schemes and packages being sold to different investors, rather than one clear product or service.
 
For instance, Anil Mehta (name changed) a certified financial planner has this to say. “QNet is projecting that it can create over lakh billionaires through its Ponzi scheme. All you have to do is to invest once—say Rs5lakh and you will get back Rs 5lakh every week for the rest of your life. I know you will laugh, but this is exactly what they are projecting”. He says, since they claim to be a global company, they have managed to get bank managers, software professionals and insurance agents to get involved and evangelise this scheme.
 
Manoj Arora (name changed), a chartered accountant and management consultant tells us how he decided to string along a QNet ‘operative’ to understand its modus operandi which promises to make you a millionaire in two or three years.
 
He was scandalized at what he discovered and says, “QNet is just not about Amway-esque MLM but a Stockguru-type pyramid scheme. The premise is to get more and more people to invest Rs1 lakh to Rs6 lakh in an 'e-commerce' venture. They make you owners of QI group by selling three shares for every Rs1 lakh. How does that generate returns? The victims who are enrolled into the scheme, in turn hunt for newer victims to buy into the Ponzi. They are entitled to get 14% of share capital they or their victims raise. The scam is proliferating through social media like Linked-in to find newer targets. This reader had stored names and screenshots of people canvassing QNet from their profiles on Linked-in.
 
Amrit (name changed), yet another reader wrote to say, “I was very recently approached by an ex-colleague with one wonderful scheme by QNet and he explained the products and plans of the company. I signed up for it on the basis of my trust in this friend. However, after joining I observed that the company is promoting its money-making plan by targeting the near and dear ones of those who has enrolled. I am now a suspicious about the activities of QNet and its functioning and skeptical about the manner in which they approach people. Can you tell me more about QNet?”
 
Well, the company had a chequered past. In 2008-09 it was making waves like it is today. At that time, it flaunted powerful political connections (at that time a GoldQuest executive, K Preetha had said that Nalini Chidambaram was a legal advisor. This was after we pointed out that that the connection was highlighted at its meetings to recruit/ensnare new agents). However, QuestNet virtually folded-up after the Chennai police arrested several employees and the business was in completely disarray.
 
At that time, QNet’s Singapore-based Director of Corporate Affairs, Zaheer K Merchant had attempted to convince us that the business model was fair and in line with the activities of other direct marketing and MLM companies such as Amway, Tupperware and other multinationals which were members of the Indian Direct Selling Association. He also tried to explain the problems at Chennai.
 
Interestingly, QNet’s response was to organise a junket for journalists to Hong Kong to show that the company was not running a ‘scam’. This writer also received an invite, which we DID NOT accept. J Mayer, the Managing Director of QI Group had then written to say, “I believe that you are familiar with the names QuestNet and GoldQuest which have been in the media spotlight in Tamil Nadu and other areas of India for about a year or so.  Unfortunately, I am aware that the names QuestNet and GoldQuest do not have a positive image in the minds of either the media or the general public at this present moment.
 
Due to the legal challenges that both the companies have been facing, in India for over a year now it has unfortunately led to both companies being forced to halt their operations and temporarily close down their offices. However, the companies are by no means non-existent. Thus the MD of QuestNet India, Ms Pushpam Appalanaidu has not been in any position to make media statements or invite the media to an open forum to answer questions about the two entities.
 
As we continue to defend our case in the court of law to prove our legitimacy, we would like to take the opportunity to show you that QuestNet and/or GoldQuest are not a ‘scam’ or a ‘gold coin fraud’ company as it has often been portrayed in the press this past year.
 
QuestNet Ltd, the international company with which QuestNet India is affiliated is headquartered in Hong Kong and through representative and agent offices, has a presence in over 30 countries worldwide. The international company has been in the multi-level marketing business for about 11 years and caters to the needs of over 4 million customers in more than 100 countries worldwide who have taken advantage of the business opportunity provided by QuestNet to be a direct sales professional.
 
In order for us to show you the real face of QuestNet and share with you the story of the company that has changed millions of lives worldwide, we would like to invite you to visit our corporate headquarters in Hong Kong, where you can see for yourself our global infrastructure, meet with our multinational customer support team, go on a tour of our facilities including our warehouse from where thousands of products are shipped worldwide on a daily basis, meet with the senior management of QuestNet International  and learn about the investments the company has made in India with a view of long term commitment to the country”.
 
This time too, we reached out to QNet and Mr Merchant has agreed to answer all out queries. Accordingly, Moneylife has emailed several questions to QNet and we are awaiting answers which will be appended to this report.
 
Since then, Moneylife has done extensive work on all MLMs and come to the conclusion that all of them fall foul of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978.  We have also made representations to the Prime Minister’s office to ban MLMs altogether or allow them to operate under a clear regulatory framework under a designated regulator.
 
Today, while tens of thousand MLMs and Ponzis are cheating people no ministry or regulator is in charge. The ministry of corporate affairs (MCA) does not even require these companies to be incorporated in India. This ludicrous situation persists at a time when there is such heated debate about legitimate foreign direct investment in retail and insurance.

Offline Ajai Singh

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Re: QNet, the MLM is back in India for fooling, duping more people
« Reply #1 on: November 17, 2012, 15:40:35 PM »

It is interesting that GoldQuest was at one time represented in court by present Finance Minister, P Chidambram! Will his past association assist the company is avoiding legal and regulatory hurdles?

http://www.hindu.com/2003/11/08/stories/2003110809150500.htm


HC `no' to GoldQuest plea
Saturday, Nov 08, 2003
By Our Staff Reporter

CHENNAI NOV. 7. The Madras High Court has declined to permit a multilevel marketing company, to operate its frozen bank accounts and from its sealed office premises here.

Justice P. Sathasivam yesterday dismissed a petition from GoldQuest International for an order restraining authorities from continuing to keep sealed their office, Rain Tree Place at Chetpet, and to restrain officials from interfering with the operation of the company's bank account.

The company markets its gold and gold products through a multilevel concept of rewarding consumers who introduce new members. After the first complaint was registered on April 10, more than 100 persons followed suit, saying the company conducted its business mainly by enrolling persons and paying a commission out of the money mobilised from members, rather than by sale of numismatic coins.

Senior counsel for GoldQuest, P. Chidambaram, said unless the company was allowed to transact business and operate bank accounts, it would have to face serious consequences at the hands of not only the customers but also the Income Tax and Commercial Tax departments. He also faulted police action, including non-submission of seizure reports to higher authorities.

However, Mr. Justice Sathasivam concurred with the submissions made by the government advocate, Abudukumar Rajarathinam, that since the investigating officer was incharge of the police station, there was no need for him to submit the seizure report to any other officer.

Also, a police officer, in the course of investigation, could seize bank accounts of the accused and prohibit their operation if there was evidence to show that such assets had direct links with the commission of the offence. ``In the absence of specific details such as the actual number of complainants, the amount involved and the amount payable by GoldQuest, any direction (as prayed for) cannot be issued at this stage''. This court would not prohibit the lawful authority of the investigating officer in probing the case and filing a final report before the competent court.

On Mr. Chidambaram's submission that the Union Consumer Affairs Secretary had sent a communication to all States asking them not to interfere with multilevel marketing businesses, the judge said, ``it is only a letter from the official, and not a notification duly published in the official gazette''.

Offline Ajai Singh

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Re: QNet, the MLM is back in India for fooling, duping more people
« Reply #2 on: November 17, 2012, 15:49:34 PM »
http://www.moneylife.in/article/coin-game/421.html

Coin Game
11/10/2007 12:00 AM |   

An international network marketing scheme hawking expensive limited edition coins is attracting a huge following. Sucheta Dalal examines this strange quest

Over the past few decades, one has seen a variety of chain marketing schemes capture people’s imagination but each of them has either collapsed or vanished with public money. There was the Sheregar gold-chain scheme, which did so well that it spun off diamond and kuber schemes. When it collapsed in 1998, nearly 5,000 investors lost their money and an agent was found murdered.

Then there was the JapanLIFE scheme, which sold magnetic mattresses for a stupendous Rs one lakh plus and was apparently started by a businessman from Shenzhen. Congress MP Jaipal Reddy had raised the issue in parliament and called it a scam. But its politically-connected promoter R.V. Pandit - or rather his son, who was the main operator - was arrested only a couple of months ago. This scheme ran for well over a decade and again thousands of people have lost money or are stuck with really expensive mattresses.

A third one that we exposed in the 1990s, while I was at the Times of India, involved some time-share schemes, sold by a bunch of people who claimed they were non-resident Indians (NRIs). They targeted bankers and wealthy businessmen, held meetings only in five-star hotels and flashed visiting cards with only a mobile numbers. They vanished when we began to expose their clandestine operations.

The latest scheme that has captured public imagination for the past few years is ‘GoldQuest’ or QuestNet. Call it network marketing, or multi-level marketing (MLM), a pyramid or ponzi - you will find endless debate over its pros and cons on the Internet. Of course, QuestNet executives will provide you an elaborate distinction between MLM schemes and pyramids and claim they belong to the former category.

Is networking marketing a scam? Let me start by pointing out that several developed countries ban multi-level marketing companies altogether. Even Iran threw out GoldQuest. Their functioning and structure confuses people. After all, any scheme that is not marketed openly but propagated only through quiet networks, promises instant riches and sells products at a huge multiple of their intrinsic worth certainly attracts suspicion. This is evident in the numerous emails that I have received over the past two years asking about Goldquest. As usual, people want ready answers, which are not always available. It is for each individual to decide, whether to be lured by the quick riches that the scheme promises and the implications of persuading family and friends to cough up the money to participate.

What exactly is GoldQuest or QuestNet? Its corporate communication executives wrote to say that GoldQuest International, Hong Kong, is part of the QI Group (www.qi-ltd.com) and QuestNet , the marketing arm of the group, is also headquartered in Hong Kong (www.quest.net). GoldQuest International has 18 wholly-owned subsidiaries engaged in a wide range of activities including time-share resorts, retailing, education marketing, finance and corporate investments. In India, it registered GoldQuest International India Pvt Ltd., in 2001. Elsewhere we are told that QuestNet Enterprises has been registered in November 2004 in Chennai. Between them, they have offices at Bangalore, Mumbai and Hyderabad. The communication is interesting, because the communication executives sometimes refer to both companies with India in the name and at other times without it.

The wife of a finance company chief, who attended a marketing seminar, says that the organisers claimed to have Reserve Bank of India’s permission to operate the scheme and that the Finance Minister’s wife Nalini Chidambaram is the legal advisor to the company. Although QuestNet’s claims about its legitimacy are an important part of its sales pitch, government agencies are uncomfortable about its operations and the Intelligence Bureau has sent out a report questioning its activities to several government agencies.

The company sells a pair of limited edition, numismatic medallions for around Rs30,000 that are made in Germany. These have images of Indian deities, the ka’abah, Bhagwan Mahavir, the Pope and Mother Theresa; it also has coins for major world sporting events-in fact, it has coins for every interest group. It sells through closed-group presentations led by influential people - doctors, lawyers, sports stars - and the products are pitched at those who can cough up Rs30,000 for a pair of medallions of doubtful value (limited edition coins don’t necessarily appreciate in value). The emphasis at these meetings is on establishing the apparent legitimacy of the scheme by displaying documents about its tax filing, apparent government permissions and its ISO 9001:2000 certification.

However, the selling point is not the value of the coins or their potential appreciation. Each buyer of coins, who puts down 30 grand, is supposed to persuade two others to join the scheme and purchase coins. When that happens, the originator gets back a part of his money in line with a detailed matrix which is spelt out on its website without indicating the exact returns earned. The company has three posh offices in India, but when I called a number listed on the Net, I was told that the person who informed me about QuestNet alone can give me information about the scheme. However, they offered to tell me about a couple of forthcoming seminars that I could attend for more details.

Last week, Prof Agashe from Pune wrote to say, that Michael Ferriera, the former world billiards champion, is at the forefront of marketing the scheme and a former cricketing great and a national tennis player are also cheer-leading the sales and lending credibility to the scheme. Over the past few years, the scheme has apparently reached even farmers from Sangli. A doctor proclaims that he has been earning several lakh rupees every month from GoldQuest - apparently selling some limited edition coins is more profitable than practising medicine!

Anand Desai, an investment banker, changed his mind about joining the scheme, after having paid Rs30,000 because of the long delay in sending him the coins. This started a protracted battle, with Mr Michael Ferreira communicating with him on behalf of the group. After much wrangling, Desai got his coins but was flatly told that the company has no policy of returning anybody’s money if they choose to opt out of the scheme. There are many such cases posted on the Internet and, in Chennai, there was even a raid on the company.

Several months ago, in an email to me, Ramya Chandrasekaran, the communications manager at QI Limited wrote that network marketing is a much-misunderstood business - “perceptionally challenged”, is how it was described. She also sent me a long presentation to highlight differences between pyramid schemes, which she portrays as a scam and multi-level marketing schemes, which are claimed to be legitimate. Another GoldQuest executive, K. Preetha, head corporate communications, replied to my queries saying, “We would like to further reinstate (sic) that as asked by yourselves (sic), Mrs Nalini Chidambaram was engaged by the company on the legal side. She is not in the management team as perceived. Our legal advisor is Mrs Senthamarai who handles all our legal sundry issues.” She says further: “We need not have to have any RBI approvals/sanctions to run our business.” Well, the Reserve Bank of India is currently looking into this claim and, as I said earlier, the Intelligence Bureau is not very comfortable with it either. At the same time, there are people who claim to be raking in the moolah by hard-selling coins to friends and relatives. Only time will tell whether the smart ones are those who joined the gold quest or were too prudent to be lured by quick riches.