Invest Rs 1 lakh in property or stocks and double it in six months’. Many would have received variants of this SMS in recent months.

Many would have even called back the sender, to find there are property or auto or stock schemes which offer such amazing returns. Sadly, while some are able to make hay while the sun shines, many more get duped.

Shivpujan Yadav, a physician by profession, calls himself an analyst of such schemes. This is despite his being aware that such schemes could wind up any day, with the operators simply vanishing.

His latest is a property scheme that is offering to double his money within six months. “These property firms buy agricultural land on the outskirts of a city in the investor’s name, after converting its usage. Then, the investor is told the land will be sold to a prospective buyer within the next six months at double the price,” explains Yadav.

Such dealers claim to have expertise in this business and give details of past deals. In addition, they give random statistics on people going for holiday homes to market their scheme. With a smile, he added” “I know the company will wind up operations within a few months.”

But not everyone is as informed and lucky as Yadav. There are a large number of investors who lose their hard-earned money by pursuing such promised returns. Investors should always take schemes that promise unusual returns with a pinch of salt. If they are wooed, a check on background of the business needs to be done. They can also access annual reports and other filings with the ministry of corporate affairs,” said Sanjay Saxena, additional commissioner of the Mumbai police’s economic offences wing (EOW).

The property companies mentioned above take investments, but are not covered by either the Securities and Exchange Board of India (Sebi) or the Reserve Bank of India. Reason: They are neither collecting deposits nor issuing shares. They are registered at the ministry of corporate affairs.

EOW is the only authority who can scrutinise their books and operations. They need a genuine complaint against the company to take any action. “Investors usually rush to the department only after the default has taken place,” said Saxena.

This was seen in the recent ‘cheating cases’, as the EOW calls them, of transport companies. The most prominent name was City Limouzines, something the police had unearthed in December. The company would ask clients to pay between Rs 109,900 and 189,100. Depending on the money, City Limouzines would buy a car in the client’s name. This car was leased from the client and in return the company paid between Rs 6,213 and Rs 12,213 per month.

The returns on the investment were initially between 67.8 per cent and 122 per cent a year, depending on the plan an investor opted for. The reported investor base in the scheme was over 25,000 individuals. The police have already received 7,000 complaints. Prior to City Limouzines, companies such as I Link Motor and Bhavani Metro Link duped investors the same way in 2008. “Obviously, it’s greed that drives investors to such schemes. Even before this, the plantation scam of 1998 was an example for many to understand that any investment proposal that looks too good to be true is not sustainable,” said Gaurav Mashruwala, a certified financial planner.

He quotes a Gujarati proverb: “Wherever there are greedy people, manipulators don’t go hungry.” For investors, it is best that they are satisfied with their 15-25 per cent returns from instruments like equity and gold. Anything more is likely to spell trouble.

source: Business Standard

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