the seizure of property belonging to M/s Amway India Enterprises Private Limited by the Directorate of Law Enforcement (ED) this week is the culmination of years of long and thorough work and investigations into multi-level marketing (MLM) businesses by a handful of law enforcement officers from Telangana and Andhra Pradesh, especially IPS agent VC Sajjanar.
Other IPS officers who have relentlessly pursued MLM companies include Charu Sinha who kept up the pressure on Amway, K Raghuram Reddy who as Kurnool Superintendent of Police (SP) arrested then the managing director of Amway India, William Scott Pickney, and Dwaraka Tirumala Rao who chargesheeted Agri-gold and Akshaya Gold.
No other state has followed the case against Amway as undivided Andhra Pradesh has. Sajjanar, who is now the Managing Director of Telangana State Road Transport Corporation (TSRTC), was a young SP in 2005 when, on a visit to his native Hubballi in Karnataka, he noticed billboards advertising a company’s products called Japan Life, including a bed.
“I was curious and asked my friends about palisades. I felt something was wrong, and the next day, without revealing that I was a police officer, I attended a meeting organized by distributors where they told people how to make a lot of money quickly by becoming a distributor and registering members to sell these “miracle beds”. When I tried to ask about the viability of their business model, I was discouraged. I immediately knew it was a scam,” Sajjanar said. The Indian Express this week.
“Looking back, I think it was by chance that I learned about this new type of direct selling pyramid model scam, because a few months later I was assigned to the offenses wing of Andhra Pradesh CID.At that time, the police were already aware of complaints from people who felt cheated because they had invested a lot of money but were not receiving the hefty commissions promised to them. .
“On August 14, 2006, I issued a press release calling on the public not to fall into the trap of multi-level marketing, hoping that the next day being a national holiday, a large number of people would read it in the newspapers at home,” Sajjanar said.
This public appeal led to the filing of the first and most comprehensive actionable FIR against Amway at a police station dedicated to investigating economic crimes.
“A software engineer named AVS Satyanarayana came to the EOW office and told me that I was right to call the public because it was nothing but an illegal money circulation scam of which thousands of people fell prey.
Satyanarayana had read my appeal in the newspaper while he was in Chanchalguda prison. Her story made me realize that not only were people losing money, but families were being torn apart and relatives and friends were avoiding each other,” Sajjanar said.
Satyanarayana and his wife, who had started a software company together, were approached by two people claiming to be Amway distributors, Sajjanar said. One of the men was related to Satyanarayana’s wife and pestered them to sign up, which they did after initially refusing.
“It soon turned out to be a nightmare for Satyanarayana. Clients began to complain that when they visited his office, instead of discussing work, his wife tried to sell them soaps, dietary supplements and car washes. Eventually, clients, relatives, and friends began to shun them. While they continued to buy products and pay to attend meetings and seminars, they were not making any money. When he tried to persuade his wife to stop, she, convinced that she would make a lot of money, filed a dowry case against Satyanarayana, and he was arrested,” Sajjanar said.
Based on Satyanarayana’s complaint, an FIR was filed on September 6, 2006, and police raided Amway offices and godowns throughout PA. “That’s how it all started,” Sajjanar said. An FIR had been lodged earlier at the Chandigarh Sector 26 Police Station, but it was not followed up.
Amway moved to court saying its business was legal and was granted a stay of further police action. However, when a PIL was filed by retired scientist Umamaheshwar Rao whose two sons had lost almost Rs 25 lakh in MLM programs including Amway, the cases were transferred to the court of the Chief Justice of the High Court of Andhra Pradesh and the police started to pursue the case. energetically.
During investigations, they uncovered evidence of the widespread social impact of the MLM craze – family members and loved ones turning on each other and filing divorce petitions or police cases. , or got involved in fights in order to enlist more members in order to obtain commissions.
“Families were torn apart and the social fabric was breaking. People sold or mortgaged properties to invest in MLM companies and ended up losing everything,” Sajjanar said.
“I studied their business models in depth and found that everyone was a distributor or business owner, and there were no consumers. When people started complaining about not getting commissions as promised, told by their elders that they weren’t working hard enough or signing up enough people. This began to affect families, relationships and friendships as people forced themselves to sign up. They were brainwashed in seminars and meetings that they would make a lot of money quickly, but ended up losing their investments instead. Unemployed youths, students, and housewives looking to earn a quick buck were targeted,” he said.
Some developments were bizarre, the officer recalled – for example, an entire village from Palakurthy to Telangana had registered to sell car wash liquid, but there were no cars in that village.
Aware of the impact on ordinary people and local economies, he alerted IPS forums, the Union Home Office, Department of Consumer Affairs and Department of Income Tax, said Sajjanar. Whenever he had the chance, he tried to publicize MLM companies.
But the companies carried significant political weight, and senior officers and government ministers often tried to block police action. “On one occasion, within five minutes of a raid on Amway property, I received a phone call from an irate senior asking me to return to the office,” Sajjanar said. Family members of top doctors and other professionals, some IAS and IPS officers and several politicians had become members, and there was implicit pressure not to pursue cases, he said. .
Kitty parties were turning into events promoting MLM products, and doctors’ wives were marketing magnetic beds and dietary supplements, he recalled. To represent their interests, MLM companies had formed the Indian Direct Selling Association. Sajjanar served notices on several Bollywood actors who were featured in MLM commercials.
“Even now, it pains me that there are still many loopholes in the laws that allow MLM companies to operate with impunity. There is no collective effort to stop these companies from duping innocent people and gullible, exploiting their desire to make a quick buck. Millions of people across the country still fall prey to these pyramid schemes,” he said.
Regarding the ED action, Amway said in a statement: The authorities’ action relates to the investigation dating back to 2011 and since then we have been cooperating with the department and have shared all requested information since then. . on time since 2011. We will continue to cooperate with relevant government authorities and law enforcement officials toward a fair, legal, and logical conclusion of outstanding issues.
“Amway has a rich history of maintaining the highest levels of probity, integrity, corporate governance and consumer protection, which are well ahead in the interests of consumers in general. As the matter is pending, we do not wish to comment further. We urge you to exercise caution, as a misleading impression about our business also affects the livelihoods of over 5.5 lakh direct sellers in the country.