An elderly investor in the ponzi scheme company I Monetary Advisory – which has left over 40,000 investors stranded after its founder went underground on June 8 – blames politicians and religious leaders from the Muslim community for the scam.
"People trusted the company because its founder Mohammed Mansoor Khan was seen in the company of political leaders at various events. In messages religious leaders said the company’s investment schemes were in line with our beliefs. People flocked to invest in IMA because of these factors," said Mohammed Akram, 70, an investor who has now approached the police to atleast recover his principal amount of Rs 12 lakh from the sunken firm.
A series of companies running ponzi schemes, targetting mostly middle class Muslim investors – with hard earned money from small businesses or jobs in the middle east – with promises of huge returns on investments have crashed in Bangalore in the last few years.
Firms like Ambidant Marketing, the Ajmera Group, Hira Gold, Injaz International have all come under the scanner of tax, banking and police authorities amid complaints of fraud.
The Karnataka government and police have acted against these firms under the Karnataka Protection of Interest of Depositors in Financial Establishment Act, 2004, after complaints of defaults on payments and reports against them from agencies like the RBI.
Of all the firms claiming to offer huge returns on investments – in the range of 36 to 60 percent per annum – I Monetary Advisory, which claimed to be involved in gold bullion trading has managed to thrive the most by positioning itself as a halal firm where investors are partners and not depositors like in the other firms.
Established in 2006 IMA hit the big time around 2015 and managed to thrive despite warnings against its fraudulent schemes from the RBI, income tax investigations, and a public declaration by the government of Karnataka in November 2018 of seizure of the firm’s assets.
"Some people gave a fatwa saying that investments in IMA is halal. People have followed like sheep and invested innocently. Some have done it to fund the marriage of their daughters, some for education of children, some just for savings. After demonetisation people who had money started investing in such firms," says Azhar Ahmed, a social worker from the Shivajinagar area in central Bengaluru where IMA is headquartered.
"They were a good company but suddenly they changed. They were paying returns on time and then suddenly they stopped early this year. They stopped responding to our calls, " Taha Baxi, an investor in the firm stated.
"Please give our money back. Even if you don’t want to give benefits it’s okay. There are many married women who have invested their complete family income for the sake of their daughters marriages," says Parveen Sheikh on IMA’s Facebook page.
One of the other factors that lead a large number of people from the Muslm community to invest (nearly 80 percent of investors in IMA are Muslims) was also the glib talk of the firm’s founder Mohammed Mansoor Khan, 46 – who appeared modern and religious.
"Every body knew there is some thing fishy but still people trusted him because he used Allah Allah, Quran ,namaz so that people trust him," says Subiya Khan an investor in the firm.
"I trusted you so much because you always spoke about god and I felt you are a true Muslim and will never cheat middle class people like us. Because of you I could not get school admissions for my two kids. I lost everything now," Yashas Kumar a Shivajinagar resident said.
As many as 40,000 investors have lost funds to the tune of Rs 1000 crore through investments in the range of one or two lakh rupees to Rs 10 to 25 lakhs and more, preliminary investigations by a Special Investigation Team of the Bengaluru police has revealed.
IMA’s business began unravelling sometime in October 2018, according to an admission made by the absconding Mohammed Mansoor Khan himself in a social media video on June 23.
"The downfall started in October itself but we did not let the investors know. We suffered losses in the range of Rs 2000 to 3500 crore and then there was a delay of payment in returns for one month. People started sending rowdies to the firm to threaten us and things went haywire and I had to save myself," Khan says in the message explaining his disappearance.
According to Khan – IMA’s schemes benefitted 21,000 families before it unravelled.
As the losses of the firm – with investments also in hospitals, real estate, retail jewelry, retail pharmacies – began mounting, and the defaults on payment of returns on investments to investors began growing, the revenue department of the Karnataka government issued a public notice on November 16, 2018 ordering seizure of all proprties of IMA and its directors.
The notice said IMA was "illegally collecting money from the public and perting the said funds to its directors’ self-interest" and had defaulted in paying depositors as a result.
"As such, the government, exercising its power under section 5 of the Karnataka Protection of Interest of Depositors in Financial Establishment Act, 2004, has appointed assistant commissioner, Bengaluru, north-sub pision as the competent authority to forfeit movable and immovable properties of IMA and its associates, promoters, partners, directors," it said.
Mohammed Mansoor Khan and IMA managed to survive the action initiated by the revenue department by promising to pay investors after obtaining a Rs 600 crore loan to tide over the crisis.
Khan is reported to have been taken to the Karnataka revenue minister R V Deshpande by the Congress MLA from the Shivajinagar constituency Roshan Baig – who was closely associated with the IMA’s activities including philanthropy in the constituency. The IMA founder sought a no objection certificate from the revenue department to obtain a loan to revive IMA but the NOC was not given, the minister Deshpande has admitted.
"I was waiting for a bail out. One NBFC was ready and was waiting for an NOC from the government. One IAS officer delayed the NOC because I did not pay an amount of Rs 10 crore in time," Khan claimed in his June 23 video on social media.
According to the revenue minister Deshpande no action was initiated against IMA after the November 2018 notice because there was no police report on the matter. There was no police report because IMA showed investors as being shareholders of the firm and as a consequence the Karnataka Protection of Interest of Depositors (KPID) in Financial Establishments Act, 2004 did not apply in the case, the revenue department has claimed.
One of the major factors for IMA staying afloat for thriving in recent years despite setbacks has also been the proximity of Mohammed Mansoor Khan to key politicians in Karnataka.
The Congress MLA from Shivajinagar Roshan Baig – who was the minister for infrastructure, urban development, information and Haj in the Congress government (2013-2018) – has been closely associated with IMA and its founder Mohammed Mansoor Khan for many years.
At the instance of Baig the IMA group in 2015 adopted a government school in Shivajinagar – the alma mater of Baig – and renovated it at a reported cost of Rs 16 crore. The renovated building was inaugurated in June 2017 by the then Karnataka chief minister Siddaramaiah, Roshan Baig and then education minister Tanveer Sait.
Another politician who has had links with IMA’s Mansoor Khan is the Congress leader Zameer Ahmed Khan – minister for infrastructure and Haj in the current Congress-JDS government. Zameer is reported to have met Mansoor Khan on May 28 a few days before the IMA founder disappeared. An election affidavit filed by the minister also shows that he sold a property to Mansoor Khan in 2017-18 for Rs 9.38 crore.
Incidentally, Roshan Baig and Zameer Ahmed Khan are involved in a political war to emerge as the main leader of the Muslim community in Karnataka. The whole IMA scam in fact exploded on the scene on June 10 while Baig was in New Delhi meeting the BJP’s minority affairs minister Mukhtar Abbas Naqvi amid rumors of him joining the BJP. Baig was appointed chairman of the state Haj committee following the meeting.
In an audio message in which he claimed to have released after he fled the country on June 8 IMA’s Mansoor Khan however alleged that he was not able to pay back investors because politicians like Roshan Baig borrowed nearly Rs 400 crore and failed to return the money.
Baig has denied the allegations and has said that his association with IMA was restricted to developing the V K Obaidullah government school in his constituency. "After my recent political fallouts, some of my adversaries have made a full-fledged attempt at assassinating my character by orchestrating a series of events using underhand methods. The entire hit job has been carried out using a baseless, un-investigated audio recording," Baig said.
Baig, who was suspended by the Congress on June 18 for a verbal tirade against party leaders in May this year, obtained an injunction from a civil court in Bangalore on June 21 against media reporting on the IMA issue that leads to assasination of his character.
Among other politicians Karnataka chief minister H D Kumaraswamy was also seen in the company of the IMA founder Mansoor Khan at an iftar party in the past.
The disappearance of Khan occurred barely 48 hours after he was quizzed by top officials of the Bangalore crime branch unit of the police. Since his disappearance on June 8 Khan has sent an audio message addressed to the former Bengaluru police commissioner T Suneel Kumar and a video message addressed to the new police commissioner Alok Kumar.
In his mesages to the top police officials Mansoor Khan has blamed extortion by unnamed politicians for the downfall of his business and has promised to return to India and come clean on names if his safety is assured by the police.
"Many people were successful in bringing me down – I have details of all those who harassed and extorted and I will place it all before the judiciary. If I name the people now they will finish my family. When we give black money there is no record or receipt but funds have to be returned. Those who have caused loss must be punished," Khan said in his recent video.
"My own people have betrayed me in the managament and the politicians who were close to me were after my life," he said.
One publicly documented instance where Mansoor Khan was allegedly subjected to extortion over the functioning of IMA occurred in 2017 when the IMA founder lodged a police complaint against the CEO of a private television channel Janashri TV alleging extortion.
In his April 14, 2017 complaint to the Commercial Street police Khan alleged that he paid Lakshmi Prasad Vajpai the CEO of the channel Rs 10 crore into seven bank accounts and gold worth Rs 30 lakh to stop airing negative stories about the operations of the IMA group. The complaint also alleged that the channel executive later began demanding Rs 25 crore and a Toyota Fortuner to prevent broadcast of stories about the IMA Group.
The channel CEO was arrested and was later released on bail by the Karnataka high court.
With the operations of the IMA Group unravelling in recent weeks the firm’s founder has now virtually washed his hands off the responsibility of returning the funds of investors.
"There are a list of names and if you can do it take it from them I will give evidence to all authorities. It is up to you to take the funds," he has stated to investors through his recent video message addressed to the Bangalore police commissioner. Over the past week an SIT of the Bangalore police has recovered jewelry worth Rs 11.72 crore from IMA Jewel stores.
The SIT has also arrested seven directors of IMA and has obtained an Interpol blue corner notice against Mansoor Khan who is suspected to be in a country in the middle east. The Directorate of Enforcement of the union finance ministry is also now probing the IMA scam.
The opposition BJP and leaders like Roshan Baig have demanded a CBI probe in the issue.