ED Frames Charges Against Amway for Running Money Circulation Scheme

Hyderabad: The Directorate of Enforcement (ED) filed a prosecution complaint under the Prevention of Money Laundering Act (PMLA) against Amway India Enterprise Pvt. Ltd. (Amway) in the court of the Metropolitan Sessions Judge-cum-Special Court (PMLA) in Hyderabad. The court has taken cognisance of the complaint, which is akin to a chargesheet.

The ED had initiated investigation on the basis of FIRs registered by police under the of Indian Penal Code (IPC) against Amway and its directors. The FIRs alleged that Amway had been promoting an illegal money circulation scheme under the guise of sale of goods and cheating the public by promising very high commissions or incentives through enrolment of new members, and by claiming that these commissions or incentives would continue in perpetuity.

The ED said its investigation revealed that Amway had been promoting a pyramid scheme under the guise of direct selling. Instead of selling goods directly to the consumer, Amway had floated a multi-level marketing scheme of members and introduced many intermediaries in the name of distributors. The scheme survived primarily on enrolling members, it said.

Once a newcomer is convinced to pay money through someone who has referred him to the company, he or she becomes a representative. To earn commissions, the member has to enrol more persons. As the number of persons increases down the line, the ones on top are promised more commission and incentives like luxury tours.

In this way, Amway had generated proceeds of crime totalling Rs 4,050.21 crore," the ED said. The ED said its investigation also revealed that more than Rs 2,859 crore collected from the members has been siphoned off and parked in the bank accounts of overseas investors in the name of dividend, royalty and payments for expenses.

The ED said it had attached properties worth Rs 757.77 crore.