Kerala Kaumudi Online
Friday, 24 May 2024 10.37 AM IST

Highrich scam exposes urgent need for investor protection measures


Investment fraud is a recurring phenomenon in Kerala. All these scams have taken advantage of people's insatiable appetite to make more money in less time. Such fraudsters make unreasonable offers and promises of high interest rates through advertisements, exploiting the trust of unsuspecting individuals. Initially, these institutions offer interest rates four to five times higher than those offered by banks and other legitimate financial institutions. Countless individuals in Kerala have lost their hard-earned savings, including their retirement benefits, due to falling into such traps. When these scams are exposed, the establishments are shut down, the fraudsters vanish and legal proceedings commence, often leaving investors with nothing to recover.

The Highrich couple recently perpetrated the largest investment scam in Kerala. The company owners, K.D. Prathapan and Sreena, enticed people by claiming that purchasing a coupon worth 700 rupees and becoming a member of Highrich company would lead to substantial wealth. They established the company in 2019, headquartered in Cherp Njeruvassery and incorporated investors into a money chain transaction scheme. They also falsely promised immediate cashback of Rs 100 to those who bought groceries from Online Shopee Pvt Ltd using the coupons. Moreover, members who referred investors of Rs. 10,000 were promised a Rs. 1,000 incentive. Investors who deposited Rs. 10,000 were assured a monthly interest of Rs. 400, translating to an annual interest rate of up to 48 percent. Thousands of individuals were lured by these enticing offers and ended up investing lakhs of rupees. Initially, all investors received their promised interest payments.

However, it was later discovered that the couple had transferred crores to their personal accounts. The scam was uncovered when it was revealed that they had evaded GST to the tune of 125 crores, prompting the GST department to launch an investigation. The exact amount involved is still unclear, but initial police investigations estimated the fraud to be Rs. 3,141.34 crore. Additionally, the Enforcement Directorate initiated an investigation into hawala smuggling involving Rs. 100 crore. Dissatisfied investors demanded that the CBI take over the investigation from the crime branch.

Consequently, the government has ordered the CBI to investigate the Highrich investment fraud. Although Rs. 1,630 crore was traced to 20 accounts across four banks, this amount could not be recovered. These accounts, held in private banks under the names of Prathapan and Sreena, require immediate scrutiny by the CBI. The priority should be to locate Prathapan and Sreena, who are currently absconding on bail, and subject them to legal proceedings. Investigative agencies and courts must take decisive action to ensure that defrauded investors recover their funds. Typically, investigations and legal proceedings in such cases drag on for years, with investors receiving no compensation. This cycle must not repeat itself in the case of the Highrich investment scam.

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