In Mumbai, India’s divided city, two people, strangely, hold the key to a curious case which has acquired myriad hues over the last three years.

One is Gurupreet Singh— a whistle bowler who claims to have unfolded what he calls one of the biggest scams in India, the other Michael Ferreira— a former world billiards champion, now locked up in a jail on the outskirts of Mumbai. Last week, a court in Mumbai shifted the bail hearing of Ferreira to 20 February, 2017.

Both are integral to the December 2016 chargesheet filed by cops of the Economic Offences Wing (EOW) of the Mumbai Police who claim that the QNet scam is a Rs 1000 crore scandal in which over 10,000 people were cheated across India in a multi-level marketing programme.

The chargesheet has been filed on the basis of a complaint where Singh claims his wife bought a product called a “Bio-disc”. As per the chargesheet the Bio-disc is a product which claims to have supernatural powers to cure any ailment, including cancer, diabetes and mental illnesses.

Singh, who claims his wife was duped of Rs 30,000, says the case is much bigger and that he escaped being cheated only because he managed to alert his bank not to clear the cheque.

Representational photo. ReutersRepresentational photo. Reuters.
Raj Vasudevan, chief legal officer of QNet from its headquarters in Hong Kong, said in his response: “Gurupreet’s Singh’s wife indeed placed an order, but it was not for a Bio-disc. She placed an order for an online education product valued at Rs31,500. She subsequently cancelled this order and no financial transaction ever took place between the company and her.”

Interestingly, Singh’s wife filed a complaint with the Oshiwara police in Mumbai and later withdrew it as there was no financial transaction between her and QNet. The company has submitted copies of the cancelled complaint to the investigators of EOW. Six months later, Singh filed the complaint again and this time, a Rs 31,500 dispute ended up with the EOW of Mumbai Police.

And then, QNet made breaking news on television channels.

A few years ago, the Serious Fraud Investigation Office (SFIO) of the Ministry of Corporate Affairs had said that two companies, Gold Quest and Quest Net, were mis-selling their products under a pyramid scheme and that QNet was the new face of both Gold Quest and Quest Net. But QNet was never probed by SFIO and claims that QNet is the latest version of Gold Quest and Quest Net were proved incorrect.

The current charges levelled against QNet not only talk about selling products which are mystical in nature but actually go way beyond to question its business model itself. Investigations initiated against QNet have alleged it to be a chit fund, claiming that the consumers were investors.

It has also been claimed that people have invested money in expectations of high interest earnings allegedly promised by Independent Representatives (IR) of the company.

“QNet is a direct selling company. Not an investment scheme. All products are sold against VAT paid invoices, and distributors are paid commissions after TDS deduction,” says Vasudevan. Copies of these documents have been presented by the company to the police.

The company claims it never marketed Bio-disc as a supernatural product but a wellness product certified by international labs. “Those who drink water treated with Bio-disc have reported feeling energised. The Bio-disc doesn't heal, the body heals by itself when the detoxification process occurs through drinking bio-energised water,” says Vasudevan.

However, the police in Mumbai produced a report based on research done by scientists at the Bhabha Atomic Research Centre (BARC) which claimed Bio-disc to be a piece of glass with zero effect on the body. QNet claims to have taken the product off their e-shelves in India.

Multiple cases filed against QNet have yet to get into trial but Ferreira, now 78-years-old, who held 80 percent shares in Vihaan Direct Selling that operated as a sub-franchisee of QNet in India, has emerged as the face of this scam, probably due to his own prominence. Others arrested from the management of Vihaan Direct Selling were faceless entities.

In Mumbai, Fay Ferreira, wife of the Padma Bhushan awardee, says she has no comments to offer. “Please, I have nothing to say, all I can say is my husband is innocent and I am praying for him. He is innocent, that’s all I can say,” she told me in a telephonic conversation.

A PR company that briefly represented QNet had its bank accounts frozen back in 2014 due to their association with the company.

Singh says the case is just the tip of the iceberg and there are over 7,00,000 people who have submitted their affidavits in the courts and have joined “my crusade to bring justice”. He claims the cash laundered must be a little over Rs 1,00,000 crore, ten times the figure offered by the cops.

But that is not the figure in the chargesheet and neither is the number of complaints adding up to his claims. QNet’s audited accounts for 2015-16 shows revenues of around Rs 591 crores. The first FIR in Mumbai was filed on August 16, 2013 and there are a total of 17 such FIRs filed in 3 different cities.

Interestingly, most of the FIRs arise from complaints in which the company or its officials are not named. The complaint is usually filed against certain individuals who are distributors of QNet, for misleading them about the business opportunity or the product. The language in all the FIRs in the different cities is almost identical.

According to Singh, “There are thousands in my records who have not even complained, I want justice for them. Those who have run away from India must be brought to book,” says Singh, indicating a significant number of people - his estimate is 35 - once associated with QNet have left the Indian shores.

QNet officials say none of the complainants have approached the company to address their grievance. QNet claims to have a zero-tolerance policy towards any misrepresentation of either the company or its products. “Over a period of around 4 years, the company has terminated over 400 independent representatives for violation of our policies and procedures,” says a company official.

Indian officials of the Hong Kong-based QNet claim the purported figure of the scam has increased with every passing year in media reports. When it was detected, the money allegedly lost was pegged at around Rs 150 crores, and then the figures kept on spiralling. Last month, a newspaper quoted officials of the EOW of Mumbai Police and claimed the figure was a little over Rs 7,000 crores.

QNet claims there are many who have earned hefty commissions from the company but now turned up as complainants. The company website says it has a 30-day refund policy. “If someone feels they have been misled into purchasing a product from QNet, they have 30 days to cancel their transaction. Why are people suddenly showing up now after 2-3 years claiming they were cheated, especially when they have made money?” asks Vasudevan.

No answers are forthcoming.

Last week in India, another multi-level marketing company head, Anubhav Mittal, was arrested in Noida city close to Delhi and charged with cheating investors of a whopping Rs 3,700 crores. Earlier last month, a local court in Chandigarh framed charges against two directors of Amway India, another leading MLM company, including a foreign national in a cheating case.

As many as 19 people have been arrested in the QNet scam, hearings are on in various courts across India. Lost in the is legal battle is one crucial issue: Do multi-level marketing companies operate in India or shut shop, till New Delhi clears up rules for such companies?