IMA ponzi scheme case continues to haunt Karnataka's power circles

Despite investigation, chances of getting back deposited money look bleak

Even as the Enforcement Directorate (ED) is readying an appeal to Interpol on issuing a Red Corner Notice against promoter of I Monetary Advisory (IMA) Mohammed Mansoor Khan, this politically-sensitive ponzi case continues to haunt Karnataka’s power circles.

Claiming innocence, Khan had alleged the involvement of R Roshan Baig, the MLA from Shivajinagar. He also threatened to come up with more names and give proof of their involvement in the case. 

Meanwhile, the Opposition BJP in Karnataka has demanded the resignation of B Z Zameer Ahmed Khan, state minister for minority welfare, after he was summoned by the ED in connection with its probe into the scam. Grown in the guise of religion and patronised by politicians, the IMA scam is similar to many ponzi schemes that had robbed people of crores in different states. 

The only difference here was that there was a strong doze of religion that has been cocktailed with this illegal investment scheme. The IMA collected money from investors for which the business house assured a share of its profit. The Bengaluru (Shivajinagar)-headquartered firm used to give investors 1-3 per cent return on their investment every month, which had to be in multiples of Rs 50,000. The depositor could also withdraw his principal any time, after a 45-day notice. Working as a small savings scheme for retail depositors, people with small-time jobs in the informal sector constituted majority of IMA’s investor base. Even depositors were conveyed that Khan was working to uplift Muslims and the returns were from profits through trading in gold by its firm IMA Jewels.

No wonder, with such attractive returns which were even higher than most risky bets in the equity market, people came in droves putting their hard-earned money into such dubious investment scheme. 

During initial years, IMA’s investment plans had also given returns to the depositors on time. Most importantly, returns were either deposited in the investor’s bank account or given as cheques, making it look like a legal affair. At its peak, even investors had received up to 7 per cent return on their deposit per month. 

Meanwhile, Khan also opened a pharmacy chain, Frontline Pharma, apart from Frontline Super Specialty Hospital in Shivajinagar last year. With deposits from investors swelling, the IMA also entered the grocery business with Mulberry Greens. Khan was on an acquiring spree of prime real estate in the city. Sources said like every ponzi scheme, rampant fund diversion and investments in real estate led to defaults in paying returns to investors.  The first sign of trouble came in January 2019 when the payout reduced, which finally ceased altogether in March. Though people inquired, they had been assured that due to elections in April, there was a liquidity mismatch, leading to a delay in payment. Payments would again be normal from June, the investors were told. 

A police officer, who did not wish to be named, said, “No one complained. Around the same time, another multi-crore scam by investment firm Ambidant Marketing got all the attention.” But, on June 10, when a WhatsApp video of Khan was circulated in which he was seen blaming local politicians for his inability to pay dues, it was evidently clear that the last game of IMA was over. Since then, more than 40,000 investors had filed complaints against Khan. 

To investigate the matter, the state government has formed a special investigation team (SIT) though the case has taken political colours with opposition Bharatiya Janata Party (BJP) demanding a central investigation, given the alleged connivance of Congress and Janata Dal (Secular) leaders. Though the exact amount of investment by depositors is yet to be ascertained, it is likely to be around Rs 2,000 crore, according to sources.