Rise of the ‘cheat’ fund business
Illegal financiers and chit fund fraudsters are becoming a major threat to the financial security of the common citizens. A number of unregistered small and big finance firms have mushroomed in the city of late. While in January, Medisetty Chit Funds had cheated its customers to the tune of `1 crore, many other cases were reported this year involving small firms based in the city. City cops had registered as many as 149 cases on chit fund fraudsters and illegal financiers last year.
The crooks who lure people, offering handsome returns on investments, flee the scene after collecting the cash. According to police records, the money lost in chit fund fraud cases in the city is four times higher than the value of looted property in theft and burglary cases.
“In most cases, a single scam involves more than 50 victims, and this increases the amount of money lost,” a cop said. Methods of conmen: Most chit fund organisers do not get their registration done because it costs a huge amount. They think that police cannot trace them if the firm works without a registration. “They do not get it registered themselves since they have to pay a reasonable amount as security when such a financial institution is opened. Small financiers keep them- selves away from police and operate within a closed circle. Unless a victim comes forward and lodges a complaint, it is difficult for police to find such firms,” Ravi Varma, DCP, LB Nagar said.
Cops have found that in many chit fund scams, the owners do not maintain any record of customers. Even if they do, when they flee, the records too disappear, which makes it difficult to get deposits back even after the scamster’s arrest.
“Chit funds owners gain the trust of people by giving them huge amounts as return in the initial stages. They disappear when the depositors invest a large amount of money at one go, or when the number investors increase,” a senior official from Cyberabad said.