Halal investment scam rocks Bengaluru; founder flees, investors left in lurch

Investors protesting in front of IMA Group of Companies head office at Lady Curzon Road, Shivaji Nagar, in Bengaluru on Monday. Photos: BN Vijaya Kumar

Khurath Ulain (20), a second-year degree student from Mysore had plans to go to Australia for higher studies. With a year left for graduation, she thought to utilise the money saved by her father, a businessman, to earn a bit extra money.

Ulain did not want to invest in bank as it was ‘haram’ (prohibited) to draw interest under the sharia law (Muslim religious law). So, the family invested ₹5 lakh in a Bengaluru based I Monetary Advisory (IMA) Jewels, which was into bullion trading (considered as ‘halal’ investment, permitted under the Muslim law). She trusted the company as many of her relative invested and earned exorbitant returns.

On Tuesday (June 11), Ulain was in for a shock. An audio clip emerged about the founder of the company committing suicide. Panic gripped among several investors.

Ulain travelled all the way from Mysore to Bengaluru to register a police complaint. As it was already 9 pm, the city police, who set up special counters, a few meters away from one of the IMA Jewellery story in Shivajinagar, asked her to come next morning.

Another investor, Jamrud Begum (62), invested ₹2.5 lakh, the money she received after her son’s death. Begaum invested the money so that she could take care of her three grandchildren with the returns promised. Begum who invested a year ago, got returns of ₹6,000 for 10 months. After that the company did not pay her and cited Lok Sabha elections as a reason for the money crunch. The company promised that the money would be paid after Ramzan festival.

By Tuesday evening, there were 8,560 complaint registered with the police, a senior police official confirmed to The Federal. According to police estimation, people invested between ₹50,000 to 10 lakh and majority of them were Muslims. The company reportedly raised closed to ₹2,000 crore.

Hundreds of people who invested in IMA Group of Companies register a complaint, in Bengaluru on Tuesday.

Fraud case

Earlier this week, an audio clip from IMA Jewels founder, Mohammed Mansoor Khan, indicating his intent to commit suicide, emerged. Khan alleged that he was tired of bribing the government officials and politicians and his money was stuck with them.

In the purported audio clip, Khan alleged that Congress MLA from Shivajinagar, Roshan Baig, took ₹400 crore ahead of the elections but failed to return the money despite not getting seat to contest.

“Due to corruption in the Central government and the state government, I kept bribing the bureaucrats and Muslim politicians. The PMO and the RBI were misinformed,” Khan alleges.

Addressing the Bengaluru Police Commissioner, Mansoor said, he has assets (properties and jewels) worth ₹500 crore and instructed the police to take possession of the properties and sell it to return money to investors.

The police suspect the founder went absconding. While they registered a complaint under section 406 and 420 of the Indian penal code, upon request from several Muslim leaders, the Karnataka Chief Minister ordered a Special Investigation Team (SIT) to probe into the issue.

Karnataka Home Minister MB Patil told that the police seized jewelry showrooms (in Shivajinagar and Jayanagar) of the company.

Did anyone raise alarm?

In October 2018, the Hyderabad police arrested Heera Group founder Nowhera Shaik in a similar investment scam. Shaik, floated a political party, All India Mahila Empowerment party ahead of the Karnataka Lok Sabha elections. With much fanfare and endorsement from Bollywood actors like Arbaaz and Sohail Khan, her party unsuccessfully contested the elections in May last year.

Soon after, the Karnataka government alerted people about the illegalities in IMA and issued public notice in local newspapers informing that the company diverted money for the director’s self-interest and defaulting in repayment.

But people kept investing despite the fact. Owner of IMA Jewels, Mansoor Khan, issued a public notice in Times of India and Prajavani newspapers (and published on social media), assuring investors that all was fine.

Some of the comments on Khan’s Facebook post, shows people considered those warnings as rumours and believed that they were posted to drag down the ‘successful’ company.

‘Political storm’

With the audio clip mentioning corruption in the state government and alleged involvement of Congress MLA, the state BJP unit latched on to the controversy to call the ruling coalition government corrupt and toothless. The party posted pictures of Chief Minister HD Kumaraswamy dining with Khan.

BJP MP Shobha Karandlaje urged the government to order a CBI and Enforcement Directorate inquiry and arrest people behind the scam. “Though the company was found guilty in 2018 for a similar incident, the state government took no action. Karnataka has become a hub for fraudsters and anti-social elements,” Karandlaje said.

Meanwhile, Congress MLA Baig issued a public statement and claimed innocence. Baig said his association with the company was as a legislator, on the basis of social work carried out by the company in his constituency.