By now the Ima scam has been infamous in India and especially in Bengaluru for the Ponzi scheme, that exploited the Islamic investment market. The money involved in this scandal is estimated between 1,000 crores to 2,000 crores. This story starts with the I Monetary Advisory Group or IMA jewels founded in 2006 by Mohammed Mansoor Khan practices Islamic banking that is tilted towards the Sharia principle of law which prohibits receiving or paying of interest on loans and also prohibits loans at unreasonable higher rates of interest.
The company has been successful for the last four years attracting investors of which most of them are middle-class Muslims. Ima offered an array of investment schemes with monthly, quarterly and yearly returns. By June, when the company suddenly shut down and Khan sequestered, the company already encompassed in bullion trading, retail jewellery, gold finance, real estate, healthcare, and other businesses. The investment was proclaimed to be hassle-free with money returned after 45 days. At its peak, it meted out a 7% of monthly profit and within less than a year the person could easily recover the entire amount.
But this percentage did not last long. It gradually started decreasing from 7% to finally 1% in April 2019. Things came to a halt in May when many investors did not receive any profit and soon the IMA tower was swarmed with anxious investors.
But by June Khan has already left the country when the investigation closed on him leaving an audio message accusing politicians like Baig, MLA from Shivajinagar for the collapse of the firm.
But this was not the first run-in with the law. In 2015 Reserve Bank of India had sent an alert to the Karnataka government about the fraudulent allegedly practices and that it was a Ponzi scheme. In 2018 a similar complaint was lodged with the Karnataka government.
Khan who fled to Dubai in the first week of June arrived in Delhi and upon his arrival, he was arrested by the Enforcement Directorate (ED) said a special investigation team (SIT) which was constituted by the Karnataka Government which is probing the alleged ponzi scam.
The most important sign of a Ponzi scheme is the promise of exorbitant returns. The peril of this kind of scheme which is opaque is that it will turn out to be risky. If a scheme is prepared to pay a return of 3 per cent every month, investors should regard with scepticism”, says SG Raja Sekharan, lecturer on Wealth Management at Christ University, Bengaluru. People come to perceive such groups (here IMA) as one running a legitimate business. About 50,000 people have lodged complaints against this group in Karnataka. Many investors sold their assets and invested in the scheme. Many are on the verge of losing their life-saving.
The chances are very slim for the investors to get back their money as most of the structures under IMA has been falling out since his run and also given the legal and procedural complications involved. Unlike other Ponzi companies, IMA group claims to run its business on the limited private partnership (LLP) which means that the investors are partners and returns are subject to market risks. The investors signed in a clause which states that the company does not assure minimum returns on capital accounts. This clause hinders the government from ensuring unsuspecting investors get their money back. And this clause is the reason that stopped the authorities to take legal action when this fraudulent activity was first alerted by RBi way back in 2015.
After the SIT investigators conducted a raid at the showroom they found 90% of the jewellery is missing from IMA jewels and the remaining are valued to be within 20 crores. The political association that backed up this group has given legitimacy which gained them the trust of the public.
By taking into account this IMA scandal, it is very early to give a statement on the fate of the shareholders. But regardless of whatever is the outcome of this scam, people should take caution when it comes to investing one’s money.
And in regard to the government, it is still unclear how they are going to take actions on retrieving the depositor’s money, or if there is going to be any. Nearly 40,000 complaints have been lodged and 20,000 crores are alleged to be involved in this impropriety.