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Moneylife » Life » Public Interest » QNet, the MLM company, has no answers to Moneylife’s simple questions

QNet, the MLM company, has no answers to Moneylife’s simple questions

Sucheta Dalal and Yogesh Sapkale | 20/11/2012 05:50 PM | 

QNet, GoldQuest, QuestNet, MLM, Pyramid, Bio disc, chi pendant, Vijay Eswaran

QNet, the MLM company which has become active again in India, cannot provide answer to a single question asked by us. Instead it sent us a threatening and defamatory mail that raises more questions as to their real motive

QNet, the controversial Hong Kong-based multi-level marketing (MLM) operator with multiple names (GoldQuest, QuestNet, QNet, QI Ltd and QI group are the better known names) refused to answer simple questions like how much money their independent representative (IR) earns on an average every month and why their products are priced so highly.

 

Instead Zaheer K Merchant, director for corporate affairs at QNet, sent us a mail (after five days) which not only admits that the company tried to bribe us, but has also threatened us accusing Moneylife for targeting only QNet not other MLMs. As regular readers of Moneylife know, we have been writing on a large huge number of MLMs, pyramid or ponzi schemes. A simple search of www.moneylife.in would reveal scores of stories of these shady schemes. Here is a quick rundown on how Moneylife has never flinched from reporting on the corrosive influence of MLMs whenever it has had a chance to.

 

Remember Speak Asia, Stockguru and NMart? Even mainstream media has acknowledged that Moneylife was the first to expose them.  Moneylife flagged Speak Asia as a fraud, way back in October 2010. In December 2010, Moneylife had reported about the dubious modus operandi of Stockguru.India and advised investors to stay away from investing in the company. It collapsed much later. Similarly, in August 2011, we informed our readers, how Surat-based NMart Retails, a division of Newlook Multitrade Pvt Ltd, is running a collective investment scheme (CIS) based on MLM model, under the guise of selling products through its retail chain. Needless to say all the three mentioned above duped lakhs of people. There are scores of other such examples.

 

Here are a few initial questions that we asked to QNet, which it has failed to reply…

 

1. What is the churning ratio of QNet Independent Representatives (IRs)? On an average, how many IRs join and leave the company in a 12-month period? What is the IR retention rate in this line of sponsorship? What is the renewal rate of IRs?

2. What is the average amount an IR typically earns in a year?

3. How many IRs earn less than $1,000 as commission in a year?

4. What is the maximum amount an IR had earned in a year as commission and royalty through selling QNet products and through selling promotional, motivational materials?

5. Are the products sold by QNet priced competitively? If not, how much is the difference? Is it true that QNet products are costlier by over 100% than similar products available in the market since you shell out 50% as commission?

6. Who has certified your nutritional and wellness products? Is there any certification from FDA (US FDA) available for the nutritional supplements you sell? Who decides whether a person needs nutritional supplements? Is it your IR or a qualified doctor?

7. If someone decides that the QNet business is not for him, what is your refund policy?

8. Does the business model really free people from their jobs or have they just replaced their job with another that has more risk?

9. Does the QNet business really allow the leaders more time with their families?

10. What are the chances that someone starts from the scratch and own an office in QI Tower*?

11. Are you registered in India? Who is the regulator, governing your business activities in the country?

12. What is the status of court cases regarding GoldQuest and QuestNet in India?

 

Instead, five days after our queries, Mr Merchant (now Director Corporate Affairs, who was projected as legal head in 2009) wrote to us with a series of counter questions. We publish them with our replies below each sentence…

 

QNet: We had invited your organisation and Ms Sucheta Dalal, to attend at our office in Hong Kong to provide her with every opportunity to review our operations.

 

Moneylife: This was in August 2009, soon after the police action in Chennai had closed down its sale of numismatic coins in a company called GoldQuest. Moneylife had written extensively about it and was constantly writing to Ms Usha Thorat, the then Deputy Governor of the Reserve Bank of India (RBI) asking why action wasn’t taken against the company. She in turn passed the buck on to chief secretaries of states by writing to them. We had already written a story “Coin Game” on the shady business of GoldQuest coins.  It is obvious that this carefully timed media junket was seen as a way to ‘soften’ journalists with a paid foreign holiday rather than a review. Naturally Moneylife rejected it.

 

QNet: We made overtures to meet with her, and did do so in Mumbai some time back.

 

Moneylife: This is a lie. There has been no ‘overtures’. The fact is, ever since Moneylife has been campaigning against dubious MLMs and pyramids, both Amway and the Indian Direct Selling Association (IDSA) have long meetings at our office but could not answer many of our queries. Some of the questions asked to QNet were also asked to Amway. In fact, Amway representatives Richard N Holwill and Rajat Banerjee admitted to us that although some distributors tend to go overboard in pitching the scheme, income from being a distributor of Amway can, at best, be a source of additional income or pocket money for most people. It is not the pathway to riches as MLM companies make it out to be. However, Amway also insisted that there is no longer any joining fee and the model does not necessarily require enrolment of distributors. However, there was no answer to expensive nutraceuticals being prescribed by doctors, whose wives or relatives were Amway agents.

 

QNet: We had provided Ms Dalal with relevant information and material. Our distributors thereafter also met with her and attempted to communicate with her in connection with our business and its legitimacy.

 

Moneylife: Another lie. No distributor has ever met us in to communicate about the business or its legitimacy. The only person who met us, came as a close personal friend and on checking with him again, he insists that he had not met us as a QNet representative.

 

QNet: The fact that there is no express legislation governing the business in India doesn't make the same ‘illegal’ in the manner in which the same has often been cited and reported in the seminars and documents which your establishment presents.

 

Moneylife: This is a matter of dispute and debate. Mr Merchant agrees that they operated in a legally unclear area. He also indicated that QuestNet was being kept out of the Indian Direct Selling Association (IDSA) by a cabal of US MLMs such as Amway and Tupperware despite its best efforts. He also pointed out that these MLMs had not been facing problems in India.
 

The fact is there has been plenty of litigation on the issue, precisely because various authorities consider that the operations are illegal under the Prize Chits & Money Circulation (PCMC) Act of 1978.  Moneylife Foundation, an NGO for spreading financial literacy has repeatedly warned people about falling for MLM and pyramid companies with innumerable examples of losses incurred. Moneylife Foundation sent a representation to the Prime Minister, Finance Minister, Governor of RBI and SEBI.

Former Expenditure Secretary EAS Sarma has also written to the PM and the Ministry of Corporate Affairs (MCA) about the need to check the proliferation of Ponzis and binary pyramids which are duping people.  We have been specifically told by the Ministry of Consumer Affairs and the Ministry of Corporate Affairs that they are investigating these scams and plan action/tightening of legislation. To turn Mr Merchant’s argument on its head, just because our regulators are sleeping and scams are always discovered too late, if at all, does not make an unregulated scheme legal.

 

QNet: We have also found on several occasions that there is a marked level of partiality towards reporting inaccurate material about our business.

The discussions which have come about as to your site and seminars and the ‘talk’ is, contrary to what is projected by you as to being industry watchdogs with care and concern for the people allegedly duped by MLM business, you seemingly prefer certain MLM companies over others. The mantle almost of a crusade is thus assumed only against certain MLM entitles. Why do people have this impression? Can you please explain? I am certain that this is not the case, but I would appreciate your confirmation in writing to this assertion made by several other entities that you are not what you make yourselves out to be. Additionally, matters such as the success we have had in the courts are never dealt with. Preference is given in fact to reporting salacious and incorrect material, which is always unverified and inaccurate.

 

Moneylife: Mr Merchant prefers to throw unsubstantiated accusations. We prefer to offer facts. Only Moneylife has been writing about the menace of MLM schemes, including GoldQuest, QuestNet, Stockguru.India, JapanLIFE, Amway, Speak Asia, NMart, AdMatrix and so on. On the other hand Moneylife Foundation is helping people to become aware about money circulation or MLM schemes and is actively involved in making changes in the government policies through representations, memorandums etc.

 

It is laughable that Moneylife is accused of being partial towards any MLM when we alone are crusading against ALL such schemes. QNet should drop its defamatory and scandalous tone and please offer us one shred of proof.

 

Talking about getting in touch, we have been contacted by IDSA and Amway, who promised us to provide answers to questions raised by us. So what was stopping QNet from reaching out us? We reiterate that it was Moneylife which got in touch with QNet before writing any story and not the other way round as is being claimed by Mr Merchant.

 

QNet: Additionally, you have already written and filed a story which is defamatory, aside from being totally baseless and confused, about us. This leads to the possible conclusion that there is no real sincerity to the assertion that you are seeking information and wish to truly educate anyone. On the contrary, it begs the question whether any information given will be used properly, reported accurately or simply (worse as we have been warned about) that you may misuse or divulge information to other organisations which may be allied to you. The essential element is whether we will get a fair outcome or hearing, since the actions belie the request. The story is as below in the link pasted. Again, I am inclined to believe this cannot be case, but I would like formal confirmation in writing as to the same. Additionally, if you are going to publish your request for information and this response, please do us the courtesy of publishing the contents of this email in full as opposed to simply abridging and prefacing it wrongly. Your purported seminar on 23rd November also makes several assumptions and comments of us, preferring to lump us together with other (wrongful) companies quite baselessly. All these lead to concerns as to the points made above, which no doubt you will appreciate as much as address.

 

Moneylife: Before writing and publishing the current article, we contacted QNet through Mr Werner Fernandes whose company used to handle the PR of QNet, and gave them enough time to reply. However, instead of a simple reply, Mr Merchant sent a mail whose tone is threatening and defamatory.

 

According to Robert FitzPatrick, President of US-based Pyramid Scheme Alert, schemes like QNet or GoldQuest are an “endless chain”, or a “pyramid scheme”.

 

“I believe this form of fraud is a clear danger to national economies. They subvert efforts to accumulate wealth. They divert energy and funds from real businesses. They often divert people from seeking more education with their promises of fast wealth. They destroy savings and equity of lower income people. They confuse people as to what a legitimate value-based business is. Unless the regulators and analysts recognize and are willing to assert that this form of business is ‘inherently' fraudulent and harmful, it is rather difficult to stop any one particular company. Such a fraud, whether the products are soaps, gold coins, vitamins or air in a box, will always cause 90%-99% of the investors to ‘fail’. Whether some of the people engage in retail selling or not, the income promise that relies on continued expansion is deceptive, that is, it is a lie. The financial harm to the vast majority is predetermined. Calling it a business does not make it so. A real business requires an exchange of value," wrote Mr FitzPatrick to us. He is actively exposing several pyramid, ponzi and MLMs.

 

Mr FitzPatrik was involved in framing new law in Sri Lanka to deal with MLMs, especially GoldQuest. During 2005, the GoldQuest scheme spread across Sri Lanka, marketing gold coins for double their worth. Sri Lanka's central bank noticed that the equivalent in their currency of millions of dollars had left the country, a big drain.

 

What is sad is many people have left high-paying jobs to “pursue their dreams” in an MLM. Having been conned so dramatically, they do not easily admit defeat. It seems easier to cling to the bad dream in an increasing cycle of desperation to make the MLM work against all odds.

 

*QI Tower in Malaysia is where QNet founder Vijay Eswaran has his new office. (https://www.facebook.com/photo.php?fbid=521501461194473&set=a.204006466277309.56163.161033627241260&type=1&theater)


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248 Comments
jitu moni

jitu moni 2 days ago

http://pib.nic.in/newsite/PrintRelease.a...

Press Information Bureau
Government of India
Ministry of Corporate Affairs
30-April-2013 17:52 IST

Curb on Fraudulent Mlm Companies

Multi Level Marketing (MLM) Schemes involving enrollment of a vertical chain of investors/agents constitute “Money Circulation” and are banned under the Prize Chits & Money Circulation (Schemes)Banning Act, 1978 which is implemented by the States. Giving this information in written reply to a question in the Rajya Sabha, Shri Sachin Pilot, Minister of Corporate Affairs, said that in order to facilitate effective control of MLM, a Group of Officers from Ministries of Finance, Corporate Affairs & Consumer Affairs along with representatives of Reserve Bank of India, Central Economic Intelligence Bureau (CEIB) and the Serious Fraud Investigation Office (SFIO) have prepared Model Rules called Money Circulation Scheme (Banning) Rules, to explicitly cover MLM under the said Act. Ministry of Finance (Department of Financial Services) has sent the rules for notification to the States.

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jitu moni

jitu moni 5 days ago

http://www.moneylife.in/article/qnet-eow...

QNet: EOW seizes documents from Vanmala's 'hidden' office

Moneylife Digital Team | 12/04/2014 06:13 PM |

After being named as accused in the Rs425 crore QNet scam, Vanmala shifted its office to undisclosed location. However, the EOW raided this secret hideout and seized important documents about the MLM operations of QNet

Economic Offences Wing (EOW) of Mumbai Police has raided a little known or 'hidden' office of Vanamala Hotels, Travels & Tourism Services Pvt Ltd, an associate of QNet India. The EOW has seized documents and computers used by Vanmala related with its vacation holiday packages sold to customers of QNet in India, say sources.

Vanamala had its office at Trade Centre in Bandra Kurla Complex (BKC). However, the tourism services provider shifted its office to an unknown location when it was named as an accused in the first information report in the Rs425 crore QNet multi-level marketing (MLM) scam.

Vanmala shifted its office to Lower Parel from BKC. However it kept the new address hidden even from its submissions in the court. Daryl Patrick Bisset, the chief executive of Vanmala has been found avoiding EOW and not forthcoming since past few months, the sources added.

During the investigation into the QNet scam, it was revealed that majority of the victims across the country were sold the "Holiday & Vacation Packages" from Vanmala.

In February 2014, the Enforcement Directorate (ED), the agency responsible for enforcing economic laws and fighting economic crime in India, registered a case in the Rs425 crore QNet scam for money laundering.

The ED has named QNet Ltd from Hong Kong, its official franchisee Vihaan Direct Selling Pvt Ltd, Vijay Eswaran, the founder of QI group and three other independent representatives (IRs) of QNet from Mumbai.

In a media statement, QNET called the money-laundering probe by ED against it as 'allegations that are preposterous and completely baseless'.

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gurupreet

gurupreet 5 days ago

Vanamala/QNET runs away from Mumbai...

This is the message that was posted on http://www.vanamala-india.com recently...

Dear Members,

Due to service disruptions on our current hotlines, please refer to the following number should you have any queries: 0008006001144 or email us at customercare@vanamala-india.com

We apologize for any inconvenience.

Is it a 'Simple" Disruption or there is more then meets the eye..The truth is their offices were raided by the EOW..effectively shutting down the whole operations of Vanamala in Mumbai.

The last time this message was posted after Vanamala's Payment gateways were blocked..

Important Announcement regarding Payment Gateway - INR Payments
Dear members,

We are experiencing problems with our Payment Gateway system. As such, please refrain from using it with immediate effect.

To know the alternate modes of payment you can use, please contact our Customer Experience Ambassadors at
+91-22-6139-9500 and they will assist you accordingly. Thank you.

The above mentioned PRI Line number +91-22-6139-9500 has also become un-operational

How good these white collared criminals are at sugar coating the real truth...Raids become "disruptions"...blocking becomes "problems"...shame on you all white collared criminals, you all should be tried for treason for your anti national activities.

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gurupreet

gurupreet 1 week ago

Cheap Pathman said in his video message to India.."We shook hands with the right people in India"

Wouldn't it be FUN exposing these "Right People" ;)

hehe

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gurupreet

gurupreet 2 weeks ago

EOW RAIDS QNET SYSTEM MEETING IN MUMBAY BEING CONDUCTED BY "MR.BIJOY MATEHWS"..TEAM LEADER OF QNET.

This Morning QNET team Leaders had organised a Seminar/System at the following address and invited innocent people to induce them into this illegal money circulation scheme..the system was held at the following address:

Youthapreneurs Training Center, 605, Alpana Bldg, Opp Sarvoday Hospital, LBS Marg, Ghatkopar (W), Mumbai - 86

During the raid Mr.Bijoy Mathews was caught red handed promoting the illegal money circulation scheme in presence of 45 Odd people.

Ironically this Mr.Bijoy Mathews is the same person who has had cooled his heels in the jail for more then 20 days in the past for the same offence.

The officers of EOW detained and questioned several people and names and contact details of 47 people were noted down :)

I am sure the records of the activity today will lead to the cancellation of the bail of several team leaders of QNET.

Let me mention here that a similar activity was done by the EOW several months back when QNET leaders were holding a system meeting in Dadar, Mumbai and details were noted down. These details led to the arrest of Nine qnet leaders earlier.

So guys any guess who all will be arrested now after today's raid/activity?

Best guesses will win prizes ;)

Keep posting/replying...

Regards
Gurupreet

P.S Tomorrow is the Hindi New Year so my msg to QNET "Happy New Year" in advance...

After the ABA of your people are cancelled we will get the bails also cancelled wait and see...

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