KBC Multitrade MLM: ED Attaches Promoter Chavan Family Assets Worth Rs84.24 Crore

Moneylife Digital Team 21 March 2024

Economy & Nation

The directorate of enforcement (ED) has provisionally attached movable and immovable assets located in Nashik, Thane, Sindurgarh and Pali districts, among other areas across Maharashtra and Rajasthan, worth Rs84.24 crore belonging to the promoters of multilevel marketing (MLM) KBC Multitrade Pvt Ltd under the Prevention of Money Laundering Act (PMLA). The main promoters of Nashik-based KBC Multitrade are Bhausaheb Chavan and his wife, Aarti.

In a release, the ED says, "The attached assets include movable and immovable assets including the benami properties acquired by the promoters Bhausaheb Chavan, his wife Arati and others, demat accounts, post office savings, silver and diamond jewellery or bullion and bank account balances."

KBC Multitrade's scheme was that if you invest Rs1 lakh today, the company will pay you Rs1 lakh in six months, Rs1 lakh in the next 18 months, and another Rs1 lakh after 30 months. Thus, it assured three-times return on investment in 30 months.

Mr Chavan was reportedly working at a local bank and, hence, had knowledge about the financial status of several of the bank's customers. In 2010, he floated KBC Multitrade and promised to make his investors 'crorepatis' within a few months if they invested lakhs of rupees. He also promised 20% to 30% commission to 'agents' who would lure more people into the 'get-rich-quick' scheme.

Within four years, the Nashik-based MLM was able to collect crores of rupees. When the scam was busted, some investors and agents of KBC Multitrade committed suicide due to mounting pressure from people seeking a refund of their money invested in the scheme.

On 25 February 2013, the economic offences wing (EOW) of Nashik police even issued a public note, warning people about KBC Multitrade. Following the raids and arrest of one person by Nashik police in March 2014, the EOW of Aurangabad police also asked people to file complaints against KBC Multitrade. The MLM company was active in several districts in Maharashtra, including Aurangabad.

The ED initiated an investigation on the basis of several first information reports (FIRs) registered in Parbhani, Nashik and other districts across Maharashtra under various sections of the Indian Penal Code (IPC) against KBC Multitrade and its promoters.

ED investigations revealed that the Chavan family, along with co-accused principal agents, hatched a conspiracy to lure people through an MLM scheme run under the aegis of KBC Multitrade and KBC Club and Resorts Pvt Ltd, promising attractive refunds on investment and duping investors of more than Rs200 crore.

Many investors subscribed as members to the payment of fees under various packages and schemes propagated by KBC Multitrade and KBC Club and Resorts, with promises of binary and matrix commissions, awards, rewards and product gifts. The commission was incumbent upon all members to enrol more members, as a portion of the subscription amounts so collected is distributed among the members at the top of the pyramid.

ED says that the members were incentivised to invest and lured by such commissions even when there was no underlying business activity for these companies.

Earlier, ED recorded statements of the main accused in Prabhani district prison which revealed that the directors and promoters of KBC Multitrade, Bhausaheb Chavan and Arati Chavan and other co-accused used the membership fees collected from investors for buying immovable assets, gold jewellery, investment in shares, etc.

On 8th March and 11 March 2024, ED conducted search operations at 11 official and residential premises in Nashik and Thane in Maharashtra and placed various movable assets of the Chavan family under restraint.

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