IMA fraud: the Halal trap

A series of ‘blade’ companies and Ponzi schemes have skimmed off millions from the wallets of gullible investors from the lower-middle income group in Bengaluru in recent months. The latest among them is the I Monetary Advisory (IMA), a firm whose footprints were seen constantly expanding over the city’s firmament.

Of all the fraudulent companies who made fortunes by pauperising the masses and coolly exited the scene, IMA, floated by Mohammed Mansoor Khan, lasted the longest. It took 13 years for the IMA bubble to burst. It owned two jewellery showrooms, a slew of pharmacies, had a few ongoing construction projects and a hospital, instilling confidence among its investors, drawn mainly from among lower middle-class Muslims.

The company ran reckless publicity campaigns promising unrealistically high returns to the tune of 10% a month. Those who were taken in by its promises — and they were in legions — were further encouraged to do so by religious clerics associated with the renowned Islamic seminaries of the city. Vernacular (read Urdu) dailies often carried paid news items and those with some disposable money had no time to apply their mind or exercise due diligence.

As is their wont, some of these (companies) doled out some money by way of ‘monthly dividends’, only to go back on their promises shortly thereafter. The bait worked and ‘the good word’ lured fresh prey. While IMA had some tangible activity to show for real business, most others were genuine scamsters, with no business worth the name to show.

What won the day for them was legitimacy conferred on them by some noted clerics of the city. Advertisements displayed the company’s MD Mansoor Khan with the turbaned clerics and were generously flashed across the Urdu media.

The company inveigled the clerics into its parlour through a variety of stratagems. It funded the construction of the Madrassa Maseehul Uloom, an elegant edifice with ultramodern amenities. It even funded a computer lab in Darul Uloom in Deoband in Uttar Pradesh, a seminary well known across the entire sub-continent.

A modern printing unit set up by the IMA published the Holy Quran for free distribution. In one case, some Umrah (lesser pilgrimage) pilgrims stranded in the Holy city of Makkah were rescued and flown back to the city with financial assistance of the IMA. One wondered as to how a business group in its infancy could undertake such humongous CSR ventures with such aplomb. Evidently, the company was on this unsustainable trajectory only to woo investors.

Shariah-compliant

Central to all these firms is the emotional appeal to religious sensitivities. Devout Muslims avoid investment avenues involving interest-based transactions or banks and look for Halal (business permitted under the religion) and Shariah-compliant transactions.

Companies like Ambidant, IMA, Injaz, Aala Ventures and Morgenall exploited this religious inhibition and publicised their products to be Shariah-compliant. The pliant ulema even issued the ‘Halal certificates’, thereby facilitating deposit mobilisation from among devout Muslims.

This author has documented the activities of IMA over the years. In one case, the IMA advertised a report (in Daily Salar, issue dated October 26, 2018) from three leading clerics (one among them from Deoband) ‘certifying’ that the IMA ventures complied with the Shariah (Islamic law), maintained adequate stock of gold in its vaults, and that the company directors’ investments in the venture were far in excess of deposits drawn from the depositors.

The deceitful trap masked under religious jargon worked beyond expectations and brought in investors who would not think before selling off properties and investing the proceeds into such dubious ventures. What is galling is that the majority of those who made a beeline at the portals of these firms were least aware whether they were putting in their money as ‘deposits’ or were ‘investing’ in a business.

The short-term gains through ‘monthly dividends’ — with returns diminishing month after month — deluded them enough against undertaking a serious scrutiny of the business model or ascertaining the bona fides of the promoters.

The history of Halal, interest-free and Shariah-compliant businesses defrauding the people is fairly old. It was the Madras-based company ‘Al-Meezan Leathers’ in the early 1980s which pioneered the trend. It went into bankruptcy by 1987. Barkat Investments in Bengaluru went bust in 1998.

Ittefaq and Falah Investments of Indore vanished without a trace in the mid-1990s. Al-Ameen Islamic Financial Investment Company (AIFIC), Bengaluru, folded up within 10 years. Heera Gold from Tirupati defrauded thousands of investors only two years ago.

That a scandal of this magnitude should defraud people in a city with the reputation of being the ‘IT capital of India’ should make the authorities sit up and see how the innocent could be safeguarded from scamsters and fraudulent firms. It is also time to bring all such companies that exploit religious sentiments under the scanner.

(The writer is a freelance journalist)