Talking about scams and frauds by businesses or companies has become a fad in today’s times. The list is going only upward while the innocents are being looted, it has become imperative to stay updated and informed regarding a company or business.
According to the Federal Trade Commission, USA mentions that fraudulent opportunities mostly occur in the top 10 categories in its database reports of consumers complaining about fraud activities.
In India, fraudsters are tough to avoid. With many unemployed job seekers, the list of fake companies in India is long. This act of swindling is growing at an enormous rate with high risk in our digitally enabled world.
To think of frauds, the use of the internet has given birth to many security challenges that people tend to get trapped in. Over the years, India has seen many corporate frauds that left a deep wound in the confidence of many investors. Companies like Satyam, Kingfisher Airlines, DHFL, and YES Bank are some of the big corporate frauds the country has witnessed.
These scam artists are sophisticated as they exactly know how, whom, and where to target customers. In terms of investing in any business, consumers need to look for proper information and must know their rights. If a business has no information available, then that should be treated as a red flag for not pursuing it further.
While keeping in view these corporate frauds, there must be an awareness program for identifying fraud companies. Until there are certain programs available, you can always cross-check a company on your own.
In this article, we have curated some tips on how to identify a fraudulent business or company.
Specific things to look out for in a company to know if they are real are as follows:
Check Whether the Company Is Registered by Visiting the MCA Website
In India, for a company to be licensed, they need to register itself with the Registrar of Companies. MCA is the short form for the Ministry of Corporate Affairs, which is a government-regulated online portal containing the details of all the companies that have been incorporated in India.
On this website, you can check for the registration number of a company, what type of a company is, the date of incorporation, and other such details.
Check Out if the Company Has a Website and Look For Other Details on Their Site
Even if the company has a website, try to get a closer look at the address and contact number. Every website has a ‘contact’ page, where the address and a telephone number will be given to get in touch with them.
Try calling them with the number provided and search on Google maps to verify it is an actual office and not a fake one. However, you should also keep in mind that phone numbers are super easy to fake, so depending only on this fact can never give a piece of accurate information about the company.
If the company says ‘local business’ on its website, try to search in other cities to see if they are running their operation in other localities. If they happen to show the same website in other areas as well, know that they are not right. These businesses usually have copied templates with many broken hyperlinks.
Check for Wrong Spelling and Grammar
Spelling and grammar are the two most important things that will impress anyone. Make sure you go through every detail given on the website, and if you notice unsatisfactory English sentences and wrong spelling, then it is time for you not to indulge with them. Inaccurate sentence formation clearly shows there is something wrong, and you should investigate further before coming to a final decision.
Check for Their Privacy Policy
Another thing you can look for in a company to be legitimate is by reading their privacy policy carefully. Read about their history that will give a brief about how long the company is in operation.
Even if they have a privacy policy read through their mission and vision statement and look for anything suspicious. Reading through their privacy policy will also allow you to give information about their registered business address and other details which you can check on the MCA website.
Check for Their Customer Testimonials and Reviews
Feedbacks or reviews are the best way to find out about a company. The reviews can reflect different people’s opinions and provide you with a concrete overall idea about the company.
Check if the Company Accept Payments
If you are trying to get employed by that company, remember they will never ask you to pay cash or any sort of payment. Other than this, if you are paying for any service, it is important to see how the company accepts payments.
They should accept payments through secure methods and not through shady and insecure methods like paper cheques or cash. Consider looking into payment methods from which you can your money back if things go wrong or if their product or service does not give you satisfactory results.
Conclusion
Scams are a part of the system, and we must accept that incidents like these are inevitable. It can be safe to say companies and the government, in general, must lay down a strong foundation system that keeps a close watch on such activities.
A substantial system with regular monitoring, a robust recruitment process by companies, and launching awareness programs for the public are the kind of things we desperately need.
The above-mentioned points are some of the factors through, which you can check a business’s lawfulness, but it is always better to trust your instincts if you feel something is wrong with the company.
FAQs
How do you know if a company is legit or not?
Check the trademark of the company, check their business on MCA, look for any grammatical errors, and check out the company privacy policy.
How do businesses identify and control fraud?
Many businesses develop a strategy against fraud, protect their businesses from cyber attacks, and know the customers in and out.
In the past few years, cases of many banking frauds have been gripping attention. Take the cases of these billionaire entrepreneurs like Vijay Mallya, Nirav Modi, and Lalit Modi, to name a few.
When most of the investors thought that the economy would be retained and business will run like usual, the Indian economy seems to have been hit again by another corporate bandit. We are talking about what is known to be the biggest scam in Indian History – the DHFL scam after the ABG Shipyard fraud case of Rs 20,000 crore.
Headquartered in Mumbai in the year 1984, the multinational housing corporation DHFL was founded with the idea to allow economical housing loans to lower and middle-income families in semi-urban and rural areas of India.
The DHFL stands for Dewan Housing Financial Limited, a well-known non-banking financial service provider in India and also the biggest in the sector it operates.
The Reveal of the DHFL Scam
All the tension started to begin for DHFL when the Central Bureau of Investigation (CBI) charged them and others for duping a sum of Rs 34,615 crores. There are about 17 banks that have been tricked by home loan provider DHFL. Former CMD Kapil Wadhawan and director Dheeraj Wadhawan are among 13 others who have been booked in connection with the case.
Kapil Wadhawan
Let us go through the following points to know the story behind the biggest case probed by the CBI.
The not-so-famous media house, ‘Cobrapost’ were the first one to reveal such shocking evidence against the DHFL company. They published an article citing the fraudulent activities carried out by the renowned housing finance company.
They revealed that DHFL has been using the loan money for its benefit by buying personal assets like properties and lands. However, to gain confidence in the eyes of the public, DHFL filed a response with the Bombay Stock Exchange stating there is no proper weightage to the allegations raised by the journalist group and that it was an act of causing damage to the reputation of the company.
To make the most out of these ‘false claims’ DHFL hosted conferences by inviting several investors/analysts to clarify that the Rs 31,000 crore loan is taken for an upcoming project.
The matters got off-hand when recently the CBI booked former promoters of the DHFL group for defrauding 17 banks in an amount of Rs 34,615 crore.
DHFL has borrowed a total of Rs 42,000 crore loans from banks like State Bank of India, and Bank of Baroda and the highest being borrowed from Union Bank of India (UBI), out of which DHFL has not paid a sum of Rs 36,000 crore. The UBI (Union Bank of India) has asked one of the leading providers of risk, financial, and corporate governance, KPMG to look into this matter.
They have been accused of syphoning off the money to their other companies or Shell companies to buy assets at a cost of public sector lenders.
The rating agencies downgraded the rating score on commercial paper after the company defaulted on debt payments. It was during this time when rating agencies involving ICRA and Crisil demoted DHFL’s worth of Rs 850 crore on commercial paper to ‘default’ from ‘A4’ because it had a mortgage lender’s deteriorating liquidity condition.
Breakdown of the DHFL Scam
The Resolution Plan
DHFL tried to make an impression in front of the investors that they would be repaying them the full amount. They devised a resolution plan that transformed its debt into equity and moved to the court in the hopes that it would influence their plan.
Raid by ED
Following the court case, DHFL couldn’t remain safe as they were raided by none other than the Enforcement Directorate itself. The ED made claims that they found several linkages to money laundering. This money has been used for their advantage, which was intimately associated with the company’s promoters, especially Dheeraj Wadhawan. They also found that this loan money was also linked to the criminal organisation, Dawood Ibrahim.
Removal of Board of Directors
By this time, DHFL had no longer had power and control and was bankrupted due to which the Central Bank of India decided to remove its board of supervisors and managers. The decision took place under Section 45-IE (I) of the Reserve Bank of India Act, 1934.
First Arrest of Kapil Wadhawan
This created sensational news when the promoter of the DHFL, Kapil Wadhawan was arrested under the Prevention of Money Laundering Act (PMLA). The ED had found out that his firm was allegedly involved in providing loans to the criminal association of Dawood Ibrahim.
Charge Against DHFL
Recently, the CBI finally booked DHFL and 13 others related to this case for swindling 17 banks of Rs 34,615 crore. They are undergoing investigation by both the CBI and the ED. The ED has stated that Yes Bank is also involved in this scam.
Scams like this can prove to cause huge damage to Indian investors. What can we learn from this is just that we need to have strong and stringent banking laws and policies. The country can only hope to see strict business and financial advisory groups without corrupted intentions.
It is quite evident from the above-mentioned facts the DHFL scam remains the biggest scam to date. The case is still undergoing, and we can only wait for the judgment to come out.
FAQs
Is the DHFL scam true?
Yes the DHFL financial scam is termed one of the biggest scams in the banking industry.
What is the DHFL scam?
DHFL has been charged for defrauding a total of 17 banks of over Rs 34,000 crore.
After the liberalization, banks are forced to adopt various banking services and change their approach toward customers in the competitive world. As we are in a modern era, where e-banking is a prevalent method of accessing your finance.
We know the level of security, as well as scams in banking, is tantamount. Especially, in this pandemic, many people have encountered a large number of complaints regarding fraudulent acts through online transactions.
Even in the case of Blockchain having a strong security base, it faces a lot of hackers, for instance taking the biggest hack of $600 million in 2021, which impacted a bad phrase for many investors.
Bank frauds are not similar to online malware, we could see many surveillance videos of robbers entering the premises and stealing money in the open air. So, fraudulent acts via banking are a common issue we face, even after imposing tight security. Here, in this article, you could see the top bank frauds we are facing in 2022.
Phishing is illicit conduct in which an attacker attempts to get access to a user’s website by sending spam messages in the hopes of tricking the victim into divulging sensitive information. Phishing can be carried out by sending fraudulent messages or installing harmful software on the user’s computer, such as Ransomware.
Phishing scam example
Furthermore, link manipulation is a Phishing tactic that involves creating misspelt links and URLs. As you see, you will receive plenty of emails saying ‘click the below link to download the software that ultimately leads you to a fraud platform.
2. Pharming Scams
Pharming is currently one of the most common cybercrime attacks in the world. Pharming, on the other hand, is the act of sending users to a malicious website or damaging the computer’s DNS server software. To put it another way, pharming is similar to phishing but does not involve tricking consumers into participating in the scheme.
In companies that host e-commerce and online banking services, it’s practically universal. The phrase “pharming” refers to the process of cultivating and obtaining confidential information from users.
It is a computer slang term for “farming.” Pharming is the use of DNS (Domain Name Server) software on a computer to alter the IP address of a legitimate website to one that is malicious. Finally, the user is redirected to a possibly dangerous website.
3. Technical Support Scam
Those who are accessing online banking consider the Technical support team as their last resort. where the victim customer shares their problems regarding technical to the technical team with the hope of solving it, thinking that you are conversing with the right staff, But You are not!.
This type of fraud occurs through social engineering, where the fraudster enables your personal computer and can gain confidential information.
4. Spoofing
Spoofing is a cunning form of fraud in which the fraudster convinces you that they are coming from reliable sources. For example, you may receive a call, email, or SMS from a trustworthy source stating that “Antivirus ware will remove the virus from your device by downloading an anti-malware link given below,” prompting you to click on the link, which will take you to another illegal website, potentially exposing your personal and financial information to the suspect.
5. SIM Swap Frauds
This scam is vulnerable to those who access anything on the internet with their phone numbers. As a result, scammers will easily activate a fake SIM card under the authentic users for fraudulent activities. On the whole, your phone number is the scammer’s as well.
One of the important elements of this scam is ‘two-factor authentication, where the OTPs (One-Time Password) that are sent to your phone number will be received by the scammers.
With enough data being collected from the users, the scammers will claim the users’ SIM cards from the mobile service under the excuse of being lost or broken. Consequently, the users’ SIM or phone number will be under the scammers’ control.
6. Skimming
Skimming is a common scam and crime in several parts of the world. This is an increasingly often happening scam especially in public places, like ATMs, Point-of-Sale, and fuel pumps.
Skimming Scam
This scam occurs when devices are illegally installed in public places. The result of this scam includes using the users’ data to create debit and credit cards under their name and then stealing the victims’ money.
The most common scam under Skimming is Fuel Pump, where the scamming prop is hidden inside the wiring. Meanwhile, unbeknownst to the users, the data will be transferred to the scammers’ storage within seconds.
7. Vishing
Vishing is also known as voice phishing. It is nothing but scam centers calling potential users to deceive money smartly. Telephone fraud involves tricking people into giving money or disclosing personal information when they answer the call.
The perpetrator of a vishing scam often pretends to be a member of a trusted company, institution, or government agency. Believing the credibility, the unwary victims are sometimes tricked into taking the impression that their computers are being infected and needed to install anti-virus software.
As a consequence, scammers will get into their software and extract data for their swindling endeavours.
8. Mobile Scams
As the name speaks, mobile scams are a range of scams that involve smartphones. Moreover, in this era of digitalization, everything from start to end is digitalized. Similarly, the scam is also digitalized. The above-listed scams- Mobile phone virus scams, SMS phishing, Voice mail scams, and One-ring scam are all part of mobile scams.
This type of scam is not rare or uncommon, it can take place anytime and anywhere, unless and until the user doesn’t hold a phone. Furthermore, this digital age has made this scam even more happening, since all our data including bank details, emails, and other credentials are associated with our phones.
In this way, the scammers will be capable of accessing the victims’ data through their smartphones effortlessly.
Conclusion
Scamming has become a day-to-day crime in this technological age. According to the reports, half of the bank scams are done through smartphones. However, it can be avoided by taking proper precautions and not unnecessarily accessing sensitive information with the mobile phone.
As we all know, our bank accounts are linked to our mobile numbers followed by a ‘two-factor authentication’ feature, so it is quite uncertain to find the real scammer behind all the bank scams.
On the other hand, the only solution to dodge bank scams is to always contact the administrator of the respective bank irrespective of the caller, who has asked for your information via phone.
FAQs
What are some of the common bank frauds in India?
Phishing, Pharming Scams, Technical Support Scams, Spoofing, SIM Swap Frauds, Skimming, Vishing, and Mobile Scams are some of the common bank frauds in India.
What is bank fraud in India?
Bank fraud is when a person illegally obtains money from the depositors possessing as the bank
ABG Shipyard has been making news in recent days. The scam by this shipbuilding business has not only placed the Narendra Modi administration under scrutiny but has also thrown the opposition and the Modi government into a political fight. The ABG Shipyard Limited, a Gujarat-based shipbuilding enterprise, was accused of defrauding a consortium of 28 banks, including the State Bank of India (SBI), IDBI, and ICICI, for Rs 22,800 crores.
Without a doubt, ABG Shipyard is the largest private shipyard in India. The organisation has a large client base around the globe. They are the first to create all-aluminium jet-propelled watercraft that are powered by diesel-electric dynamic ships.
The company’s registered office and yard are both located in Surat, Gujarat. The company’s first ship was delivered in the year 1990. In the 15 years after its inception in 1991, the firm has grown to become India’s largest private sector shipbuilding yard, with a global client base of happy clients.
AGB Shipyard Fraud: How Did the Fraud Come to Light?
Based on a complaint from the State Bank of India, the Enforcement Directorate filed a money-laundering investigation against Gujarat-based ABG Shipyard, which has been described as being implicated in “India’s biggest bank scam in history.” The company’s chairman, Rishi Kamlesh Agarwal, has been questioned by the CBI for defaulting on loans of Rs 22,842 crore that ABG Shipyard obtained from 28 banks.
According to the CBI, a forensic audit conducted by Ernst & Young in 2019 indicated that funds were diverted to other linked firms, with loans reportedly being utilised for investments through offshore subsidiaries. According to the examining agency, these loans were not utilised for the intended purpose, thereby breaking the agreements.
AGB Shipyard Fraud: Actions Taken by SBI Against the company
On November 8, 2019, the SBI filed a complaint on a very serious note in order to get strong clarifications, and on March 12, 2020, the SBI requested explanations too. In August of that year, the bank filed a new case. The CBI moved on the complaint after “scrutinising” it for over a year and a half, registering the FIR on February 7 this year.
The SBI said in its lawsuit that the problem was caused by the global economic slump and the shipbuilding sector, according to the news agency Press Trust of India. It had “affected the shipping sector as a result of a drop in commodities demand and prices, as well as a drop in cargo demand.”
AGB Shipyard Fraud: Banks Involved in the Case
According to a case filed by the State Bank of India, AGB Shipyard owes the bank 2,925 crores, ICICI Bank 7,089 crore, IDBI Bank 3,634 crore, Bank of Baroda 1,614 crore, Punjab National Bank (PNB) 1,244 crore, and Indian Overseas Bank 1,228 crore (IOB).
According to CBI, the funds were utilised for reasons other than those for which they were given by banks. The Enforcement Directorate (ED) has opened a second money laundering inquiry into them.
AGB Shipyard Fraud: Why Is It Considered As India’s Biggest Bank Fraud?
Previous diamond merchant Nirav Modi and his uncle Mehul Choksi’s scams totalled about Rs 14,000 crore, while Vijay Mallya’s fraud was Rs 9,900 crore. The case of AGB Shipyard has crossed amounts of all the previous scams in history.
Former Chairman and MD of ABG Shipyard Limited Rishi Kamlesh Agarwal, former executive director Santhanam Muthaswamy, and directors Ashwini Kumar, Sushil Kumar Agarwal, and Ravi Vimal Nevatia have all been charged by the investigating agency and the officials. Meanwhile, searches have been carried out in 13 ABG Shipyard facilities.
ABG Shipyard is the subject of a forensic audit that was organised and conducted by Ernst & Young LLP. Between April 2012 and July 2017, it uncovers evidence of fraud. According to the audit, fraud was committed through “finances diversion, theft, and criminal breach of trust, with the goal of gaining unlawfully at the expense of the bank’s funds.”
ABG Shipyard received loans from 28 institutions in the form of three distinct types of loans. The funds generated from these loans were subsequently funnelled through 98 sister concern firms for mostly personal benefit.
AGB Shipyard Fraud: Timeline of the events
1985: The ABG Group’s flagship enterprise, ABG Shipyard Ltd, was founded. It was run and operated by Rishi Kamlesh Agarwal and is in the shipbuilding and repair industry, with shipyards in Gujarat’s Dahesh and Surat cities. It is financed by a consortium of 28 banks, with ICICI being the principal bank.
2005-2008: Despite warnings of danger from the global financial crisis of 2008, banks continue to lend grandly to ABG Shipyards.
2008: The worldwide financial crisis, which was sparked by the housing bubble in the United States and the fall of Lehman Brothers, affected ABG Shipyards.
2014: Under corporate debt restructuring, or CDR, SBI tries to restructure debts to ABG Shipyard. The reorganisation failed terribly because ABG Shipyards was unable to pay the interest and instalments on time and with parity.
2019: SBI identified the fraud in January 2019.
2020: SBI filed a complaint in 2019 and then again a detailed complaint in 2020.
2022: ABG Shipyard and ABG International Private Ltd are both booked by CBI. According to the CBI’s FIR, ABG SL owes a total of Rs 22,842 crore.
The CBI has issued lookout notices for Rishi Agarwal, ABG executives Santhanam Muthuswamy and Ashwini Kumar, and founder Rishi Agarwal.
Meanwhile, the opposition, led by the Congress party, had accused the Narendra Modi administration of participating in “India’s biggest bank fraud” of Rs 22,842 crore, which is larger than Nirav Modi and Mehul Choksi’s PNB scandal of Rs 14,000 crore and breaks the history of scams. The BJP government at the Centre pointed out that the fraud occurred during the UPA administration, the Congress retaliated by questioning why it took the CBI and SBI nearly seven years to find the crime. Along with that, the banks are in a terrible position of attempting to recoup their losses.
FAQ
What happened to ABG Shipyard?
The CBI has filed a complaint against ABG Shipyard for cheating 28 banks of Rs 22,482 crores.
Who is the owner of ABG Shipyard?
Rishi Kamlesh Agarwal is the owner and chairman of ABG Shipyard.
NSE or the National Stock Exchange is one of the most famous institutions in India. As the name suggests, it is the National Stock Exchange of India, which is one of the apex institutes for investors in the Indian land. It is prestigious and holds upright the fundamentals and morals of the investors. The existence of the NSE can be attributed to some people and Chitra Ramkrishna was one of such names that come together with the stock exchange. Ramkrishna was selected to create NSE from scratch and has served as the CEO of NSE between 2013-2016. However, it is the co-location scam case of the NSE that she has now taken the centre stage of.
There are some people who are always present in every institution who try to manipulate the power and authority given to them in ways that are unethical or corrupted. They can be found in private, as well as public bodies. They can be found in banks, formal institutions, government propagated social institutions, These manipulators are present in almost every organisation you can think of.
There will always be people like these who try to manipulate the general public with the use of their authority or power. No institution is left without these people, even the NSE. There is a curious case of the National Stock Exchange with a person who used her power to do some fishy things. The case came out in the news and got a really big headline. However, most people still don’t remember the case in its entirety.
Here, in this article, we will see who was the fraudster behind the National Stock Exchange and what were the allegations that were posed to her. There are many twists and turns in its story that can even make a good story plot. Let us see how the case started and then slowly unfolded before the eyes of the law. Let’s unfold the complete Chitra Ramkrishna and NSE co-location case.
A Brief about Chitra Ramkrishna NSE Co-location Case
Before we go deep into the series of events that led to the eventual reveal of the big case, let us see the case at a glance. Here we will be discussing, what according to the news, the story was and how the case unfolded before everyone and how people are reacting to it. Let us see what was the issue that caused the fire to ignite. So this here is the co-location case in brief.
The National Stock Exchange, which is one of the oldest stock exchanges in the world, took a toll on its MD and CEO. Chitra Ramkrishna, who is the Ex-Managing Director and the Former Chief Executive Officer of the National Stock Exchange was accused of misusing her power.
It was alleged that she used her power and authority in the NSE to make some inapt appointments, which eventually lead to disruption of secrecy of the exchange. It was also said that there was an information leakage, which was to be concealed but she failed in doing so.
Another claim was that she was the one who made some incorrect and misleading submissions to the SEBI. The Securities Exchange Board of India was also seen stating that Chitra’s spiritual guru influenced her in doing the actions she was accused of. The ‘Himalayan Yogi’ mentioned was unnamed and unknown to the news and the media. All these were the claims that clouded the sky for Chitra Ramkrishna in the past.
The consequences of these actions were quite easy to see. The CBI or the Central Bureau of Investigation was the body that questioned her after the acquisitions and found out various fishy arrangements.
The CBI, during its enquiry, also issued some circulars against the Ex-Chief executive officer, Ravi Narain, who was her predecessor. It was also reported that the Central Bureau of Investigation also ordered circulars against the former GOO (Group Operating Officer), Anand Subramanian.
Who is Chitra Ramkrishna?
Chitra Ramkrishna is not a familiar name but in the world of finance, she is really well-known as a person. She is the former Managing Director and the Ex-Chief Executive Officer of the National Stock Exchange. She started her career as a Chartered Accountant. As she started and sailed through her career, she brushed some finance in her life.
Chitra Ramkrishna
In 1985, she IDBI (Industrial Development Bank of India). As her career and life moved forward, she got a short and brief notice period at the SEBI. After that brief work at the Securities Exchange Board of India, she returned to IDBI after two years. This was the time near the beginning of the NSE. She was eventually picked by SS Nadkarni, who was the then IDBI chairman, to establish the National Stock Exchange from zero.
What are the Allegations Against Ex-NSE Chief Ramkrishna?
By now you must have got an idea about the person who is at the centre of this case. Now is the time to understand the case and the allegations it posed towards Chitra Ramkrishna.
Starting from the beginning, Chitra Ramkrishna was appointed as the Managing Director and the chief executive officer on the first of April, 2013. She was worthy of the title and the post and designation that she received.
After her joining as the MD and CEO of the National Stock Exchange, she thought of appointing a person as the CSO (Chief Strategic Officer) for the exchange. Mr Subramanian was the person who was chosen for the post and this decision shocked everyone.
The reason why the decision shocked everyone was that the person, or the newly selected CSO, Mr Subramanian had no clue what stock and the capital market was. He had no prior exposure to the world of capital markets. He was Vice President of a leasing and repair service at an enterprise called Transafe Services private limited, before joining as the CSO for the exchange.
The Securities Exchange Board of India mentioned in a document that the person chosen for the job role had no prior exposure to capital markets. The selection of this candidate is subject to raising all the eyebrows in the room. The consultancy position for which Mr Subramanian was selected did not suit his prior life.
More than this, Subramanian’s salary at his last workplace was Rupees 15 Lakhs, which was now raised to a whooping 1.68 Crore rupees. This jump in the salary of Mr Subramanian from the last workplace to the National Stock Exchange was unjustified and abnormal.
Not only this, he was asked to work four days a week with all the benefits multiplied on his behalf. After all the appraisals and all the multiplied performance ratings, his compensation rose to 4.21 crore rupees just within two years. After all the eyebrow-raising and the magical promotions, he was redesigned to work as the GOO (Group Operating Officer) and Adviser to the Managing Director.
All of this and in the research and investigation, it was found that the exchange had no vacancy for the appointment of a CSO. Yes, The exchange never needed a Chief Strategic Officer, it was never advertised.
Chitra Ramkrishna not only appointed a person as a CSO but she also compensated him with exaggerated numbers and metrics. Remember, this is happening at the National Stock Exchange. This is a huge blow to the regulations and regulators.
Another claim or allegation that Chitra faced was this. The SEBI found out that the former chief (Before Chitra) was also guilty of spreading secret information for the exchange out in the open.
The information which is being regarded as confidential includes, some financial documents, organisations working model, dividend payout ratio and the board meeting consultations. All of this information was leaked in some sense or the other, by the ex NSE Chief who was said to have been following orders of her spiritual guru who remains unknown at the moment.
Chitra Ramkrishna and the board of directors were found guilty of not informing the regulator about the doings and leaking in the organisation. The regulator, in reply, asked both Subramanian and Ramkrishna to surrender their designations. Subramanian left the office officially in October 2016, followed by the surrender of Chitra Ramkrishna in December 2016.
The former chief of the National Stock Exchange has been examined for the case that was resisted in May 2018. The central bureau of investigation took the matter into its hands and are enforcing whatever it can.
According to the investigations of the CBI, it was found out that, the former member of the board had got access to the back servers of the exchange. This point of contact with the servers led to the control and manipulation of confidential and important data on the servers. This led to something similar to ‘Insider trading’ in the stock market.
When information travels asymmetrically, or faster to some people, they can use it to earn some abnormal gains. The brokers held unfair access between December 2012 to May 2014.
“Stock exchanges as institutional mechanisms have an important role to play in ensuring the stability of the financial and economic system,” the Bombay HC order had said.
In that light, Ramkrishna as the then-NSE chief is accused of financial misleading, concealing of information, and improper conduct. She was arrested in the co-location scam case on 6 March 2022, Sunday evening.
The Penalties and Orders by SEBI
Watching all the fraud play unfold, SEBI or the Securities Exchange Board of India made some orders and punishments to the offenders. According to the orders of the Securities Exchange Board of India, Chitra Ramkrishna has been denied to deal in stocks.
She will never trade in any of the securities, intermediate or with any clearing corporation for a period of three years. She is also ordered to pay a penalty of 3 Crore Rupees for the damage that has happened due to the bad governance.
For the denied time of 3 years, Mr Subramanian was also ordered to restrain himself from associating with any sort of market infrastructure institution. He has to stay away from the world of the market for the specified time and he has been ordered to pay a fine/penalty of 2 crore rupees.
On the market organisation of the NSE, it was ordered that the National Stock Exchange will not launch a new product or service for the next six months. Moreover, the NSE has been directed to leave/forfeit the excess leave encashment (cash in lieu of leaves) in 1.5 crore rupees and the deferred bonus of 2.8 crore rupees that the exchange owed to Ramkrishna. The forfeited amount that the NSE ordered to leave was to be utilised in its investor protection fund trust.
Other than these two people who were the centre of the storm of the fraud? there were more. The other three people who were also involved in the events were also penalised. They include Mr Narain who was the then president, A Company Secretary named J. Ravichandran, and the former regulatory officer J Ravichandran of violating some sections.
Those violated sections included the 15HB of the Securities Exchange Board of India Act 1992. Section of 23A and 23H of the securities contract Act 1956. In this case, not just president Narain was penalised but also the whole exchange was penalised. Both Narain and the National Stock Exchange were penalised with a penalty of 1 crore rupees.
The Mysterious ‘Himalayan Yogi’
This is probably the most amusing character in the case. He is a yogi who was said to be the person who was influencing the minds of the accused people. Both the people, Ramkrishna and Mr Subramanian, were at the centre of the case of misleading and making some confidential information open to the public.
Both of these parties, even after the trials and all the investigations, believe that the yogi is real and legitimate. They were seen mentioning that the spiritual guru they were talking about was a ‘Siddha purush’ or a ‘paramhansa’, which means a truly accomplished (Enlightened) being.
According to the former NSE chief, the spiritual guru has no physical coordinates and it is impossible to trace him. He is a guru that can only be found after you manifest at your own will. She also said that she met him twenty years ago on the banks of river Ganga. The yogi then gave her an email address for contacting him in the future.
All these claims were baseless and proved to be guilty of both the parties at the National Stock Exchange. SEBI, however, denied believing that the spiritual guru was fake, in fact, it said that it was a real person and the erstwhile Exchange chief went on several vacations with the guru. This proves the fact that the yogi is a real and legitimate individual.
It is the entity that makes the whole story a crooked one. Especially in a country like India, where gurus and pundits are celebrated and worshipped like demigods, this case does not stand differently. If this yogi analogy is a lie in the case, then it is very cunning on the sides of both Ramkrishna and Subramanian.
Confrontation with the Yogi
The Ex-NSE chief Chitra Ramkrishna was accused of several major lapses at NSE, which is the largest of the stock exchanges in India, and accused of making monumental decisions on behalf of the organisation under the influence of a Himalayan Yogi. She was later arrested for the charges pressed against her on March 6, 2022, and was eventually sent to a seven-day CBI custody on March 7, 2022.
As far as the reports go from the CBI sources, the Himalayan Yogi has been identified to be the former Group Operating Officer (GOO) of NSE, Anand Subramanian, who has been recorded with evidence of over 2,500 email exchanges with Chitra.
In order to reveal some more details regarding the case, the investigating agency requested the court for some questioning and confrontation with Chitra. This led to the questioning of Chitra Ramkrishna with her former aide, Anand Subramanian by her side, however, this shockingly didn’t dig up more mud, instead, Chitra refused to recognise him.
As per the reports, the controversial appointment of Anand Subramanian as the Chief Strategic Adviser and his later elevation to the Group Operating Officer and Adviser to the MD were all prompted by the mysterious guru.
This was the NSE co-location case that involved Ex-CEO and MD Chitra Ramkrishna. It was curious to see that people at such a high latitude of responsibility and authority fall prey to some gurus. And who knows if the guru is a legit person or a mere proportion of fake images, or mirages created by the fraud minds.
Chitra Ramkrishna and Mr Subramanian were found guilty of deep corporate governance frauds, which led to their denial from the exchange and the market for three and two years respectively.
They were also ordered to pay a hefty penalty of crores. This case, which can also be a script for a movie, was a very interesting case. This shows how people at the top of some institutions can really be cunning, as opposed to their stature and the magnitude of responsibility that they have to bear.
FAQs
Who is Chitra Ramkrishna?
Chitra Ramkrishna is the Former CEO and Managing Director of the National Stock Exchange (NSE), who is currently identified as the center of the co-location case scam of NSE.
What has Chitra Ramkrishna done in the co-location scam case?
The former CEO and MD of NSE, Chitra Ramkrishna has been charged with some major governance lapses at the NSE by SEBI. She has been accused of taking some major decisions under the influence of a Himalayan Yogi.
Who is the Himalayan Yogi?
The CBI sources have identified this Himalayan yogi to be none other than Ramkrishna’s former aide and Former Group Operating Officer at NSE, Anand Subramanian. According to reports, the decisions of Ramkrishna were influenced by the Yogi.
Who is Anand Subramanian?
Anand Subramanian is the Ex-Group Operating Officer of NSE and the Former Chief Strategic Adviser and an Adviser to the MD of NSE. He is the one who is currently discovered to be the Yogi in the co-location scam.
What is co-location?
Co-location is a term that designates dedicated spaces in the exchange building, which are positioned next to the exchange servers. Co-location spaces witness high-frequency and algo traders who can place their systems or programs.
In co-location facilities, a third party can lease a rack/server space along with other computer hardware. These facilities extend a wide range of infrastructures like power supply, bandwidth, and cooling, which greatly helps in setting up servers and storage of data.
What is the co-location scam of the NSE?
The NSE Co-location scam is the recent market manipulation at the National Stock Exchange, which involves several top officials of the NSE including Chitra Ramkrishna and Anand Subramanian.
Who is the first woman MD and CEO of the National Stock Exchange?
Chitra Ramkrishna was the first woman MD and CEO of the National Stock Exchange.
Why was Chitra Ramkrishna arrested?
Chitra Ramkrishna was arrested by CBI on 6 March 2022 in the NSE co-location scam.
What is the current update regarding the co-location scam of NSE?
The former NSE Chief Chitra Ramkrishna has been arrested on March 6, 2022, and has been sent to a seven-day CBI custody on March 7, 2022.
Money is the basic set of resources everyone needs. While there are two methods to make money, one is through hard, slow and honest work and the other is by duping people fast, people tend to choose the second. In this world where everyone wants to afford things fast it has been increasingly seen that people are trying to find shortcuts to everything. This, of course, is not the right thing to do. You cannot get rich tomorrow, by any means.
It is true that you need money to be stable and all. People all over the world try hard to amass as much as they will be needing in future. However, some notorious humans try to dupe the rules and regulations that are made to safeguard the integrity of the nation. They try to avoid taxes illegally, try to amass much money that is either illegally earned or hidden and transported by any means. This article talks about that issue, which has money as the epicentre.
The conflict of money laundering in this world. We will first develop a little understanding of what money laundering is and then we will discuss what has been the cases that had the largest impact on the world. This article will end with precautionary measures. Read on to learn something about the loophole called money laundering.
Money laundering can be defined as some window dressing that is done to the ‘money’, to make it appear as if it was legitimately earned. It is to ensure that illegally earned money (Or even black money) looks white and pure and looks legitimately earned. It is done with some tweaks to prevent any issues that might happen in any future transactions. Thus, Money laundering makes the illegally acquired money look as if it has been obtained genuinely.
This method can be used for more than one purpose like it can be used to change or hide the nature, location, source, situation and even the movement of criminal activity. It makes the proceeds that are earned from illegal activities look legitimate and legal.
In simpler terms, laundering is the process by which hides or converts illegally earned income. It helps criminals get away with getting their money a clean and clear image. The process of money laundering is a huge criminal behind all that is wrong in the world. It provides a safe and secure passage for all the proceeds that one can earn with bad works. Any activity that is illegal, wrong and criminal is effectively hidden by the means of money laundering.
It can be drug trafficking, or even as much heinous as terrorist funding, laundering makes it look legitimate and legal. Thus, the process of money laundering is something that converts the money (from any criminal activity) to money from a legitimate source, thereby maintaining the credibility of the money earned.
Laundering is a serious crime and is done in probably every country in the world. Not only is it illegal but it is also immoral. It is such a serious problem that it encompasses both the white-collar and the street-level criminals. The roots of this business run deep in many parts of the world.
How Does Money Laundering Work?
The process of money laundering is super important for tricksters and all the criminal organisations all over the world. It is their only way on which they can rely to get their illegal money in a legitimate manner.
They are so reliant on this method that they are even ready to pay a lot of money in return for laundering money for them. This is how much they are ready to launder their illegal money. This process is not often easy, it has to be done with precise work of hands.
Anything wrong here or there can demolish the whole organisation. To avoid any errors and issues, there are different phases through which it happens. There can be many illegal ways to launder money but some points in the process are always the same and constant. We here will discuss those three common touchpoints which are common in most money laundering cases –
There are three predictive points and those are –
Placement
This is mostly the first step in a money laundering process. The first is always the entry of illegal money into the system. As soon as illegal money is placed in a tight spot, it becomes necessary to layer it with a protective genuine financial system or to cover them in legal ways.
Layering
Layering refers to the layering that is needed to cover the fingerprints on the notes, not exactly but similarly to a criminal investigation. Layering is layering the money with various transactions and accounting or bookkeeping tricks. Any accounting loophole that can hide the source of the unaccounted money, is useful here. Not to mention that it is done by experts having good knowledge and bad intentions.
Integration
The cash that is laundered through layering it with multiple accounts and transactions are now withdrawn. It is withdrawn in order to return the proceeds to the original criminal that will look like legitimately earned money. This is the integration of money in one place.
All these three methods are the most commonly seen and mostly seen/abbreviated steps in the money laundering process. But it is here to note that there can be more steps than just these three. There can be more layers and more routes by which money is integrated.
Common Methods of Money Laundering Used by Criminals
Exports
There can be Exports that are faked multiple times, in fact, it is one of the common ways criminals do this. A fake export can look like the money is legitimate and is travelling to some other country or province in some official manner. It was very frequently used in Europe in recent years.
Stock Markets
Another unsaid method is via investing the money out. Stock Markets are the major regulator of money supply and the money can be hidden behind this big money machine. Anyone can purchase shares, stakes to bonds from stock market brokers in any part of the world. Noting that the Stock market has a ubiquitous approach in all its workings, more money can be transported and invested in these money markets. Stock markets capitalise on the transaction and make it look legitimate.
Expensive Paintings
If you are a Hollywood fan, then this method would be quite familiar to you. It is evident in movies that gangsters buy some expensive art to cover the money that they have. Thus, Antiques and paintings that are ridiculously expensive can be used too. Hide money or even turn the illegal black money into legitimate white money.
Electronic Means
Then comes the smart modern way of pulling out money laundering. That is, by Electronic means. It has become increasingly easy to transfer money to each other’s wallets. This has not to mention also eased the hard work of money launderers. Now you can just transfer money with a click of a button or a few taps. Electronic means provides a wonderful and magical opportunity to exchange money without revealing its true identity or form.
If you are a modern thief, this trick would come in really handy. Criminals can convert real money to untraceable digital money, which is super hard to trace. That illegal or black money can also be stored in a cloud of games and rewards. It can be distributed through auctions and sales through gambling websites.
Cryptocurrency
If you move ahead in technology and money transactions, you will hit a block. That block is no other than the blockchain. As the world of cryptocurrency rises, so do the concerns of money management all over the world. It is forecasted that it will become extremely easy to get away with black money in the form of cryptocurrencies. What can be worse? They are not even regulated with one organisation, it is power in the hands of people and what if they fail to manage the power. Although there are proper ledgers at place working overnight to record all the transactions, it still can be hard to track individuals involved in the theft.
Up till now, we have all learnt that money laundering is a complex process and can include many forms and types. This calls for some real study on scams that the world has witnessed already. Let us now discuss which tricksters (read criminals) were able to dupe the national security laws of money laundering. This is the history that saw some of the biggest cases of money laundering in the world –
HSBC
HSBC was one of the top firms that showed signs of money laundering. The organisation was tried by the senate. It came under the limelight in the year 2012 when the United States Senate triggered a search in its operations.
On further investigations, it was found that they were breaking AML laws. AML here is Anti-money laundering laws. It was found that the entity HSBC was found to be guilty of the following frauds and illegal activities.
Firstly, they offered banking services to clients hailing from Saudi Arabia, even after knowing the fact that the clients had contacts with terrorists. HSBC sanctioned money transactions from Iran and North Korea without raising any sort of ticket that signifies any issue with those transactions.
HSBC let a subsidy of them having relations with a Mexican counterpart go, even when that counterpart had ties with drug trafficking. HSBC ignored all the risky factors and let the relationship with such a threat of an organisation go without any issue.
The reports say that an estimate of about 881 million Dollars was laundered in summation. This was a huge amount and the entity was banned from any workings for the foreseeable future. HSBC was a reminder that every entity has to be regulated so that it runs according to the lines seated by AML laws. HSBC was fined $1.9 billion dollars for laundering money.
BCCI (Bank of Credit and Commerce International)
The name BCCI is an acronym for Bank of Credit and Commerce International. It is a name now long forgotten. It was however not the same in history. In the mid 19s, BCCI was the seventh-largest private bank in the world. In the mid-1980s the bank was found to be involved in some really serious business of money laundering and even drug smuggling.
BCCI was found with sums of money that were in billions in criminal profits. The name that is forgotten now is estimated to have hidden and laundered a sum of almost 23 billion dollars. This much money was laundered and the bank made a name for itself in the black market of thieves and money launderers.
It is reported that the bank was too picky of its clients, it had relations with some really big names in the industry. BCCI has been reported with relations with Saddam Hussain (Former military dictator of Panama Manuel Noriega) and Palestinian terrorist leader Abu Nidal. By 1990 BCCI was entangled in its own corporate structure and ran into obscurity. That was when the time came for its investigation.
The US Senate report says that Price Waterhouse started an investigation on this matter. The credit and commerce bank shut down its operations even before the investigations were completed.
Even after an early shutdown, the bank owed hefty amounts of fines due to the AML (Anti-money laundering) laws it broke. It was also reported that the CIA (Central Intelligence Agency) user accounts listed on the BCCI, to fund Afghan Mujahideen during their war with Russia (The soviet union) in the 1980s. On the land of money laundering accusations, the Bank of Credit and Commerce transferred about 20 billion dollars in money laundering
Nauru
Nauru Island
Nauru is the name of a tiny pacific island. It is about 1100 miles away from the coast of New Guinea. The place might be small and dingy but it is quite an epicentre of money laundering. This small land has been the go-to place for the highest-profile of criminals and gangsters. In the late 1990s, Russian criminal gang lords laundered about 70 billion dollars through banks that were registered in Nauru. Those banks were mostly called ‘Shell’ banks.
Shell banks are the banks that exist only on paper and nowhere else in real life. They cannot be traced on a map, nor do they have any physical office/branch in real life. Nauru even allowed those banks to record transactions without naming the people behind those transactions. This was done to incentivise more and more transactions. The small land of the Nauru coast of Australia turned into a shell corporation heaven for the Russian mafia. The place is now only known for being a money-laundering favourable place after being a natural resource hotspot.
After the US treasury found out about the illegal money business going on in Nauru, they imposed heavy sanctions on that land. Only to surprise, it was found that the penalties were even more than the penalties imposed on Iran (Another laundering place).
With factors like those of Shell Banks, and recording money transactions without account names, cooked all this hassle. All of the factors above made Nauru a safe place for money launderers. The island has been blacklisted and all the shell banks that were once there, are deregistered on the spot. Since 2001, Nauru has taken steps to clean up its act and has accepted financial aid from Australia.
Standard Chartered
Standard Chartered is one of the biggest banks in the world. This humongous financial institution was accused of helping out the Iranian government to launder an amount of about 265 billion dollars. This huge amount was reported to be laundered as there were not enough/sufficient checks at places. This lack of governance of checks and looks made this big money to be transported illegally.
When it was investigated and regulated by concerned authorities, the organisation paid about 350 million dollars in fines in 2012. Standard Chartered also paid 350 million dollars again in fines and settlements in 2014 for not improving their AML (Anti-money laundering) face and compliance with the assigned rules. After that, they improved their AML sector within the organisation and since then, it has been on a check.
Pablo Escobar
All the Pablo fans out there, do you know how big that criminal was. Pablo Escobar, the most successful criminal ever known to known history. He was so rich and had money in such amounts that it is said once, he spent 1000 dollars in a consecutive week on rubber bands which were used to hold up the bundles of cash that he had. Not to mention, his business was drugging and although the business was illegal, he was a master of the trade.
He was so good at the drugs business, it is reported that he once in time-controlled about 80 per cent of the world’s drugs business (Cocaine trade). With such a hold over the most profitable business, he had loads of money. And because of that, he was forced to make more ways to launder his money to look legitimate. He was so into money laundering that probably the epicentre of his business was just that, ‘Cash Laundering’.
The recipe that he followed in getting all the money back to himself was simple. He paid bankers some bribe to which they returned the favour by turning his black cash into legitimate money. In 1989, reports say that his personal fortune was worth about 9 billion dollars, which made him the seventh richest person in the world at that time. He died in a gunfight in 1993 with Colombian authorities.
Wachovia
It is now a part of Wells Fargo, Wachovia was among the biggest banks in the United States in the 2010s. The bank was found to have allowed drug cartels in Mexico to launder close to US$390 billion through its branches during 2004-2007. The drug cartels had one job specific to money laundering. They laundered money (Proceeds) that came from selling drugs in the United States to the other side of the Mexican Border. Then, they used money exchangers to deposit the money into their bank accounts in Mexico.
“Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations,” said Jeffrey Sloman, the federal prosecutor. Yet the total fine was less than 2% of the bank’s $12.3bn profit for 2009. On 24 March 2010, Wells Fargo stock traded at $30.86 – up 1% on the week of the court settlement.
At the Mexico border, the requirements were not clear and regulated which added to the money laundering situation. The regulatory requirements with regard to the source of funds were not on par with current standards. Later on, the money that was transported to Mexico was roped in back to Wachovia’s accounts in the US. The total money laundered by this bank amounted to 390 billion dollars.
Now you must be thinking about what happens if the situation is not controlled, and that is a legit question. If money laundering is not stopped, it can raise havoc. How? Let us find out –
When some money is unaccounted for and lies around in society, it can be used for any purpose. The intentions can be constructive as well as destructive. Depending on the purpose, it can create a ruckus for the society we live in.
As we all know, money can be used as an incentive for many things, it can be an incentive for good things, hardworking and it can also be an incentive for bad things for society. In that situation, the social and political cost of such money can be severe.
In addition to that factor of thought, money laundering can weaken society as a whole. It can lower the boundaries of social and collective ethical standards. In developed countries, it can be efficient and effectively used in terrorism and any sort of destructive activity or behaviour.
On the other hand, if unaccounted money or money laundering is in an underdeveloped country then it can be serious damage to the progress of the country and the integrity of such a nation. For example, those examples can be disastrous in the second most populous nation, India.
What are the Precautions for Money Laundering?
There can be precautions as well for this money laundering influence. These precautions can lead to a safer environment for all, the government and the citizens. Let us discuss some of the precautions that are advised by experts and are worth a read –
Tax Evasion
First of all, the process of one laundering starts from the intention of tax evasion. At the heart of the issue is hiding the income to save some pennies of taxes. This has to be completely stopped. Tax evasion has to be stopped in all steps of production to consumption. This will help make people aware of the monitoring. This will also reduce significant money movements from one place to another.
Local governments should be held accountable for the money management of an area. They have to be fully authorised as well to do their duties on full throttle. For this purpose, the government and the media can work hand in hand to be more effective in maintaining the secrecy of sensitive topics.
Reducing Tax-free Earnings
The private sector has to be regulated as well. Cartels should be prevented and any sort of underground economy should come to an end. This can be done by reducing the tax-free earnings as much as possible in nature. This can be hard for developing countries, as they rely on taxes for development but they can do small changes as well.
AML(Anti-money laundering)
Businesses can protect themselves by strictly accounting for all the transactions as well as adhering to the AML(Anti-money laundering) norms. For which they can use the AML software available in the market such as Sanction scanner and many others available throughout the internet.
AML (Anti-money laundering) Initiatives
Throughout the article, we have mentioned something called AML, we did mention it but what it is actually? Anti-money laundering is a set of initiatives that rose to global prominence in the year 1989. They were formed by a group of companies and countries who were concerned about the issue. It is an entailing part of the Financial Action Task Force (FATF). The mission of which is to prevent and control the money transactions that are unrecorded and benefit from money laundering all around the world. In October 2001, following the 9/11 terrorist attacks, FATF expanded its mandate to include combating terrorist financing.
Another important organisation that controls the fight against money laundering is the IMF or the International monetary fund. Just like the FATF, the IMF also runs on a mission of preventing money laundering as they assert influence on countries and corporations to act according to the accepted international standards.
Laws like these are effective and work in a manner that prevents market manipulation, trade in illegal goods, corruption on public funds and even tax evasion on a global level (large scale).
Laundering is a serious crime and is done in probably every country in the world. Not only is it illegal but it is also immoral. It is such a serious problem that it encompasses both the white-collar and the street-level criminals. The roots of this business run deep in many parts of the world. With this rooted problem, it can be a serious hindrance to the development of countries and even corporations at a smaller level.
There are many international corporations like the FATF (Financial Action Task Force) and IMF (International monetary fund) trying to influence these numbers. Reading the history of money laundering, it is threatening that it can happen today too. In this world where we talk about decentralised currency as the new currency. It is going to be hard to prevent such happenings in today’s world. It does not just harm corporations and societies but even the society and constituents of society.
FAQ
How does money laundering cash work?
The money that needs to be laundered is carried into foreign bank accounts in small amounts and then is transferred back to where it came from.
What is the most common way to launder money?
The most common ways to launder money is investing in gold, investing in stocks or transferring money to foreign bank accounts.
Is laundering money illegal?
Yes, Money laundering is illegal as the laundered money can be used for illegal activities.
There are only two ways to be successful and have a ridiculous amount of money. The first way is to do the work, put in the hours, work super hard. The second or the other way is to quickly pull out a scam, expose loopholes, thug people and earn millions in a short period of time.
Now, which way is ethical and which way is unethical, that would be another topic for some other day. Here we are to discuss some of the most unethical ways people pulled out in history to create a ruckus. The biggest Ponzi schemes of the world.
A Ponzi scheme is a form of fraud that is performed by a dummy organisation, built with the sole purpose to defraud people by luring them to good schemes to get the money and vanish. We will go with a list of top Ponzi schemes and numbers do mean a lot in here –
There was a person named Bernie Madoff who was a popular American financier and who allegedly executed what is said to be the largest Ponzi scheme in history, defrauding thousands of investors of tens of billions of dollars over the course of 17 years, and maybe even longer.
He was also the chairman of the Nasdaq in the early 1990s. He died in prison on April 14, 2021, while serving a 150-year sentence for money laundering, securities fraud and several other felonies. Yes, you read it right, 150 years in sentence and he died during the ongoing term.
Bernie came up with promises of unbelievable and steady returns through an investing strategy known as split-strike conversion, which is funnily a real trading strategy.
He simply deposited funds (from clients) into one bank account which he used to pay existing investors who wanted to cashback. He funded retrievals by attracting new investors with good capital but was unable to maintain this transaction balance when the market turned upside down in 2008.
He admitted to his sons who worked at his firm but, he claimed later, were not aware of the scheme as of December 2008. They turned him to the authorities the very next day. The fund’s last statements indicated it had a whopping $64.8 billion in client assets.
Sergei Panteleevich Mavrodi with such a spell of a name was a Russian financial fraudster, supercriminal and previously a deputy of the State Duma. He was the founder of МММ, a scheme or basically a company that defrauded millions of people around the world. He was the Deputy of a state and that made him a trustworthy individual and the trust was misused.
MMM was established in 1989 by Sergei Mavrodi, his brother Vyacheslav Mavrodi, and Olga Melnikova. The name of the company is simply the initials of the founders’ surnames.
In the beginning, Sergei operated a network of enterprises importing computers. In 1992, tax police accused MMM of tax evasion, leading to the collapse of a subsidiary which was a bank, Suffocating the company of financial support.
Facing difficulties in funding its foreign trade, the company jumped into the financial domain. It offered American stocks to Russian investors, but the new business was met with little success.
The MMM Ponzi scheme was launched in February 1994, promising quite some super annual returns of up to 3000%. The company started an aggressive TV ad campaign, spending a lot of money to get to the most investors.
The advertisement campaign appealed to the general public by using “ordinary” characters that viewers could relate to. The most popular of them was a “folk hero” of early 1994, Lyonya Golubkov.
Another notable marketing effort was a giveaway of free Metro trips to all citizens on a certain day. That was how the scheme was popularised and landed on the plates of investors. This became the recipe for a successful scam and thugged the public.
Stanford Financial Group
Allen Stanford
The Stanford financial group was an international organisation that provided financial services. They were privately owned and the company was managed by Allen Stanford. Headquartered in Uptown Houston, Texas, it had 50 offices around the world. It was seized by the United States authorities in 2009. It was said to have managed a whopping US$8.5 billion of assets for clients that were more than 30,000 and in around 136 countries of six continents.
On February 17, 2009, US federal guys entered the Houston offices and Law officials placed signs on the office doors stating that the company was temporarily closed, but the company was in operation but under the management of a receiver.
The feds placed charges of fraud due to that receivership and ten days after that the U.S. The Securities and Exchange Commission amended its complaint to accuse Stanford of turning the company into a “huge Ponzi scheme“.
Caritas means ‘charity’ in Latin, which is quite ironic for such a Ponzi scheme originated in Romania that was active from 1992 to 1994, that is for around two years. The company was founded by Ioan Stoica.
It attracted millions of investors and depositors from all over the country, who invested millions of dollars in that scheme in hope of amazing returns before it finally went down or went bankrupt on the 14th of August 1994, having a debt of whooping US$450 million ($786 million in current terms).
It covered itself wearing a blanket of “mutual-aid”. It showcased itself as an enterprise aimed at helping Romanians during the transition (Capitalism) and it lured investors with a promise of a good eight times the capital they initially invested in a matter of six months.
Caritas prospered this scheme with the help of a relation it had with the Romanian National Unity Party (PUNR) and the mayor of Napoca, Gheorghe Funar, who helped this scheme to set up and even helped it garner good trust by renting them space in the Cluj hall, appearing with Stoica in public and on television they managed to get some trust from the general public.
Funar even went ahead and paid for space in the local newspaper to publish a list of the chosen ones, who would see their money multiply 8 fold; the list had 44 pages per day less than a month before the Ponzi firm collapsed. It went bankrupt.
Its bankruptcy made the Romanian government active and it searched and closed down such schemes. The government even got warnings about the scheme from several mediums, including the Intelligence Service of Romania, which wrote a report in early 1993 (which was leaked) and from the Chief Economist at the National Bank, Daniel Dăianu, who straightforwardly called it a fraud.
The above article discussed some of the biggest Ponzi schemes witnessed in the world. There are surely much more other than these, some small in scale and some even wider in scale. These are people who used loopholes in their favour and even discovered them when they needed to. All this takes courage and the will to know the game well in order to steer the wheel in a Ponzi direction.
All this shows a human character getting to the worst of creativity and shortcuts to earn quickly by defrauding the trust of millions. This is how ugly can trade happens when performed by tricksters.
This also shows how important it is to be in the know about what’s happening around us and how to get rid of ignorance where most people live. Get to know these masterminds, learn how laws can be bent and learn how you can safeguard yourself. In a world of democratised information, ignorance should be left behind.
FAQ
How can you spot a Ponzi scheme?
If the scheme offers “Guaranteed” High Returns, Consistent High Returns and has Unlicensed Sellers it might be a Ponzi scheme.
What are some of the biggest Ponzi schemes?
Madoff Investment Scandal, Stanford financial group, and MMM are some of the biggest Ponzi schemes.
What is a Ponzi scheme?
A Ponzi scheme is a form of fraud that is performed by a dummy organisation, built with the sole purpose to defraud people.
Cybersecurity is at the tipping point entering 2021. Advances in AI and ML are accelerating its technological progress. Technology which can take us forward and empower us, can also show the flip side that is Cyber Crime. By creating cybersecurity systems that encourage diversity and value equality, we can help ensure that technology, innovation, and the future, will be better. We’ve listed technology used in cyber security in this article.
These evolving Cyber security technologies list can help protect your organization.
The future of cybersecurity is in high-speed quantum encryption as Cyber war-fare gets graver day-by-day.
If we look at some trends, then it’s observed that cybercrime is costing organizations on average $3.9 million of data breaches every year around the world. Global scalability of Cybercrime is becoming easier for attackers, as criminals find new business models. It is one of the reasons that 55% of the organizations work together with external partners to reduce security risks.
Technology and security go hand in hand. There’s always have been a war between data defenders and data thieves, so you have to take a stand and be infosec warriors. Here is list of top 5 emerging security technologies that may be of great help.
Top 5 Emerging Technologies That Are The Future Of Cybersecurity
Hardware Authentication
Hardware Authentication is the future of cybersecurity. This approach is used as user authentication that relies on a device like smartphones, laptops, or any hardware systems held by an authorized user. This could be in the form of a basic password or fingerprints to grant access to the device.
The dearth of usernames and passwords are well known, so, a more secure form of authentication is needed. Hardware authentication is an important feature for the Internet of Things (IoT), where a network wants to ensure that the thing trying to gain access to it is something that should have access to it.
One limitation of hardware authentication devices is that they can be lost or stolen, which can create login issues for users.
AI is compared as technology that appears to emulate human performance typically by learning, including conclusions, analyzing complex content, engaging in natural dialog with people, enhancing human cognitive performance and, the major one is replacing people on execution of non-routine tasks.
AI technologies can be used to protect data against increasingly sophisticated and malicious malware, ransomware, and social engineering attacks. AI is not conscious yet, but there is likely a future in AI cognitive autonomy in predicting and mitigating cyber-attacks.
Rediscover the technology behind cybersecurity
If we look otherwise AI and ML go hand in hand in every respect. It basically gets a computer to act without much programming. It combines with AI and is one of the rapid automation of predictive analytics.
ML can provide the fastest way to identify new cyber-attacks, draw statistical inferences, and push that information to endpoint security platforms. Threat intelligence is one of the special cases where AI and ML can be an important functionality for cybersecurity. AI and ML could help with identity management by cross-checking the veracity of data across multiple fragmented databases. Hence, AI and ML are definitely the future of the cybersecurity.
% of AI Cybersecurity for the folloeing areas in organisation
Automated and Adaptive Networks
Automated networks can change the future of cybersecurity. Automation allows for scanning and monitoring of connected networks that can report on deviations and anomalies in real-time. The automatic updating of Defence framework layers i.e. network, endpoint, firewalls, payload and anti-virus; and diagnostic and forensics analysis for cybersecurity. AI and ML can be one of the major components and support applications of these networks.
Cyber Security Competence Survey in different areas
Blockchain Cybersecurity
It is one of the potentially strong cybersecurity technologies that’s rising stupendously. The blockchain technology works on the basis of identification between two transaction parties so this type of security works on the basis of peer-to-peer fundamentals. It offers authentication and resolving a single point of attack simultaneously.
With the help of blockchain technology, a security system used in a company can leverage a distributed public key infrastructure for authenticating devices and users. The use of Blockchain technology with AI can set-up a robust authenticated verification system to keep potential cyber threats at bay. It’s the future of cybersecurity.
Zero Trust model is a response to a breakdown in traditional security models. The zero-trust security model is based on the principle of maintaining strict access controls and not trusting anyone by default, even those already inside the network perimeter. The goal is to use authentication throughout the course to re-ensure security—but in a thoughtful and limited manner, to avoid unduly burdening the user. The key is to know when a re-authentication has actually become necessary due to some malicious or simply anomalous event taking place. This is how the combination of identity technology with application and API protection technology comes into play.
In spite of these technologies and many more upcoming smart cybersecurity techniques, organizations do face a lot of phishing scams. So, have you ever wondered how these Malware actually look like or what are the challenges?
Challenges That Organizations Face With Cybersecurity
Continuous Security Incidences And Breaches
Ineffective Responses And Security Protocols
Too Few Responders are Available for 24/7 Support
Employees are Afraid of Security Threats at Work
Many Organizations are still Unprepared For Security Threats
Phishing Scammers Target Senior Decision-Makers
Increased Weekly Volume of Suspicious Emails
Lack of Training about Security Threats and Scams
To Strengthen Cybersecurity
The upsurge in technology and digital connectivity and more and more cyber-threats has promulgated the need for smart cybersecurity. Smart Cybersecurity is an intellect reflex to manage risk by lessening security gaps that often occurred by reliance on manual processes that are impacted by a continual cybersecurity skills shortage and the administrative burdens of data security management.
A myriad of upcoming technologies can help us enhance cybersecurity and guide the increasingly malicious and disruptive cyber threat landscape.
Frequently Asked Questions – FAQs
Does cybersecurity have a future?
Cybersecurity is at the tipping point entering 2020. Advances in AI and ML are accelerating its technological progress. Technology which can take us forward and empower us, can also show the flip side that is Cyber Crime. By creating cybersecurity systems that encourage diversity and value equality now, we can help to ensure that technology, innovation, and the future, will be better.
Will cybersecurity die?
Cybersecurity will never die. Cybersecurity is at the tipping point entering 2020. Advances in AI and ML are accelerating its technological progress. Technology which can take us forward and empower us, can also show the flip side that is Cyber Crime. By creating cybersecurity systems that encourage diversity and value equality now, we can help to ensure that technology, innovation, and the future, will be better.
Is cybersecurity a good field?
Yes, definitely cybersecurity is one of the growing things in India. Cybersecurity is at the tipping point entering 2020. Advances in AI and ML are accelerating its technological progress.
Why AI is the future of cybersecurity?
AI is compared as a technology that appears to emulate human performance typically by learning, including conclusions, analyzing complex content, engaging in natural dialogs with people, enhancing human cognitive performance and, the major one is replacing people on execution of non-routine tasks. AI technologies can be used to protect data against increasingly sophisticated and malicious malware, ransomware, and social engineering attacks. AI is not conscious yet, but there is likely a future in AI cognitive autonomy in predicting and mitigating cyber-attacks.
Will AI take over cyber security?
No, AI technologies can be used to protect data against increasingly sophisticated and malicious malware, ransomware, and social engineering attacks but cannot fully overtake cybersecurity. AI is not conscious yet, but there is likely a future in AI cognitive autonomy in predicting and mitigating cyber-attacks.
