Cheating Customers, Amway India Chairman, 2 Directors Arrested


Three top officials of Amway India Enterprises,  India operations were arrested based on complaints of cheating customers.

INDIACSR News Network

Thiruvananthapuram: Amway India’s Managing Director and CEO William Scott Pinckney and two directors Sanjay Malhotra and Anshu Budhraja were arrested on Monday, 27 May 2013 at Kozhikode, Kerala on charges of fraud.

amway directorThe Kerala police arrested William S Pinckney (pictured), managing director and CEO of direct-selling company Amway India, on the ground that the company’s business was illegal – 15 years after it started operating in India. “Two directors of the company, Anshu Budhraja and Sanjay Malhotra, were also booked. The trio was arrested from Calicut and is likely to be produced in court on Tuesday, 28 May 2013.”, police said.

The arrests were made in connection with three cases registered against Pinckney in Wayanad district and a fourth in Kozhikode. The Crime Branch had asked Pinckney to report at the office here for interrogation in the wake of a complaint registered by a customer, Visalakshi of Kunnamangalam in the district.

The economic offences wing of Crime Branch, Kozhikode, charged them under Section 420 of the IPC for ‘cheating and dishonestly inducing delivery of products’. Cases have also been registered against them for violating the Prize Chits and Money Circulation Schemes (Banning) Act, 1978.

A top official of Economic Affairs Wing (EOW), Kerala, who was part of the operation that led to the arrests, said: “With the call of easy money, they have been luring people to invest. The new members in turn had to get more people and this was leading to illegal money circulation. We had received several complaints against the company.”

The officials have now been taken into custody in relation to an FIR that was filed in 2011.

The direct seller’s Kerala operations have been in trouble from last year when its godowns were raided and stocks seized. Rajkumar, chief of Kerala operations, was also arrested. Earlier this year, godowns at Thrissur, Ernakulam, Kozhikode and Kannur were raided and products worth Rs 2.14 crore seized.

Amway stopped short of calling the arrests illegal. “With respect to the 2011 case, the company or its officials were not issued any summons to join the investigation and neither was any information sought by the police,” it said.

There was another case filed by an ex-Amway distributor in 2012, charging the company with cheating. The company officials had received bail in that case. While probing the 2012 case, the police found that goods were being sold at overpriced rates. A product worth Rs37 was being sold to consumers at Rs395.

The EOW had also conducted raids at Amway’s godown in Kozhikode, Thrissur and Kannur and seized goods worth Rs2.14 crore last year.

The trio will be produced before the chief judicial magistrate court in Wayanad on Tuesday.

The Crime Branch had earlier arrested Rajmohan, a native of Chennai, who was in charge of Amway operations in the state. It had also registered cases against Amway India directors -Pahlavi Suresh Shraff and Shabdul Suresh Shraff -who reside in New Delhi.

P. A. Valsan, Superintendent of Police, Crime Branch, Kozhikode, told that Pinckney was asked to come to Kozhikode for questioning. The arrest was made by the Wayanad police. Pinckney had sought anticipatory bail in all these cases, but got for only a case registered in Kozhikode.

All the complaints filed against Amway accuse the company of its failure in ensuring the promised benefits to those who joined the network marketing business. The complainants said the company forced them to buy Amway products which included cosmetics and protein powder, for huge sums of money, the police reported.

According to the police, Visalakshi had purchased products worth Rs. 3 lakh expecting the promised returns. When the company failed in honouring its promise, she filed a police complaint on November 1, last. Sourced from local producers, many of the products were priced several times higher than the original price, it was pointed out. Most of the complainants rue the fact that the company ditched them after enlisting them in the business network.

Condemning the arrests, Indian Direct Selling Association secretary-general Chavi Hemanth said: “The Government should come out with clarity between financial pyramid schemes and direct selling companies.”

The Crime Branch had gone through the documents of the company sourced from the Registrar of Companies in Chennai.


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