Chit frauds: 3 firms under scanner

KOCHI: After a lull, private chit fund fraudsters have become active again in the district. Three cases, in which promoters illegally peddled multiple schemes after obtaining permission for one and vanished with public funds running into crores, have come to light in the past few months.
In one such case, around 500 investors lost around Rs 13 crores. The office of the district registrar general, Ernakulam, is in the process of ascertaining the amount lost in two other cases.Desom Kuries in Chengamanad, Aluva, and Friends Kuries in Maradu have shut shop leaving investors in the lurch.
"In the third case, a chit firm in Mulanthuruthy has remained closed for the last three days. We suspect the firm may have collapsed. The owner has also disappeared. We received a complaint from a person who lost Rs 1 lakh," district registrar K C Madhu said. He asked investors to be careful and ensure that the schemes have sanction.
Chit funds usually obtain permission to launch a single scheme. "With the same permit, they start similar schemes where the promised returns are higher and collect money from the public. Every scheme requires a separate permit with a unique serial number even if it is floated by the same company," an official said.
Officials said they were in the process of issuing a detailed advisory warning the public against falling prey to such schemes. "Investors should ensure that the scheme is approved by the office of the local sub-registrar," the official added.
The office of the registrar has forwarded the cheating complaints to the police. "We gather evidence and hear the versions of both promoters and complainants. If it amounts to cheating, we forward it to the police. They are probing two cases related to Desom Kuries and Friends Kuries," the official said.
Data collected from the district registrar office shows that 200 firms have obtained permits to launch 1,271 schemes, totaling Rs 31.42 crore in the last three financial years. In April alone, sanctions were given to 66 chit schemes worth Rs 1.60 crore
Kerala implemented the central Chit Fund Act 1982 only on April 30, 2012. Until then, the state followed the Kerala Chitties Act 1975. This allowed chit companies, registered in places such as Jammu Kashmir and Faridabad, to open offices everywhere in the state. Several such companies vanished with public funds. With the implementation of the central Act, officials made registration in Kerala mandatory.
As per the Act, owners who cheat people can be sentenced to a maximum of two years in prison and a fine of Rs 5,000. Police can also file a case of cheating under the Indian Penal Code.
Chit firms can register in three formats by depositing money. There's the sole proprietor chit (scheme up to Rs 1 lakh), firm (with partners for schemes up to Rs 6 lakh) and company (with schemes valuing up to Rs 1 crore). A chit firm should submit minutes of the draw to the registrar's office within 21 days after the draw. The balance sheet should also be filed annually.