Duping in the name of Halal investments is an issue that has left thousands of Indian Muslims confused, scared and angry. Muslims in two cities -Hyderabad and Bangalore are especially at the receiving end, yet there is every chance that unless you are from that region and following local media, you may have no clue that thousands of Muslims have been duped over just the past year in the name of “Halal”investments.
courtsey: Social media
In these ‘Halal’ offers, even more attractive than the Halal factor was the ridiculously-high returns they promised to their investors. This, coupled with religious scholars who were too happy to promote such companies, meant that Muslim investors came in hundreds. Such smart marketing embedded with lies and deceit meant that these companies were easily able to fool people.
In this five-part series, TwoCircles.net will look at how companies like Heera Gold, now at the centre of a confirmed Ponzi scheme, used a combination of religious symbolism, Ulemas, fake propaganda and political tools to attract investors in Hyderabad.
We will also look at successful examples of Shariah-compliant investments especially from the state of Kerala. We also get an expert to help us understand how to avoid such fraudulent companies, understand the basic concepts of Shariah investment to ensure that investors do not fall into the trap of Haram in the name of Halal. In the third of the five-part series, Shaik Zakeer Hussain looks at the curious case of Bangalore and how over a dozen fake companies have mushroomed all over the city and manged to fool people in the name of Islam and Shariah.
Probably there is something in the Bangalore water.
Nothing else explains how someone as world-famous, and seemingly-knowledgeable like Indian cricket legend Rahul Dravid fell for a scam by Vikram Investments, which promised ridiculously high returns. This same fraudulent company company, also managed to fool Badminton star Saina Nehwal among other celebrities.
This news might be of little solace to thousands of Muslim investors who have, in just one year, collectively lost hundreds of crore in a dozen companies, all promising to conduct business as per Shariah standards. In Hyderabad, most of the attention has been diverted to Heera Gold, but in the case of Bangalore, the condition is far worse. Here, it seems every month there is one company which is emerging as a cheat. And to make matters worse, there is no way to ascertain how bad the condition might actually be. Companies like Burraqh, Capital First, Morgenall, IMA, Ambidant, Aala, Injaz, Muzariba, Flawless might very well be the tip of the iceberg when it comes to the long list of companies that use Islam as a front to fool investors.
Burraqh Groups, a Bengaluru-based investment company, which runs a slew of businesses, became the most recent company that allegedly duped hundreds of investors using a Ponzi scheme. Investors, mostly from the city’s Muslim community, had been lured in the name of halal income and the company promised them hefty monthly fixed returns. However, three months ago the company shut down its office and the directors have allegedly absconded.
According to the investors, Burraqh Groups collected deposits from people for investment in their construction projects, supermarkets, and other businesses.
Syed Jameel Ahmed, a realtor said he had invested Rs. 1 crore in the firm in March this year, but the company closed operations after taking the money. He said he trusted the company because the director of the company was his friend.
“I have worked with him on many construction projects in the past. I never thought he would cheat people this way,” said Ahmed.
Mohammed Ashraf, another person said he had invested Rs. 1 lakh and also helped several others from his family make investments.
The investors allege that the company has duped hundreds of people in Bengaluru and other parts of Karnataka and the amount could run into several hundred crores.
We have lodged several complaints with the police, but there has been no progress in the case so far,” said Ashraf.
Fayaz M.D, one of the investor says, when he had requested a refund of his deposit amount couple of months ago, the company, gave him a post-dated cheque, which got rejected for insufficient funds.
According to the information gathered from the website of Ministry of Corporate Affairs (MCA), and from the web archive of the company, Burraqh was started by father-son duo Syed Niyaz and Syed Mohsin Pasha. The investment section of the Group, Burraqh Unity LLP was started on December 12, 2017. Its now-defunct website shows that prior to this, the company operated under different entities.
The investors allege that both Syed Niyaz and Syed Mohsin are still in Bengaluru, and have even contacted some of them, with promises to return their money.
In a video message sent to investors in July, Syed Niyaz said he has not run away with their money and he needs more time to return their payments.
“Some of us have sold our houses, and some have even borrowed money from others, to invest in this company. It’s been more than three months since we received our payments. They have shut down their office and there is no trace of the directors,” said Ashraf.
In the past six months alone, a number of such companies in Bengaluru have systematically targeted the city’s Muslim community and lured them to invest in their firms, inducing them in the name of halal investment.
In January this year, Capital Plus and Capital Infrastructure, a firm promising similar high returns on investment duped over 200 investors of over Rs. 300 crore. On September 24, Morgenall another so-called ‘halal’ investment company shut down its office, and the owners went untraceable. They join Ajmera, Injaz International, Aleef, Aala Ventures, Ambidant, and several other companies in the list of allegedly syphoned off large sums of money.
Each of these companies has its own story of how they lured the investors into believing they were making a smart choice, but of particular interest is the story of Morgenall.
Many former employees and investors reached out to us, revealing some startling details about the disgraced firm and its promoters. The details they provided are all in bits and pieces, considering that none of them was fully privy to the actual functioning of the firm. However, when these pieces are put together, what comes out is a story which is just incredible to believe.
According to the information provided by these employees and according to the details gathered from the company’s now-defunct website, Morgenall began its operations as a consulting firm in 2004, facilitating recruitments in the Middle East. The company was headquartered in Dubai, UAE, where it still functions out of an office.
It’s unclear, how and when a relatively-unknown and shady job consulting agency transitioned into a financial company, promising to double people’s money, but somewhere around late 2016 or early 2017, Irfan Pasha, the CEO, and Founder of the company is believed to have started contacting many known and some unknown small companies, through mutual friends, promising to invest money in their establishments. And that is where the trouble began for the investors.
“He projected himself as a devout Muslim, who had made a large fortune for himself through his company in the Middle East”, said one former employee, who wished to conceal his identity.
A smooth talker, Pasha told these company owners to think large. For instance, he convinced the owner of a small-time design company to expand his agency from 4 employees to 50 employees and financed the expansion too. He invested in pharmacies, a fertility and birthing centre, a hearing aid clinic, and a green tech company, among others. He even asked an Islamic bookshop owner to convert his store into what he called a ‘Global Islamic Megastore’, where besides books, Muslims could buy perfumes, cosmetics, and clothes, all halal certified.
“The only thing he wanted in return, was the logo of Morgenall, next to the logos of all these companies, which they all happily obliged,” says the anonymous employee.
It’s yet to be ascertained the exact amount Morgenall invested in these companies, but a quick search on the financial information website zaubacorp.com reveals that Irfan Pasha, his wife Fathima Maqdooma, and in some cases the CA of the firm Aslam Pasha, are themselves supposed to be the directors of many of these companies, along with the original founding members.
A new Halal investment company
Within the next few months, in 2017, large hoardings of these companies, along with the name of Morgenall started coming up across Bengaluru, especially in areas predominantly resided by Muslims. The billboards were laced with verses of the Qur’an, with pictures of people wearing skull caps.
Morgenall had started to apply the age-old rule of marketing. It went from teaser to preview to launch.
The company started hiring new employees, mostly for its call centre and marketing team. The employees were told that they will be working for a multinational company, which was starting a credit co-operative society in India, to empower people from economically backward communities.
The employees, naturally brought into the claims, without any reasons to doubt the company’s veracity.
“The company first announced the start of Morgenall Ventures LLP, and came up with many investment plans, which was too good to believe,” said one of the former employee, who too wished to be anonymous.
One such was plan was, what they called P+P or Principal + Profit.
For instance, the ones who invested Rs. 1 lakh received the principal amount of Rs. 25,000 in return and an additional 5% profit on the remaining Rs. 75,000. The second month, they received another Rs. 25,000 and 5% profit on the remaining Rs. 50,000 and it continued this way, till on the 4th month, the investors were returned their entire principal amount of Rs. 1 lakh, 20% profits on that amount, and an additional Rs. 25,000, a 2-gram gold coin, and Rs. 2000 worth gift vouchers from Big Bazaar.
When some of the employees questioned the management, about the outright dubiousness of such a plan, they were asked to just do their jobs.
Initially, the company is said to have smoothly paid investors their promised returns every month, gaining their trust, and adding more investors to accounts. And a few months later, it even announced the starting of a co-operative society.
According to the employees, the launch of the co-operative society was promoted heavily. “It was advertised in newspapers, hoardings were put up in petrol bunks, and other public spaces and leaflets were distributed in front of mosques”.
The minimum deposit to open an account was fixed at Rs. 50,000 for men, and Rs. 25,000 for women. They even had a term to explain the special consideration for women depositors. “It was called Women Empowerment,” said one of the employees, sarcastically.
According to this employee, around 5,000 people had made investments in Morgenall Ventures LLP, and an even higher number of people had invested in the co-operative society. The exact number can be learned only after looking into the company’s records.
Although the co-operative society was registered in Karnataka, and by law was supposed to only operate and collect deposits in Karnataka, the company promoted their plans in Andhra Pradesh and Tamil Nadu and started collecting deposits in those states as well. One investor, from Andhra Pradesh, who wrote to us, says that she had invested Rs. 1 lakh in the company, and has not received her monthly returns for the past two months.
Tumbling Down
Everything seemed to be going fine for Morgenall. Within a short period of time, it had established itself as a big financial company, with thousands of investors. It had made a name for itself in the Muslim community, and that despite many similar companies shutting down, and its promoters absconding with millions of investor money.
There was no reason for either its investors or its employees to believe that the company, which had promised them the stars, was systematically planning to trick them all.
About four months before the company shut down its office and scooted off with millions of rupees, it abruptly stopped paying investors their monthly returns. For some, the payments stopped coming in the month of June, and for some, it was in July.
When panicked investors contacted the company’s office, they were told that all their accounts were being linked to ICICI Bank and were asked to wait for the process to complete. To gain investor trust, they even installed an ICICI bank kiosk in their office.
According to the employees, they too stopped receiving salaries three months ago.
In fact, around a month ago, messages on WhatsApp started getting circulated warning people to withdraw their deposits from Morgenall. The message even warned that Irfan Pasha had run away to a different country or planning to run away, according to another message.
One suspicious employee, whom we spoke to tried tracing the source of the messages. “Along with Irfan Pasha’s name, the message contained the name of the CEO of the design agency, who had no involvement in the day to day activities of Morgenall LLC or Morgenall Society. I knew that there was something fishy about it, and wanted to get to the root of it”.
His search landed him to a bulk SMS providing company in Chandigarh, whose call centre confirmed that the message was sent through them. But to his surprise, the very same day, Irfan Pasha’s wife Fathima Maqdooma confronted him about the call he made to the SMS company. “In retrospect, I believe there was a planned effort to divert the attention of people from Irfan Pasha, his wife, and the core inner circle of the company to other people, right from the beginning”.
According to the employee, Irfan Pasha sold his house in HBR Layout at a throwaway price a month ago and rented an independent villa in Hennur Road. His passport copy shows it was renewed on December 20, 2017, and will expire on December 12, 2027.
These employees also accuse other senior management members, to be hand in gloves with Irfan Pasha and his wife. They accuse Azeezullah Khan, whom the company had appointed as a ‘Halal Advisor’ of brainwashing people to invest money, saying it was all halal. “He used to quote the verses of the Qur’an and the sayings of the Prophet (Peace be upon him), and persuade people to invest”. They also point fingers at the company’s manager Sibgatullah Baig, and its Chief Communication Officer Lokesh Raj, and accuse them of being the “brains behind the scam”.
“Catch hold of these people, and you’ll get the whole truth,” the employees say.
According to them, Morgenall used to accept deposits from investors in cash, without even ascertaining the source of it. This practice lasted for several months, until a fraud detection officer appointed by them, cautioned the company of legal consequences. “That’s when they began doing the KYC of customers“.
The extent of the scam, the people involved, and the nexus they had, can be wholly ascertained, only after Irfan Pasha, his wife Fathima Maqdooma, or any of the alleged core members of the company will be arrested. However, the story of Morgenall paints a sorry state of affairs of a community, which continues to be fooled in investing in Ponzi schemes, all in the name of religion.
As one employee told us, “If today, some company announces they are offering 10 or 20% return on investment, and they say the money is halal, I can assure you that the Muslim community will again fall for that trap”. And this explains why such companies continue to flourish and mushroom.
*PONZI SCHEMES STATUS AS OF 30.09.2018*
*IMA*- Still running.
*Injaz*- payments stopped since 2017.
Investors are crying and Cursing.
*Ambidant*- Closed.
Owners ran away duping 38,000 investors, mostly the poorest of poor people.
*Burraq*- Absconding.
*Aala* – Profit delayed
*Muzariba* – Absconding.
*Capital plus* – Absconding.
*Morgenall* – owners ran away. In news nowadays.
*Flawless Bangalore (Bhatkallys Nawayath)* office closed, owner n their associate brothers run away by duping 7000+ hard earner investors
*Ajmera* – Closed.
Courtesy: Two Circles