IMA jewellery fraud: The scam that opened a can of worms in Karnataka

At Rs 1,300 crore and 40,000 people affected, the I Monetary Advisory (IMA) jewellery scam has opened up a can of worms in Karnataka, especially with the involvement of senior Congress leaders.

IMA founder Mohammed Mazoor Khan is absconding with majority of jewels missing from his shop. Names of senior Congress ministers including RV Deshpande, current revenue minister and defected MLA Roshan Baig are now associated with the scam, though both of them have denied any involvement.

In a bid to control the situation, the JD(S)-Congress combine government ordered an SIT (Special Investigation Team) probe into the case last week. The SIT will be looking at all angles including the role of the revenue department. In addition, the government has held high-level meetings with multiple agencies, such as the Reserve Bank of India, to bring in a regulation that aims at taking stringent action against such perpetrators.

Additional Commissioner of Police Seemanth Kumar Singh told Moneycontrol, "Given the gravity of the scam and the number of people affected, the government is talking to all agencies to put an end to the issue instead of working in silos."

The scam came to light on June 10 when an audio clip of Khan blaming MLA Baig and other government officials of corruption went viral. In the video, Khan allegedly said that he defaulted on loans and couldn't pay back on account of giving bribes. According to reports, Khan had fled from the country by the time the audio clip surfaced.

Since then, investors have been protesting outside IMA's office. As the number of grieving investors increased, police set up counters for them to file complaints. The number of complaints increased from a few thousand in the first two days to 10,000 and now stands at 40,000. In addition, there was a separate counter at a different location for 200 employees of IMA, who have invested in the company taking loans from banks and have now lost their jobs.

“This is to protect them from investors, who might take it out on the employees as well,” ACP Singh said.

The case, ACP Singh explained, is not as simple as Khan being unable to pay on account of giving bribes.

Khan has probably been planning this for some time now. For instance, he began to default on payments since March. A significant amount of jewellery has been missing from the store.

“It is clearly a Ponzi scheme. Going by what we have uncovered, he was aware of what he was doing and he is liable for what he has done,” ACP Singh added.

This is not the first such incident in Karnataka though. In fact, the state has a long history of such scams. Prior to IMA, owners of Morgenall Cooperative, another halal investment company, fled after cheating investors in 2018. While complaints were filed, no progress has been made in the case and the owners are still absconding.

Similarly, investigation in the Ambidant case, which allegedly involved BJP's Janardhana Reddy, and has an amount running into Rs 954 crore, is still ongoing.

ACP Singh told Moneycontrol, “In both the cases, we are trying our best to give the money back by confiscating the company’s properties and/or jewellery, as most of these investors are poor people.”

"However, it is not easy since the amount seized is far less than the amount cheated," he added.