What if someone gives you a business proposition where in he asks to invest Rupees 2.5 lakhs which would then be used to purchase a car in the investor’s name and be run by this person as a taxi for which the investor will be paid Rs 20,000/- (rupees twenty thousand rupees) per month for about 2-3 years after which the investor will also get to take the car back which was initially purchased in his name only.
What if he tells that he has been running this business for almost ten years without any problem and there are thousands of happy customers? What if your neighbour whom you always regarded as a financially savvy person to vouch for the scheme having invested, recovered the initial investment and then have been making profits?
Trust me even the most sceptical ones will fall prey to such schemes. Why I said prey because, eventually any scheme that promises you abnormal profits are in fact are themselves abnormal at the first place, the fact which is blinded by the greed of easy money that is always residing inside most of us in dormant form and getting activated in times and offers such as above.
City Limouzines (India) limited is the company we are talking about today. While the sceptics can always say that having the benefit of hindsight, I can always act smart and criticize everyone around for having invested in this company and that I also might have fallen for such a scheme. While that may be true, we are missing the main point here. The aim is to see now what we did not see then. Why? Because these schemes will always keep coming back in forms that one can never imagine. Two years after this company went bust; another one took the country by storm and ran away with humungous amounts of money. Yes, I am talking about Speak Asia Online. Click here to read more about it that I have written in another blog.
About the Company: City Limouzines India limited was a company founded by Sayed Mohamed Masood in 1995 and quickly captured the imagination of the people with bold advertisements and returns claims. In those days, the government financial watchdogs were perhaps not as proactive, were dormant or were not under strict public gaze and scrutiny as they are today. Else such bold advertisements and claims would and should have caught their attention and prompt action could have been taken. Their most popular investment scheme amongst many that they ran was the one in which an investor will bring in say Rs 1.3 or 2.5 lakhs for part or full ownership of a vehicle to be run by the company as a taxi or a tourist vehicle. In return they would get Rupees 10000/20000 per month for 24/36 months after which they can take their vehicle back or take 40-80% of the value of the vehicle as the final settlement. The investors were given post dated cheques for the first year and were to collect the cheques for the second year at the end of the first year. The business model on the first look was not bad for either of the parties. Investors get super normal returns and the company gets to run vehicles without any investments keeping the balance as profits after paying up monthly instalments to the investor. It is this fact that many investors did think of this as a once in a century business idea and ended up investing. To be fair, the company did start with honest intentions but got risky when they promised huge returns without actually making money out of the business on a trial basis before collecting the funds from the public. However to their credit, they did run the business for more than a decade which implies that the business model per se was viable. Over a period of ten years Sayed Mohamed Masood defrauded about 2,00,000 people of their hard earned money totalling more than 1000 crores ( 200 million dollars). Read the second part of the story about how it happened and got busted in the next blog.