Insight into an American ponzi mlm scheme which robbed thousands of indian citizens because of corruption and regulatory loopholes
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With Rs. 50 Crores as estimated monthly profits, Regulation of Direct Selling Industry by the Government also comes into picture.
IX Global, A Utah based company is running a multi-level marketing business in India with a product, ‘education services for trading’, indirectly not permissible by the authorities. Their customers say that they feel ‘manipulated’ by the company’s promoters. The COVID-19 affected economy has led to many scammers coming up with ‘economically promising’ schemes which the people fall prey to. IX Global is suspected to be one such scheme according to a complainant who has lodged a formal complaint with the police against the company in Mumbai. “IX Global projects itself in the disguise of an economically fancy scheme and misuses the current economic condition to pitch its fraud scheme to the people.” said the complainant. The complainant also said, “after complaining about my grievances with a high ranking official in the company, he wrongfully intimidated me with his political might. I have also mentioned that in my complaint.”
Although there are many such companies in the market; which raises the bigger concern of the aptness of the regulatory measures by the government for MLM companies, IX Global is questionable on many of its aspects. We reached out to the company and they said that we were “not briefed with the true facts” and have thus printed this article. However, here are the facts which we found.
To start with, the members of IX Global call it an ‘educational company’ as it offers forex and binary ‘education’ and ‘alerts’. Along with this, this company also provides automation services for trading to its ‘members’ but that makes the claim of the ‘educational company’ quite sceptical. The reason the word ‘member’ is used instead of ‘employee’ is because this company is also involved in a multi-level marketing business. In fact, most of the company’s earnings come from MLM, as indicated by its co-founder Viraj Patil. Maharashtra’s direct selling guidelines prohibit the Direct Selling entities to deal in ‘online education’ and ‘online trading’. This would be explored further in the article. The company said in the written reply that they were, “educating the people who are interested in doing online transaction of our country about the pros and cons of trading online.”
There are strong reasons to believe that this money is illegitimately going out of the country and/or being laundered within the country, with periodic ransoms being given to politicians who protect them. From registration irregularities to past record of the founders and the current modus operandi of their business, multiple questions follow on the legitimacy and legal compliances of IX Global.
How is the scheme pitched to the people?
The scheme is pitched, but not directly, through the Instagram or Facebook pages of IX Global. The high-ranking network marketeers of IX Global lead the people to the zoom meetings through their social media posts. These posts are very utopian, fancy and idealistic in nature. They use emotional tactics to persuade people which crosses such a limit that it indicates a targeted social engineering malice. The complainant has mentioned Savio Pereira, Viraj Patil, Priyanka Khanna and Ramesh Chaudhary in his complaint. These people are often seen in such videos.
Caption: Economically misleading IX Global post.
Financial independence is unnaturally idealised in these videos as they go on to show off their exorbitant amount of earnings and talk about their high standard of living. The economic slowdown in the pandemic is used as a tool to appal people of the economic losses they might face if they do not invest their money in a scheme like this. The words ‘life changing opportunity’ and ‘financial independence’ are overused in these videos and the subsequent zoom sessions.
In the zoom sessions, they explain about the product followed by the network marketing scheme. In these meetings, they invite people who claim to be benefitted from the scheme and they show exceptionally huge profits. “The language used in the testimonies and by the session hosts is so well curated for the purpose that it leaves a hypnotising effect on the people and they sign up without questioning its legitimacy and return of Investment.” said an IX Global member who wished not to be named.
The company says, “every company has its own style and strategy for promotional activities which they are free to do in fact anybody can do the same keeping in mind the legal aspect of that country.”
What happens after people sign up for the scheme?
After they sign up, they have 2 objectives –
1. Managing to earn their monthly resubscription fee ($125 or $145 or $180 – depending on the plan)
2. Earning monthly profits over that amount.
They have 2 ways to do that –
1. Earning through trading (by utilising the company’s ‘trading advice’ and ‘education’ and/or using the ‘trading automation software’). It is interesting to see that the company provides a trading platform called MT4 to the users.
2. Network Marketing.
If they manage to add 3 members to sign up for the scheme, their monthly subscription fee is reimbursed through the commission and a one-time-non-recurring bonus they get. To get to sustain their monthly subscription fee, they have to go through a herculean task of adding members and keeping check on the added members’ work. This is a task which not many people are efficient enough to do. To meet out this expense, they resort to the trading platform. The problem starts right there. The trading platform is a third party overseas trading platform which allows brokers, which are not registered with RBI or SEBI, to function as well.
MT4 platform is infamous for its use by scammers and shady brokers. According to an IX Global user, it requires a minimum balance of $1000 for the users to be eligible for cashing out the profits which they get over that $1000 amount. An average Indian would invest only $100 in his trading account, unaware of the fact that multiplying it to $1000 would not be an easy task. Considering the rate of return of automation softwares provided by IX Global, C3PO and R2D2 it could take an investment of $100, 1-4 years to reach the $1000 mark. This figure is uncertain due to unavailability of accurate rate testimonials to us.
The bot C3PO projects a drawdown value of 67.76% which means that this is the amount percentage which can go in loss from your trading balance.
Caption – 67.76% drawdown value of C3PO bot provided by IX Global
Traders say that 20-35% drawdown is the most which they can risk. Beyond that, there is a high risk of money getting lost.
In fact, if we see current monthly statement of this bot, it is going in 2.59% loss. (This amount is bound to fluctuate(positive or more negative) with the passing time)
Caption - C3PO bot going in 2.59% loss in March.
The complainant told us, “IX Global has taken the Introducing Broker partnership with TP Global. TP Global is the overseas broker which is registered on MT4 trading platform and the users of IX Global log in through TP Global on MT4 for trading.” This way, IX Global does not act directly as a broker but gives the responsibility to TP Global, a foreign company. The commission on trades is split up half between TP Global and IX Global. Although the monthly trends might be in losses, the companies are making commission on trading nevertheless.
If such bots are not able to make money and the users are incapable of organically trading by receiving forex/binary alerts from IX Global, they may start spiraling towards loss. Since there is no encashable profit before the $1000 dollar profit mark, most of these retail investors or users resort back to the tedious task of multi-level marketing. Even in one of the pitching meetings, a high hierarchy person in the marketing chain, Priyanka Khanna said that the ‘network marketing part’, which was supposed to be her plan B, became her Plan A (see a similar Facebook post here). This situation is equivalent to a restaurant chain claiming to be earning more from selling its franchise rather than the food.
The company did not categorically comment on this in their reply.
The Debt Trap
When people are unable to earn through trading in such companies, they get into multi-level marketing to manage their subscription fee and then earning the commission from it. When they are not able to add more members to the scheme, they end up subscribing from their own pockets for the month, wishing for a better luck the next month. So eventually, the users could be paying more than they initially ought to invest. This spirals into a debt trap if the person is facing repetitive failures. When a person is not in a situation to pay more, they get out of the scheme and the entire money goes to the company without them actually utilizing the product. “I had some grievances with the company and I was messaging them. Viraj Patil has blocked me from Facebook and IX Global’s YouTube channel.” said an IX Global member.
IX Global said, “anyone who is connected to India doing the business in online does with their own risks and consequences.”
Since this money is going overseas, it raises a great suspicion on the company. Considering the shady background of the company and its founders, it won’t be uncanny to ponder over that thought.
The Dark Origins of IX Global
IX Global, in itself is not as suspicious as the people associated with it, along with their past. Two key people, Joseph Martinez - CEO and Viraj Patil - one of the co-founders, were both working at another Multi-Level Marketing company, called Kuvera Global. The products offered by that company and the modus operandi are similar in nature to that of IX Global.
Kuvera Global is another Utah based multi-level marketing company which functions mostly in Europe and India. There have been a lot of complaints about this company in the past (See here, here, here, here, here). It was, and is still, working under the SEC registered company called Investview. US Commodity Futures Trading Commission (CFTC) back in 2018 documented that the company was illegally offering forex and binary trading advice to retail investors in the United States. In legal terms, it was illegally acting as a Commodity Trading Advisor. The company was thus, fined for $150,000.
Apart from that, the securities regulatory authorities of France, Portugal, Spain and Belgium have delegitimised and warned against investing through this company. While all of that was happening, Joseph Martinez and Viraj Patil were excessively promoting the company and working it. When we go to their Facebook posts from that time, we can find multiple mentions of ‘#IXMovement’. This raises a question whether IX Global is a shell company for the legally troubled overseas company, Kuvera Global?
Exploring further qualms.
The company, despite being so rich and projecting INR 7,00,00,000 as the highest monthly income of its network marketing chain, does not exist on LinkedIn. The CEO and co-founders keep a very low profile there. The company is based in USA but there are no indications (by the company’s social media accounts) of any operation as large scale as India happening over there.
Joseph Martinez – CEO
Caption – Joseph Martinez - CEO
The CEO, Joseph Martinez claims to be a US army veteran but his LinkedIn profile (a very low profile account collected through OSINT) says that he is still working there. Caption – Old photos of Joseph in the US Army.
Subsequently, there are no indications of his previous affiliations with Kuvera Global on that profile. In the profile, Joseph Martinez claims to have formal educational degrees, however, in this Youtube video, he says, “I don’t have a degree, but I have been able to make a lot of money…”
Helen Boyle
Co-Founder Helen Boyle
There is also a lot of false information being pitched to the users. In one of the zoom meetings, one of the co-founders, Helen Boyle claimed that she was close to Richard Branson while working in Virgin Atlantic and then, she worked as a murder detective for Manchester police. There were neither any such proofs shown in the meeting, nor is this information inferable through the internet. Let alone these airy claims, she went on to claim herself as a bestselling author in the meeting. However, the google search results of her so-called book ‘She is unstoppable’ are not very promising. Helen Boyle was also a member of the troubled company Kuvera Global.
Caption – Helen Boyle working with Kuvera Global. Notice the word ‘IXMOVEMENT’
Viraj Patil
Caption – Co-founder Viraj Patil
Viraj Patil is found to be delivering dreamy-visionary lectures on the ‘life changing opportunity’ that IX Global is. In some videos, he is found to be lionising himself and inserting background songs amplifying his position. This leads to an emotional impact which mesmerizes the viewers and the audience.
These actions draw a parallel from Pawan Malhan, who used the same tactics to emotionally impact his audience. Mr. Malhan was running eBizz, a similar multi-level marketing company which cheated more than 17 lakh Indians. Such portrayal of the top-level officials in such organizations leads to the consumers being mentally and emotionally manipulated which leads them to cross social boundaries in order to promote their scheme. “People who are seriously involved tend to behave like cult members” was mentioned in an article, mentioning the company Kuvera Global, where Viraj Patil and Joseph Martinez emerged from.
Utah, the place in the USA where IX Global is registered, is infamous for hosting a huge amount of Multi-Level Marketing companies. According to a study by Jon M. Taylor of Consumer Awareness Institute, USA (chapter 7), at least 21% of the people of Utah were, at some point of time, involved in Multi-Level marketing business but almost no one reported profits to the tax preparers. In the same study, it was highlighted that 99% of the lower hierarchy people in the pyramid of MLM end up losing their money. It should also be noted that IX Global’s social media profiles have very few references to their business’s ‘success’ in Utah. Most of their business operates from India.
Is IX Global Following legal compliances for carrying out business in India?
To begin with, there is no company such as IX Global registered with the Ministry of Corporate Affairs in India. The company which Viraj Patil and Joseph Martinez have registered is called IX Academy.
According to the direct selling guidelines of Maharashtra, the services of online education and the indirect services of trading being provided by IX Global are not permitted.
The company however said, “IX Global in India through IX Academy and is doing its business absolutely in a legal manner as per the laws governing in India.”
The complainant provided us with a screenshot claiming that the direct sellers in this company are collecting the payments in their personal accounts. This raises questions and warrants for an investigation of a GST fraud.
The complainant has claimed that the company is not complying with KYC norms. “I was asked for documents for my KYC approval only after I expressed my desire to leave the company. With such a decluttered member registration system, I am sure that they are not complying with KYC norms.” said the complainant. According to Maharashtra’s Direct Selling Guidelines, a Register of Direct Sellers should be maintained.
Caption – Source – Maharashtra State Direct Selling Guidelines.
However, IX Global said, “we are following proper terms and we are having agreements signed by the distributors.”
The most important aspect of this scam is that IX Global is not a registered Forex Dealer with the Reserve bank of India. In the RBI notification RBI/2013-14/265, A.P. (DIR Series) Circular No. 46 dated September 17, 2013, it was mentioned
All AD Category I banks who offer credit cards or online banking facilities to their customers should advise their customers that any person resident in India collecting and effecting / remitting payments directly /indirectly outside India in any form towards overseas foreign exchange trading through electronic/internet trading portals would make himself/ herself / themselves liable to be proceeded against with for contravention of the Foreign Exchange Management Act (FEMA), 1999 besides being liable for violation of regulations relating to Know Your Customer (KYC) norms / Anti Money Laundering (AML) standards.
It was also mentioned,
If it is observed that the concerned AD category I bank has failed to carry out the measures as outlined above, Reserve Bank of India may proceed against the defaulting bank under section 11(3) of FEMA, 1999 and take any action as may be deemed necessary.
Also see
The platform that they use for trading (according to this video) is called MT4. It is an overseas platform and there have been claims of data manipulation on that platform. This platform also allows trade of currency pairs except EUR-INR, GBP-INR, JPY-INR, USD-INR, EUR-USD, GBP-USD, and USD-JPY. Trading in currency pairs except these is Illegal. See the RBI notification here.
“When such trades are taking place without the notice of the authorities, money flows through the systems by illegitimate means. Mostly by hawala.” said Gopika Baghel, a Cyber Crime Consultant, Chhattisgarh Police.
Drawing Parallels
A similar company XDirect was busted which showed patterns of promising its customers quick earnings in short time through trading, misleading the clients, depositing a minimum amount ($515) in their account over the registration fees and no proper legal registration for the process. The broker failed to register with the Reserve Bank of India and the Securities and Exchange Board of India. Meanwhile the broker actively sought clients to trade in the Forex markets via their platform, for a commission on each client’s transaction.
A company by the name of WealthGenics is also functioning on similar lines. Its founder, Vinod Shedge was working with Viraj Patil in IX Global back in January 2020 and Kuvera Global before that.
Therefore, the glorification of the company and its business model are not very true in their nature. Amit Dubey, a cybersecurity expert and a crime investigator on cyber forensics said, “MLM companies, conventionally used to sell physical products like beauty products, wellness products, etc. but with these online educational schemes, we can see that they have an unlimited supply of the product. Their production cost is negligible, thus they have absolutely no logistical limitation to stop them from proliferating their business. When such digital products come into picture, IT Act 2000 should also do and these individuals should be held for digital fraud.”
Caption – WealthGenics founder Vinod Shedge with Viraj Patil and Bhavika Waghela (January 2020).
Estimated Earnings of IX Global
According to the complainant, the internal systems show that there are more than 50,000 members in IX Global.
“If we assume that 40000 members are paying an average of $125, (note that there are packs of $145 and $180 as well) the monthly earnings of IX Global through Multi-Level Marketing come out to be $5,000,000 (5 million dollars) or around 36.5 Crore INR.”
Let us assume that the automated trading systems are generating $5 commission /day/user for the company, the commission for just 20,000 users’ trading accounts comes up to around 22 Crore INR (Note that all the users do not use the trading services).
This makes the monthly income of IX Global around Rs. 58.5 Crore which indicates that the company has generated over 500-700 Crore Rs. since its inception.
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