The Hindu : Marketing firm chief arrested

Online edition of India's National Newspaper
Monday, Mar 25, 2002

Southern States

Southern States - Tamil Nadu

Marketing firm chief arrested

By Our Special Correspondent

SALEM March 24. The managing director of a multi-level marketing company, Skyways-2000, T.J. Karthikeyan, and his personal assistant, Jayaprakash, were arrested by the police here today.

Police arrested the duo at a hotel here when they arrived to attend the distributors' meeting of their company and seized a luxury car owned by Mr. Karthikeyan. Over 100 complaints had been received about the alleged "fraudulent activities" of the company, police said. The duo were booked under Sections 420 (cheating) and 120 B (conspiracy) of the IPC, read with Sections 3 and 4 of the Money Circulation Act, 1978 and were remanded to judicial custody.

The modus operandi of the company, headquartered in Chennai, was to enrol "distributors" after collecting Rs. 5,000 from each.

The distributors were then be given goods worth Rs. 3,000 to be marketed.

So far, the company had "appointed" over one lakh distributors in the State; their number exceeded 5,000 in Salem district alone.

The company was said to have amassed wealth by retaining a part of the deposit amount.

Each distributor was asked to recruit two more persons in a similar capacity, and through this process, a dealership network was created.

The distributors were asked to market products such as sarees, shirts, compact discs, watches and magnetic beds. The distributors were entitled for 20 per cent commission.

The company did not market its own products and just acted as an agent for other manufacturers.

Following complaints about the quality of the products, the Commissioner of Police, Vijayakumar, directed the Assistant Commissioner, Rathnakumar, to arrest the duo.

However, a Coimbatore-based distributor of the company, T. Salai Sakkarai, expressed surprise over the arrests, saying that the company was carrying on the multi-level marketing service in conformity with rules.

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