Thiruvananthapuram: Money chain rackets are resurfacing again in Kerala, according to the State police. The new method of operation involves the use of aggressive advertisement campaigns to collect money from the public on the assurance that their deposits would be doubled and repaid within a short time.

The police had recently registered a case against a private firm in Ernakulam on the charge that the company was running a money circulation scheme banned under the provisions of Prize Chits and Money Circulation Scheme (Banning) Act, 1978.

The case (Central Police station crime: 672/06) was registered after the State Finance Department and Reserve Bank of India (RBI) at a State-Level Coordination Committee meeting this year brought the activities of the company to the notice of the police.

Further investigation revealed that the Bangalore police had in 2005 registered three cases against the same firm on the charge that its public transactions were prima facie a money circulation scheme.

The firm had placed a series of advertisements in newspapers stating that a person depositing Rs.625 would be repaid Rs.1,150 in eight months.

A part of the deposit (Rs.225) would be charged as subscription fee for the magazine published by the firm. The rest of the money after a service charge of Rs.50 would be used to buy lottery tickets in the name of the depositor over a period of 35 weeks.

Even if the depositor does not "strike luck," the promised amount would be returned to him within the specified time.

Inspector General of Police T.P. Sen Kumar said that such fraudulent money chain schemes relied on advertisements to continually rope in new members so that the old members could be paid.

The payment to a member is dependent on the enrolment of a certain number of new members. Hence, such firms, along with luring new depositors through enticing advertisements, are also seen to increase their membership fees to meet their repayment schedule.

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