Miss Conduct S03 E03: Kamalavalli Arumugam

May 24, 2022 Suresh Solanki

MERCH NON-ANNOUNCEMENT:

Hello everyone! We are thinking of selling merchandise. If you would like some merch to purchase (“merchase”), please leave fill out this survey – https://forms.gle/ENMZgR4LBjjK9ThT9

If we get enough interest, we’ll try to get some merchase for you all!

Blog Post:

Kamalavalli Arumugam's name is one that 500,000 people across South India will never forget.

Because she was responsible for the Paazee fraud, one of the most elaborate and far-reaching financial scams ever seen in India (only rivalled by the Sahara Pariwar investor fraud).

In 2008, Kamalavalli, along with her business partners Mohanraj Kathiravan and Karu Kathiravan, would set up a company called Paazee Forex Trading in the Indian state of Tamil Nadu.

This company promised what was essentially a ponzi scheme – a type of investment fraud that pays existing investors with funds collected from new investors.

Kamalavalli was featured heavily in the marketing for the company, promising investors 2x of their investments. And many thousands of investors believed them.

Over 2 years, Kamalavalli and her business partners swindled over 490 crore rupees (or 4.3 billion rupees) from about 45,000 investors.

In 2009, the India government stepped in and the Tamil Nadu police issued orders to freeze Paazee's bank accounts, and arrest the company's founders.

Between 2009 and 2010, thousands of investors found out that they were not going to get their money back. Many, many complaints were filed – with the police, with the consumer courts, and even with the Madras High Court.

And just as Kamalavalli was going to be arrested, she pulled a trick on us all – she disappeared !

Find out more on the episode !

Timeline and sources:

July 2009: Paazee Forex Trading company incorporated in Coimbatore

Source: Ministry of Corporate Affairs (company CIN: U67190TZ2008PTC014607)
https://www.consumercomplaints.in/complaints/paazee-in-c259383.html

September 2009: Chennai police busts Paazee

https://timesofindia.indiatimes.com/city/chennai/police-bust-forex-fraud-by-firm-using-public-deposits/articleshow/5058138.cms

April 2010: Investors file claim against Paazee for allegedly cheating them

https://www.newindianexpress.com/cities/chennai/2010/apr/02/investors-allege-cheating-by-financial-firm-146554.html

September 2010: Inspector Pramod arrested for allegedly extorting Kamalavalli for Rs. 3 crores

https://www.thehindu.com/news/national/tamil-nadu/Police-Inspector-held-on-extortion-charge/article15949264.ece

April 2011: Case moved to CBI

https://timesofindia.indiatimes.com/city/chennai/hc-transfers-paazee-fraud-probe-to-cbi/articleshow/8031959.cms

July 2011: DSP Rajendran sent to judicial custody

https://www.oneindia.com/2011/07/19/paaze-forex-scam-dsp-sent-to-judicial-custody-aid0126.html

August 2011: CBI grills Mohanraj AND Kamalavalli found and arrested

May 2012: CBI Court dismisses Pramod Kumar's bail request & judicial custody extended. Also Pramod tried to bribe officials to get out of the case (LOL)