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 Indian 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!
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