The Sheregar Scam - An Overview

In 1996, Ashok Sheregar, an employee of the Brihanmumbai Electric Supply and Transport Undertaking (BEST), devised a fraudulent scheme that ensnared over 60,000 unsuspecting individuals. The scam, known as the Vaibhav Laxmi, Dhanvarsha, Mahalaxmi, Kuber and Golden Chain schemes promised investors lucrative returns.

For example, a minimum investment of Rs 2,000, was doubled in six months. However, by 1997, Sheregar was proposing to double investors' money within 30 days. At that point, investors had contributed over Rs 100 crore to Sheregar's schemes.

The Modus Operandi - Luring Investors with False Promises

Sheregar, exploiting the trust and desperation of his fellow BEST employees, primarily targeted bus conductors and drivers. He propagated the scheme through word-of-mouth, emphasizing the guaranteed high returns and encouraging individuals to invest their savings. To further convince potential investors, Sheregar initially paid out the promised returns, creating a sense of legitimacy and encouraging more people to join the scheme.

The Unraveling of the Scam - A Tower of Lies Collapses

As the number of investors grew, Sheregar's ability to maintain the facade became increasingly difficult. The unsustainable returns and the influx of new money were not supported by any genuine business activities. As a result, Sheregar began to delay payments and eventually disappeared, leaving thousands of investors in financial ruin.

The Aftermath - A Trail of Devastation

The Sheregar scam left a trail of devastation, and impacted the lives of a large number of individuals and families. Many investors had invested their life savings, hoping to secure a better future for themselves and their loved ones. The loss of these funds caused significant financial hardship, emotional distress, and a loss of trust in financial institutions.

Protecting Yourself from Scams Like This

The Sheregar scam serves as a stark reminder of the importance of exercising caution and conducting thorough due diligence before investing any money. To protect oneself from such schemes, individuals should adopt the following strategies:

• Stay informed about common investment scams and their tactics.
• Verify the credentials of investment companies, promoters, and financial advisors.
• Seek advice from a qualified financial advisor.
• Be wary of unrealistic promises of high returns with minimal risk.
• Conduct thorough research on any investment opportunity before committing funds.
• Diversify investments across different asset classes and industries.
• Beware of emotional appeals and investment pitches that create a sense of urgency.
• Discuss investment decisions with trusted family members or friends for an objective perspective.
• Seek legal assistance promptly if you suspect involvement in a fraudulent investment scheme.