Gulled by an outsourcing
- Latest pyramid scam where investors were
taken for a ride which cost them millions
Sri Lanka is never short of suckers given the
numbers who subscribed to yet another scam, later revealed as a
pyramid scheme and losing millions of rupees. This happened again
last week when the two Indians behind the latest scheme, vanished
without a trace.
An investigation by The Sunday Times found that
an estimated 18,000 people, including students and undergraduates,
lost their money amounting to millions of rupees. This is in spite
of the Central Bank issuing repeated warnings to the public alerting
them about the Gold Quest scam that hit the road a few years ago.
|The notice by the landlord displayed at the
gate of the Seagull office saying it is no more at this location;
Pic by J. Weerasekera
People passing No. 237/2, Galle Road, Mount Lavinia
last week may have wondered why so many angry and disgruntled people
were gathered outside. The premises received police protection after
angry investors on Wednesday attempted to storm the place demanding
These unfortunate people were the latest victims
of a "get rich quick" scam, floated by a company known
as Seagull Softwares (Pvt) Limited, a Business Process Outsourcing
scheme more commonly known as BPOs. The company was run by two Indians.
BPOs entail the relocation of entire business
functions to either self-owned or third party service providers,
usually at low cost locations. This is a trend which is gathering
momentum, particularly in countries such as India.
Those who have ended up as victims of this scam
are known to have invested amounts ranging from a few thousands
to millions of rupees. The question that begs an answer each time
this happens is why do the public continue to fall prey to these
fraudulent schemes? Don’t they know that the get rich schemes
which sound too good to be true are not what they appear to be on
the surface but more often than not, only make the schemers rich
According to a Seagull Softwares investor, a person
employed in the IT field, a simple data entry was what was required
from clients to work online. In fact, Seagull's investors constituted
IT and other professionals but some were also poor people who had
borrowed money to invest in the scheme so that, with the hoped for
returns they could finance their children's education.
"I have quite a few friends who have invested
in this scheme but are now left with nothing," another source
How did this scam work? The company ran many newspaper advertisements
promoting what appeared to be an easy-money scheme while only requiring
to work from home. Would-be investors were first asked to visit
the Mount Lavinia office where they were asked to sign an agreement
specifying details including commission and other matters. Subsequently,
clients who were taken up with the project purchased slots valid
for the next 15 months, for a one time registration fee of Rs. 6,500.
The amount was paid to Seagulls in cash and sources said clients
purchased anywhere from 50 to 200 slots at a time.
"The amount collected by Seagulls was massive,"
Seagulls undertook to pay their clients who purchased
slots for Rs. 4,000 a month for the next fifteen months thus giving
the impression to the clients they would soon receive profits. According
to the terms and conditions of the agreement, the first payment
would be paid by the company after 45 days of signing the agreement
and then every month thereafter. Each slot had five product names
and could include printers, computers, cars or a slew of other items.
The make and model of each of these products was also provided in
addition to the URL of a website where investors could get the specifications
and features of the products, make an Excel spreadsheet and upload
it onto the Seagull site.
"It takes about 15 to 30 minutes to do this
for each product. People will work for a month excluding weekends
and holidays. The clients felt they were being paid well for doing
a small amount of work."
All that the investors needed was access to a
computer and internet facilities and could either work from home
or use internet cafes.
The website which no longer functions was initially
registered by an Indian company on November 6 last year and was
set to expire on November 6, 2009.
"The logo used by the company on its ‘Seagull
Softwares’ website looked very much similar to the one used
by a UK company called Seagull Software," a source said, adding
that when he contacted the UK company said it had nothing to do
with the Indian company.
One of the two Indians, an individual named Raj
Shekar was also the administrative, technical and billing contact
for Seagull's office in India located at 1/2A, East Abhirampuram
Mylapore, Chennai, Tamil Nadu 600021. However Sanjay Sudhir, the
Economic and Commercial Counsellor at the Indian High Commission
in Colombo said, "We have no information nor have heard of
any such company by this name." Payments were made by direct
deposits into clients’ bank accounts which they were asked
to open at the Nations Trust Bank or by calling over at the company’s
Mount Lavinia office.
"Depositing to the account was easier than
having to go all the way to Mount Lavinia to get paid," the
source, also an investor/victim, said.
A spokesman for the NTB said the bank was unable
to provide any information on the basis of customer confidentiality.
The scheme is known to have been in operation
since January this year. One individual had purchased 100 slots
but was never paid any funds as profit, the investigation revealed
and when he had gone to the Mount Lavinia office seeking payment
was told by one of the employees to return the next day. He returned
the next day but it was only to discover the office was shut with
no trace of the two owners.
Investors said no payments were made since last
Friday but the point to remember was that majority of the investors
had joined the scheme during the last two months.
"Previous to that, it was just a trickle
of investors," one of the clients said.
Mount Lavinia Police believe the two Indians may
have fled the country but the police were continuing their probe.
"There are some investigations but we cannot
reveal the details just yet,” Central Bank Financial Intelligence
Unit CEO George Fernando, said. The FIU had been set up to monitor
incidences of money laundering or terrorist financing activities.
We found several websites which have sprung up
where victims of the pyramid scheme have aired their frustrations.
On a website called www.heyambo.com, a user calling
himself Amal had posted this message on October 17: "To all
you idiots who invested your money in this company, this is an obvious
scam. It is highly unethical to join this pyramid-like scheme even
if you cover your initial cost because the majority of people are
going to be duped of their money. Incidentally the scheme is viable
only if there were a reasonable number of dropouts."
Another user named Sudukolla had posted this message
on October 24: "I went to the office of the Seagull Softwares
in Mount Lavinia today, but it was closed and a lady nearby told
me they had moved to India."
Samantha Rajapakse’s message on October
26 said: "Have they shut the operations in Sri Lanka? I bought
30 slots not more than five days ago. Is there any way that we can
get our money back? Please reply!"
Sana another user in his message said: "I
can't understand why people are so stupid. From the very beginning,
this company was strange. I got the same invitation and I refused.
This is not the first time something like this has happened in Sri
Lanka. I suppose you have all learned a lesson. Hope now you will
understand that there is no way anyone can earn easy money sitting
at home. Try to do something hard and realistic."
outside failed company
Those who lost their investments in the Seagull scam are
planning a protest campaign outside the company’s Mount
Lavinia office on Monday and have extended an open invitation
to other victims too to join in the campaign to recover their
The Sunday Times FT visited the property where Seagull Softwares
Pvt. Ltd. was operating and found a policeman stationed at
the entrance to the premises and a notice from the landlord
informing the public that he has no connection with the proprietors
of the software company.
The landlord told The Sunday Times FT, the premises were
occupied by two South Indians Dominic and Rajkumar.
The owner had advertised the property on the internet and
was approached by Dominic. Though the company was managed
by South Indians, the tenancy agreement was entered into with
a Sri Lankan, Suppiah Pillai Vijekumar from Borella. The landlord
said rents were paid on time.
Speaking of the damage caused to his property -- which was
fully furnished – allegedly by the enraged victims of
the alleged scam, he said computers were smashed, glass shattered
and furniture broken. He estimated the total damage to be
about Rs. one million.
Since the incident, the landlord said he sought and received
police protection for his property.
“I have absolutely no connection with the Seagull
Softwares Pvt. Ltd. proprietors and requested the public to
refrain from damaging his premises. I only let the premises,”
Among the investors were students and undergrads. They were
mostly IT-savvy, educated and probably looking to make a fast