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1.25 Lakh Investors Got Trapped In The Rs 1,000 Crore Ponzi Scheme
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The Torres Jewellery scam in Mumbai involved a Ponzi scheme that defrauded 1.25 lakh investors of over Rs 1,000 crores.
The scheme promised unrealistically high weekly returns on investments in gold, silver, gemstones and moissanite.
The jewellery chain initially gained investors' trust by delivering promised returns and encouraging reinvestment, but abruptly shut down in December 2024, ceasing all payouts and leaving investors in distress.
The scam highlights the importance of skepticism towards investment schemes offering ‘too good to be true’ returns in a short time, and the necessity of conducting due diligence before investing.
Investors should remember that financial regulators like RBI and SEBI have established platforms to raise awareness and address grievances related to financial frauds.
One of the greatest investors of all time, Warren Buffett, had once said “Keep things simple and don't swing for the fences. When promised quick profits, respond with a quick no."
So basically, if an investment sounds too good to be true, it probably is! That is what perhaps happened in a recent case of investment fraud in Mumbai that has turned out to be another eye-opener for investors.
In the last few days, you might have come across the trending news of the sudden closure of Torres Jewellery chain in Mumbai. As per various media reports, Torres jewellery was carrying out a ponzi scheme through which it defrauded 1.25 lakh investors to the tune of Rs 1,000 crores, or even more.
The jewellery chain, which had six swanky stores in Mumbai (including Dadar, Grant Road, Kandivali, Mira Road, Kalyan and Sanpada), suddenly shut down around a week ago, sending shockwaves to all the investors who had put in money ranging from as low as Rs 1,000 to as high as even Rs 1 crore or more, in the ponzi scheme.
Incorporated in April 2023, Torres Jewellery has been operating under Platinum Haren Private Ltd. But how did the jewellery chain pull-off this multi-crore scam? And what can investors learn from all this? Let’s explain it all to you through this blog.
Luxury jewellery chain Torres Jewellery had launched a scheme in February 2024, in which offered attractive returns to entice investors. Here are the details of the scheme:
2% weekly returns on gold purchases
3% weekly returns on silver investments
4%-6% weekly returns on moissanite purchases. (For the unversed, Moissanite is a cheap gemstone used in jewellery, and is often referred to as fake diamond or American diamond)
Displayed fake jewellery at their stores to project legitimacy
Lucky draws with rewards like cars, 2 BHK house, phones, etc
And that’s not all. The jeweller promised weekly pay-outs and gave added incentives for referrals when investors brought friends, relatives etc to pitch in money for investment.
Torres reportedly encouraged people to invest by buying jewellery, mainly moissanite stones (American diamonds), and earn a weekly interest ranging between 3%-6% for first one year. Initially, to gain their trust, the jeweller regularly gave promised returns to investors. They also induced investors to reinvest the profit.
What happened next? Well, their core modus operandi turned out to be a ponzi scheme. To simplify it for you, in a ponzi scheme, people are promised high returns and initially, these are delivered on, as the scammers onboard more people and then suddenly stop giving returns. Also, even the initial returns that are being given, that is the money taken from new investors to pay to earlier investors. The vicious cycle goes on for as long as possible, unless they stop suddenly some day.
So, in the case of Torres too, after regularly giving payouts till November 2024, the company suddenly shut its doors in the last week of December, leaving investors in the lurch.
So, all the glittering façade came crashing down when Torres abruptly shut down its doors around a week ago, and ceasing all pay-outs. Many of the investors had even reportedly encouraged their friends and family to invest in this ‘lucrative’ scheme.
At present, the 1.25 lakh investors who have become victims of the scam, are disheartened by the fraud and are demanding at least the return of their principal amount. But a resolution is not seeming to be in sight as Torres Jewellery has reportedly put all the blame on the CEO and some of the staff. So while the blame game continues, it remains to be seen if and when the investors get back their money.
Here’s what the jewellery chain posted on its website as well as social media amid the ponzi scheme’s news reports:
This is neither the first or perhaps not the last ponzi scheme scam that has come to light in India. But one mistake that investors repeatedly keep doing, is investing our hard-earned money whenever we see such ‘attractive schemes’ being offered with unrealistically high returns, and that too in a short span of time. Even in the case of alternative investments such as gemstones, digital gold, etc., do not blindly invest in any scheme without being double sure.
Never, I repeat, never invest in any random scheme no matter how amazing you think the returns are sounding to be. Always do your own due diligence before believing in any ‘too good to be true’ scheme without researching about the genuineness of the scheme, who is offering it, are there any relevant and original documents to support it, are they as per the RBI/ SEBI’s guidelines, etc. If you are unsure and suspicious about any investment scheme, do not put your money into it. Simple.
As far as India’s financial regulators are concerned, the RBI had launched its own portal named ‘https://sachet.rbi.org.in/’ to increase awareness and address consumer complaints about financial transactions. RBI has also put out a special video on ponzi schemes to raise awareness about these frauds. Click here to watch it.
SEBI, on the other hand, has its portal https://scores.sebi.gov.in/’ as an online grievance redressal facilitation platform for investors.
In 2019, hundreds of customers of Maharashtra’s Goodwin jewellery chain were left high and dry after it shut down its outlets amid the accusations of cheating people of crores of rupees. They were duped into buying a gold savings scheme that had reportedly promised to offer gold jewellery with up to 14 percent more on the investment.
Another ponzi scheme had come to light in 2019, when Delhi-based ‘Shiv-Om Jewellers’, claimed to give dozens of investors a ‘100 per cent assured return’ in the form of gold on monthly basis. He was able to collect around rs 14 lakh from various investors who made the mistake of believing that ponzi scheme.
By the way, if you want to invest in gold, here’s a detailed blog by ALT Investor in which we have explained various gold investment options.
Please note that this is an opinion blog and not an official research or investment advice. This blog aims to help retail investors make an informed decision when thinking of making investments. The blog neither encourages nor discourages you from investing in any particular platform or property or any asset class.*
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