Superintendent of Police Dr K Raghuram Reddy said that the interrogation of the managing director and CEO of Amway India Enterprises William Pinckney has betrayed the business model of the fraudulent company which is nothing but an illegal money circulation scheme in the name of selling products 'directly' to the consumers.
The SP said that the CEO has stated that there was payment to the upline members proving beyond reasonable doubt that there was sponsoring of members into the scheme. Section 2 C of Prize Chits and Money Circulation Schemes (Banning)Act specifically prohibits sponsoring of members. Section 3 prohibits enrollment of members into the scheme, he added.
He said that William Pinckney has admitted during interrogation that Amway India has paid Rs 620.59 crore for the year 2011-12 as commission to the upline members in the chain link scheme of Amway. For the year 2012-13, Amway has paid Rs 621.86 crore as commission and for 2013-14 the company has paid Rs 569.10 crore to the upline members in the chain scheme.
The managing director and CEO of Amway has also admitted that Amway has received Rs 33.4 crore for 2010-11 through renewal of membership fee, Rs 40.2 crore for 2011-12 and Rs 40 crore for 2012-13, the SP said. “The AP High Court pointed out that the collection of renewal membership is nothing but easy and quick money earned by Amway,” he added.
The total sale of products was Rs 1838 crore for 2010-11, Rs 2150 crore for 2011-12 and Rs 2191 crore for 2012-13, according to the statement signed by the Amway MD.
Referring to the gross profit of Amway, Pinckney said that Amway earned a gross profit of Rs 437.6 crore for 2011-12, Rs 478.8 crore for 2012-13 and Rs 304.7 crore for 2013-14.
Pinckney has also admitted that the annual advertisement budget for Andhra Pradesh alone was Rs 2.3 crore for the current financial year.