Ground report: How a Kerala politician and spiritual healer led a multi-crore jewellery scam | Video

Clad in a black purdha, a faded face veil and white hand gloves, Safiya walked swiftly to the podium in an auditorium at Cheruvathur in Kerala's Kasaragod district last Friday. She did not pay much attention to the gazing eyes. She reached out to the microphone and opened up her tale of woes, clutching her tiny black handbag tightly with both her hands.

She shivered in the beginning, but mustered enough courage to make a heart-wrenching plea.

“The money I had invested in Fashion Gold jewellery was my blood and sweat. I sold snacks and worked as a maid in several houses to earn it. I am a widow. I lived a miserly life to save money for the future. Now, I am on the verge of losing my life savings. Please help me to get back my money,” she pleaded.

Safiya is a victim of a humongous jewellery scam that rocked Kannur and Kasaragod districts recently. She and her daughter had together invested Rs 7,35,815 in Fashion Gold, a jewellery chain established with public investment in 2006. It went bust in October 2019. The scam came to light in August this year. The police have arrested the establishment's chairman and Kerala lawmaker M C Kamaruddin. The other accused are at large.

All the 200 assembled at the Thimiri Co-operative Bank Auditorium that day were victims of the jewellery fraud. Some shared their stories, while a majority of others sat silently wondering they will ever get their hard-earned money back.

History of Fashion Gold scam

Kamaruddin is a senior leader of the Indian Union Muslim League (IUML, always referred to as Muslim League) in Kerala. Hailing from Trikaripur in Kasaragod district, he started his political career through the party’s students’ wing - Muslim Students’ Federation - and its youth wing - Muslim Youth League.

Fashion Gold was the brainchild of Kamaruddin and his long-time friend T K Pookoya Thangal, a religious leader and spiritual healer, who lives at Chandera in Kasaragod district.

It was set up with investments from the public, who were offered fixed monthly dividends.

The jewellery completed its registration formalities in 2006. The first outlet was opened at Cheruvathur in 2007. The jewellery grew steadily in the first few years.

In 2009, the second outlet was opened at Payyanur in Kannur district.

The next year, it spread its business to Kasaragod. The jewellery’s plan to establish an outlet in Thalassery in Kannur district the next year, however, did not materialise.

With each new outlet, the number of investors too increased. According to an estimate, the jewellery had 749 investors whose deposits were worth Rs 130 crore. Higher dividends were offered to those who invested more. This was done to attract more investments. So Abdul Salam (name changed on request) got Rs 1,250 for every lakh, while Safiya got Rs 1,000 per lakh. For, Salam deposited Rs 50 lakh while Safiya’s investment was just Rs 7.35 lakh.

The dividends were slashed by 50 per cent starting from June, 2019. The jewellery went bust in October, 2019.

In the same month, Kamaruddin got a huge political boost when he won the by-poll to the Manjeswaram Assembly constituency. The Indian Union Muslim League leader defeated Bharatiya Janata Party’s Ravisha Tantri by 7,923 votes.

The victory buttressed Kamaruddin’s stature, both in the political spectrum and in his party. This stopped many investors from filing complaints against him for the non-payment of dividends.

“I kept quiet because I know that I cannot fight against Kamaruddin or Pookoya Thangal, especially after the former’s election to the Assembly. So I did not approach the police though I knew that the jewellery had gone bust,” said Ashraf (name changed on request) who invested Rs 10 lakh.

Who are the investors?

A majority of the investors are Muslims in Kannur and Kasaragod districts, who believe that accepting the interest offered by the banks is a sin.

Pookoya Thangal capitalised on their belief to drive investments to his business venture. He exhorted them that dividends from the jewellery business is ‘Halal’, meaning permissible.

This encouraged expatriates working in the Gulf, those returned from the Gulf, Madrassa teachers, merchants, daily-wage labourers, widows and even divorced women who received alimony to hand over their gold and cash to Thangal.

Thangal signed the agreement with the investors in his capacity as the managing director of Fashion Gold.

The deal

The agreement, signed by Thangal and investors in a Rs 100 non-judicial stamp paper, heavily favoured the merchants.

Clause 3 of the agreement stated that the investments could not be taken back for one year after it was deposited. It also barred investors from cancelling the agreement on their volition.

Clause 5 of the deal said all investment-related disputes should be settled by mediators. It added that both investors and jewellery owners should honour the decisions taken by the mediators, which implied that investors should not approach a court of law to settle disputes.

A few additional clauses were included in the agreement signed with the gold depositors.

Clause 5 in one such agreement read: “It is agreed that the first party (jewellery owners) shall be entitled to melt the gold deposited for manufacturing ornaments of their requirements. The gold deposited shall be returned the same weight.” This clause gave free hand to the merchants to sell or exchange the gold ornaments without the consent of the depositors.

The scam comes to light

The scam became public when an investor, M T P Abdul Basheer, approached prominent lawyer C Shukoor seeking legal advice to file a case against Pookoya Thangal in June 2020.

Basheer had invested Rs 3 lakh in the Fashion Gold. After the jewellery went kaput, he approached Thangal to give his money back. After several attempts, Thangal issued him a cheque with a fake signature.

“I got a few hints about the illegal money and gold transactions at the Fashion Gold from the complainant. My further inquiries helped me understand the enormity of the scam,” said Shukoor.

Since then Shukoor has been helping investors to file police complaints. He organised the investors’ meet at Cheruvathur (where Safiya spoke about her travails) to chalk out future legal strategies.

Cases & the arrest of Kamaruddin

The first complaints were registered on August 28 by three investors, who alleged that Kamaruddin duped them of Rs 36 lakh. Later, 115 depositors levelled cheating charges.

Complaints are being registered at various police stations in Kannur and Kasaragod even now.

The local police investigated the charges in the beginning. Later, a Special Investigation Team (SIT), led by Assistant Superintendent of Police P Vivek Kumar, took over the probe.

On November 7, the SIT arrested Kamaruddin after questioning him for six hours. “We have collected enough evidence and statements from around 70 persons before arresting Kamaruddin,” said Vivek.

He said his team is looking into the whereabouts of the jewellery’s Managing Director Pookoya Thangal and general manager, who are on the run.

Kamaruddin has been slapped with charges of cheating, misappropriation of funds, raising money from the public under an unregulated deposit scheme (Section 3 of Banning of Unregulated Deposit Schemes Act) and Section 5 of the Kerala Protection of Interests of Depositors in Financial Establishment Act 2013.

Kamaruddin has been in judicial remand since then.

On November 18, he was shifted to the Government Medical College at Pariyaram in Kannur after he complained of chest pain.

Jamaluddin lost Rs 35 lakh

Jamalauddin is a 55-year-old cleric and a head teacher at a Madrassa in Kasaragod. He had invested Rs 35 lakh in three instalments in Fashion Gold.

He first invested Rs 4 lakh in 2012. It was the savings from his meagre earnings.

He borrowed Rs 15 lakh from his sisters for his second deposit. On May 2, 2019, he added Rs 16 lakh more to it after he got his share of his family property.

“I had invested the money at the insistence of Pookoya Thangal. He told me that the dividend from the jewellery business is ‘Halal’ (permissible). He also cited a ‘fatwa’ (interpretation of Islamic law) by prominent scholar Cherussery Zainuddin Musliyar to buttress his claim,” Jamaluddin said.

He got a dividend of Rs 1,000 for every lakh he invested till September 2019.

Jamaluddin hoped to marry off his children and perform Hajj (pilgrimage to Mecca) with his wife with the investment. “All my hopes were dashed. Now I realise this was a political and religious fraud committed by political leader Kamaruddin and religious leader Pookoya Thangal,” he said.

The COVID-19 lockdown since March has rendered Jamaluddin jobless. “Madrassas were closed in March this year in the wake of COVID-19 outbreak. I have no job now. I have lost my life savings. I don’t have any income now. I owe Rs 15 lakh to my sisters. My life is in dire straits,” he said.

Now, Jamaluddin pins his hopes on the intervention of police and the judiciary to get his money back. “I hope to get at least a portion of my money,” he said.

Sabeena’s fight for Rs 6 lakh

Thirty-five-year-old Sabeena had deposited Rs 6 lakh in cash and gold in the Fashion Gold in 2012. “Those were the marriage gifts from my father,” she said.

Sabeena trusted Fashion Gold as it was run by a popular politician (Kamaruddin) and respected religious leader (Pookoya Thangal). “I had huge faith in them till they cheated us,” said Sabeena, who is a staunch supporter of Kamaruddin’s party, the Indian Union Muslim League.

Sabeena too got a monthly dividend of Rs 1,000 per lakh. “It was slashed to Rs 500 from June 2019. That was an ominous sign of the sinking ship. I should have withdrawn my money that time itself,” she said.

Sabeena said she would fight to get her money back. “The police should arrest all the fraudsters. It should not end with Kamaruddin’s arrest. The government should take measures to get us the money back,” she said.

3 sisters who deposited Rs 25 lakh

Pookoya Thangal had lured investors with lucrative dividend offers even a few months before the establishment shut shop.

In January 2019, he requested three sisters who lived next to his home in Chandera in Kasaragod district to invest the money they got from the sale of their family property.

“Pookoya Thangal had visited our home after he heard about the property sale. His reputation as a religious leader helped him win the trust of the three sisters. They gave him Rs 25 lakh,” said Hashim, a close relative of the women.

Incidentally, one of the women was Thangal’s school-mate.

They started getting dividends in April, 2019 (The agreement given to them stated that they would get dividends four months after the investment).

Starting from September, they heard rumours that the jewellery was sinking. “But the women did not pay heed as they trusted Thangal very much,” he said.

The women were shocked when they saw a shuttered Fashion Gold outlet when they went to collect their dividend in September. “They came back with a heavy heart. They haven’t recovered from the shock yet,” he said.

Hashim said the investors could be easily given their money back by confiscating the assets of the jewellery owners. “They have accumulated wealth from the jewellery business. That is the only possible solution to this crisis,” he said

Civil or Criminal suit?

At a time when the investors are demanding severe punishment for the fraudsters, Kamaruddin’s counsel argued that the police erred in registering criminal charges against his client.

“Kamaruddin did not fulfil some of the clauses mentioned in the agreement and a criminal case will not stand against him. They were just a breach of contract. The cases are civil in nature,” said senior advocate C K Sreedharan.

“Even he should not be charged under Section 420 of the Indian Penal Code (cheating). To attract the charge, there should be a dishonest motive from the launch of the jewellery. It could not be established as Kamaruddin disbursed dividends for 13 years before his business collapsed,” he argued.

SIT chief Vivek Kumar countered this with a Kerala High Court order, issued on November 12, which dismissed Kamaruddin’s plea to cancel the First Information Reports (FIR) against him.

“In the petition filed in the Kerala High Court for remedy under 226 of the Constitution, Kamaruddin had argued that FIRs against him should be cancelled as the cases were civil in nature. The court dismissed his plea and said that the probe could go on. We are carrying out the investigation based on the High Court directive,” Vivek said.

Sreedharan alleged that Kamaruddin’s arrest and the investigation were nothing but a political vendetta. “Kamaruddin is being harassed politically,” he alleged.

SIT’s Vivek said Kamaruddin was arrested because he was the chairman of the jewellery that cheated hundreds of investors. “We arrested him with solid evidence,” he said.

What next?

The arrest of Kamaruddin appears to have lifted the lowered morale of the investors.

Their hopes grew further after the ruling Communist Party of India (Marxist) leaders offered to bring the issue to the special attention of Kerala Chief Minister Pinarayi Vijayan.

“This is not a political support. We are supporting you not because Fashion Gold was owned by a rival political leader. We want to redress your grievances. We want the culprits to be punished. We want you to get your money back,” said CPM Kasaragod district secretary M V Balakrishnan while addressing the investors’ meeting at Cheruvathur on November 20.

The meeting selected a core committee to coordinate the future course of action.

Advocate Shukoor, who is helping the investors, said the government has an obligation to ensure maximum punishment for the fraudsters. “Investors have two demands. They want their money back. Then they want stringent punishment for those who cheated them,” he said.

Shukoor said the meeting requested the government to appoint a designated judge to implement the Kerala Protection of Interests of Depositors Act of 2013. “The government should also appoint a competent authority to attach the property of the fraudsters,” Shukoor said.

“We hope the Kerala government will take a favourable decision on our demands and help people like Safiya,” he said.