Gulled by an outsourcing seagull

• Latest pyramid scam where investors were taken for a ride which cost them millions

By Natasha Gunaratne

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 their money.

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 quickly.

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 said
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," he said.

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."