ED freezes Rs 260 crore in HighRich Online Shoppe Kerala MLM case

What the Record Shows

The Directorate of Enforcement (ED), Kochi Zonal Office, has frozen and seized proceeds worth around Rs 260 crore in its money-laundering investigation into the HighRich Online group, a Kerala-based multi-level marketing operation that the agency describes as a Ponzi-type scheme. According to the ED press note dated 14 June 2024, searches on 11 June 2024 at 14 locations across Kerala, Maharashtra and Chhattisgarh led to the freezing of around Rs 32 crore of alleged proceeds of crime in bank accounts of the company, its promoters and their family members, the seizure of about Rs 70 lakh in cash along with jewellery and four vehicles, and the tracing of immovable property worth Rs 15 crore said to have been acquired from the proceeds.

The action was taken under the Prevention of Money Laundering Act (PMLA), 2002. It followed an earlier round of searches on 23 and 24 January 2024 at the premises of M/s Highrich Smartech Pvt Ltd, Highrich Online Shoppe Pvt Ltd, their promoters and associated companies, during which the ED says it traced and froze Rs 212 crore. Taken together, the agency put the total proceeds of crime frozen or seized in the case at Rs 260 crore as of that date.

The ED release names the promoters K.D. Prathapan and Sreena Prathapan as the persons who, it alleges, siphoned off around Rs 250 crore of the scheme's collections through family members and various entities. These are allegations at the investigation stage; no court has tried or convicted them, and they are entitled to the presumption of innocence.

The ED says its investigation began on the basis of first information reports registered by the Kerala Police under Section 420 of the Indian Penal Code, 1860, together with multiple complaints against the Highrich group and its directors.

How It Worked

Per the ED, the company sold memberships in the form of digital IDs, each consisting of a username and password that gave an individual investor access to digital space on the company website, www.highrich.net, in exchange for a membership fee. Members would then resell those memberships or digital IDs to other people to earn a commission.

The agency says the company paid incentives to members when they referred new members to join the scheme, which the ED characterises as the sharing of commission received on the enrolment of new members rather than income from any genuine trade. "There is no real underlying business of sale of goods," the ED note states, describing this as "the typical modus operandi of a Ponzi scheme". Money collected was, per the agency, partly redistributed as rewards to members at the top of the pyramid.

The ED estimates that around Rs 1,500 crore was collected from the public through this Ponzi-type MLM structure. Of that, the agency alleges, a profit of about Rs 250 crore was diverted by the promoters through family members and various entities.

Searches also revealed, according to the ED, that the company and its promoters and leaders were involved in trading cryptocurrency on a few exchanges and had sold their own coin, marketed as "HR Crypto Coin", in exchange for rupees and USDT. The ED says the HR Crypto Coin was itself part of the Ponzi arrangement: subscribers were told they would receive 15 per cent interest per annum, and that introducing a new customer would earn them 30 per cent as direct referral income.

The procedural sequence ran from Kerala Police FIRs in 2023 and 2024, to the ED registering a case under the PMLA and conducting its January and June 2024 searches, to arrests and bail proceedings before the Kerala High Court in 2025 and 2026.

Who Lost Money

The people said to be affected are small savers and micro-entrepreneurs, with recruitment networks that the ED traced across Kerala and into Maharashtra and Chhattisgarh. A membership-and-referral model of the kind described draws in a very broad, small-ticket subscriber base, because each member has an incentive to enrol others.

The ED's own estimate is that around Rs 1,500 crore was collected from the public. Against that, the agency has so far frozen or seized about Rs 260 crore in bank balances, cash, jewellery, vehicles and immovable property. That gap between the sum allegedly collected and the sum so far secured is characteristic of such cases: money paid out as rewards to earlier members, or moved through layers of entities, is difficult to trace and recover.

Frozen and attached assets are not the same as money returned. Under the PMLA, seized or frozen proceeds are held while the investigation and any prosecution run their course; distribution to those who lost money, if it happens at all, follows separate and often lengthy legal processes. As of now, the record shows assets secured by the agency, not compensation paid to subscribers.

Where It Stands Now

The matter remains at the investigation and pre-trial stage. The ED's searches, freezing and seizure are steps in a continuing money-laundering probe; the agency's note states that "further investigation is in progress". A freezing or attachment under the PMLA is a preventive measure that must be confirmed by the adjudicating authority, and it is not a finding of guilt.

On the predicate criminal side, the Kerala Police cases have moved to the courts. In an order dated 12 January 2026, the Kerala High Court granted pre-arrest bail to Sreena Prathapan, a director of Highrich Online Shoppe Pvt Ltd, in four cases registered at Thalassery under Sections 406 and 420 read with Section 34 of the IPC and Sections 21 and 23 of the Banning of Unregulated Deposit Schemes Act, 2019. The court observed that she was "only one of the Directors" and that her husband, the managing director, was already in custody, and held that her custodial interrogation was not necessary. The bail was granted on conditions, including cooperation with the investigation.

No charge has been proved against any of the accused. A provisional attachment or freezing contains allegations, not findings of guilt; the accused are presumed innocent until proven guilty, and due process continues.

What It Means

The HighRich matter is a plain illustration of how a money-circulation scheme is distinguished, in law, from a legitimate business. The dividing line the ED draws is simple: is there a real product being sold to end customers, or is the money coming almost entirely from the enrolment of new members? Where rewards depend on recruitment rather than genuine sales, the arrangement falls within the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, and, since 2019, potentially the Banning of Unregulated Deposit Schemes Act.

For an individual saver, the practical protection is to check before paying. Any scheme that accepts public deposits, or promises fixed returns such as the 15 per cent per annum described here, should be registered with, or regulated by, an authority such as the RBI, SEBI or the relevant state registrar; a promised referral income for enrolling others is a well-documented warning sign rather than a feature of a regulated product. If a return sounds guaranteed and generous, running the promised figure through a plain lumpsum calculator against what mainstream regulated instruments actually pay is a quick reality check.

The wider lesson from the enforcement record is about timing. By the time an attachment is reported, most of the money has usually already been paid in and, frequently, paid out. The Oquilia enforcement archive shows the same shape recurring across deposit-scheme cases, from the Heera Group matter to the Falcon invoice-discounting case: large collections, a fraction recovered, and years of litigation before anyone sees a distribution.

FAQ

Does this mean the people named are guilty?

No. A provisional attachment or freezing of assets contains allegations, not findings of guilt. The ED's action is an investigation-stage step, and the Kerala Police cases are yet to be tried. The people named, including K.D. Prathapan and Sreena Prathapan, are accused, not convicted, and are presumed innocent until proven guilty as due process continues.

What exactly did the ED do?

Per its press note dated 14 June 2024, the ED conducted searches under the PMLA, 2002, froze around Rs 32 crore in bank accounts, seized about Rs 70 lakh in cash along with jewellery and four vehicles, and traced immovable property worth Rs 15 crore. With an earlier freezing of Rs 212 crore in January 2024, the total secured stood at Rs 260 crore.

How much did the scheme allegedly collect?

The ED estimates around Rs 1,500 crore was collected from the public through the Ponzi-type MLM structure, of which it alleges about Rs 250 crore was diverted by the promoters. These remain allegations under investigation and have not been tested at trial.

Have investors got their money back?

Not at this stage. The ED has frozen and seized assets worth about Rs 260 crore, but frozen proceeds are held during the investigation and any prosecution. Any distribution to affected subscribers would follow separate legal processes and is not the same as the assets currently secured.

How do I check whether a deposit scheme is legitimate?

A scheme that accepts deposits from the public or promises fixed returns should be registered with or regulated by an authority such as the RBI, SEBI, or the relevant state registrar. Schemes that pay members for recruiting new members, rather than for selling a genuine product, fall foul of the money-circulation and unregulated-deposit laws.

Where can I read the official record?

The ED's press note of 14 June 2024 is published on the Directorate of Enforcement website, and the Kerala High Court's bail order of 12 January 2026 is available on Indian Kanoon.

This report is based on the press note of the Directorate of Enforcement dated 14 June 2024 and the Kerala High Court bail order dated 12 January 2026, reviewed on 31 July 2026.