In the dusty lanes of Punjab, Nirmal Singh Bhangoo started off as a humble milkman. Few could have guessed that he would go on to orchestrate one of India’s biggest financial scams – a Ponzi scheme worth nearly ₹50,000 crore. The PACL scam, also known as the Pearl Group scam, not only spanned nearly three decades but also left 5.5 crore Indians defrauded, shaking the very foundations of financial trust in the country. What made this fraud so massive, and how did it go undetected for so long?
What Is A Ponzi Scheme?
Before we dive into the scam itself, it’s essential to understand what a Ponzi scheme is. Named after Charles Ponzi, a 1920s con artist, a Ponzi scheme is a type of investment fraud. It pays returns to older investors using money from newer investors rather than from profits earned. There’s no real business activity – just a cycle of deception that eventually collapses when new investments dry up.
In PACL’s case, instead of offering direct cash returns, it promised land-farmland allotments in exchange for investment. If the land wasn’t available within 90 to 270 days, investors were promised hefty financial returns. But as SEBI (Securities and Exchange Board of India) later uncovered, most of this land never existed. The illusion was held together by forged documents and fake allotment letters.
Bhangoo’s Rise From Chit Funds To PACL
The seeds of the scam were sown in the 1970s when Bhangoo moved to Kolkata and joined a chit fund company. Chit funds are savings schemes where members contribute money regularly and take turns receiving the lump sum. Although legal if regulated, they are often misused due to lax oversight. Bhangoo learned the ropes and launched Pearls Golden Forest Ltd (PGF) in the 1980s, promising wealth through farmland development.
When PGF came under legal scrutiny, Bhangoo quickly shut it down and in 1996 launched Pearls Agrotech Corporation Ltd (PACL). This time, the packaging was smarter. PACL claimed to own over 1.25 lakh acres of agricultural land. Investors were promised either land or handsome returns, luring in lakhs of rural and lower-middle-class Indians looking for secure, tangible assets.
Agents, Fake Documents, And Hawala Networks
What made PACL unstoppable for so long was its massive ground network. Over 70 lakh agents – many of them villagers and local influencers – were deployed across India to collect money from households. These agents were promised commissions, incentivising them to bring in more and more people.
PACL didn’t stop at just collecting funds. According to SEBI, the money was funnelled into shell companies – businesses that exist only on paper – and thousands of crores were moved via hawala transactions. Hawala is an informal money transfer system that leaves no paper trail. It allowed Bhangoo’s empire to hide and reroute massive sums without triggering alarms.
“PACL Ltd had mobilised money from the public in the name of land allotment, but did not own sufficient land. The scheme was nothing but a classic case of a Collective Investment Scheme (CIS),” said SEBI in its 2014 order.
How PACL Evaded Authorities For Years
SEBI started receiving complaints as early as 1998-99 and subsequently introduced the Collective Investment Scheme (CIS) Regulations. Under this, companies collecting public funds for pooled assets like land needed to register and comply with the rules. SEBI found PACL to be running an unregistered CIS and ordered it to stop operations.
But Bhangoo wasn’t ready to fold. PACL challenged SEBI in court. In 2003, the Rajasthan High Court ruled in PACL’s favour, saying it didn’t fall under the CIS definition. This legal loophole allowed PACL to expand rapidly throughout the 2000s. To boost public trust, it sponsored Indian Premier League (IPL) teams, kabaddi leagues, and even launched its own Hindi news channel.
Only in 2013 did the Supreme Court overturn the Rajasthan ruling, confirming that PACL was indeed running a CIS. In 2014, SEBI ordered PACL to refund ₹49,100 crore to investors.
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The Aftermath
Nirmal Singh Bhangoo was finally arrested by the Central Bureau of Investigation (CBI) in 2016. SEBI and the Enforcement Directorate (ED) seized ₹280 crore worth of assets and flagged over 1,300 suspicious bank accounts. In Australia alone, properties worth ₹2,460 crore were identified. Yet, recovery remained painfully slow.
In a shocking turn in 2022, even after PACL was officially shut down, forged board meetings were held at its Jaipur office. Fake documents were used to appoint directors like Dharmendra Singh Sandhu to regain control of assets. In 2025, Bhangoo’s son-in-law, Harsatinder Pal Singh Hayer, was arrested for laundering ₹657 crore through Australian firms.
Political figures were also raided for suspected links to PACL’s black money.
Despite SEBI setting up a refund portal, only ₹1,919 crore had been returned to about 19.6 lakh investors by 2024 – a small fraction of what was owed. The rest remains entangled in red tape and false promises.
A Lesson In Vigilance
Nirmal Singh Bhangoo died in judicial custody on 25 August 2024. But his legacy remains one of betrayal and broken dreams. The PACL scam stands as a grim reminder of how unchecked greed, combined with legal blind spots and delayed regulation, can ruin lives.
This case also exposes the vulnerability of rural and low-income investors to smooth-talking fraudsters.
As SEBI said in its official statement: “Investors must check the registration of any company before investing and avoid schemes that promise abnormally high returns.”
Transparency, awareness, and timely action by regulators are the only shields we have against the next financial predator.
So, the next time someone offers a deal that sounds too good to be true, remember, it probably is.
Sources: Finshots, Economic Times, Hindustan Times
Find the blogger: Katyayani Joshi
This post is tagged under: financial fraud, ponzi scheme, indian frauds, scam alert, SEBI, PACL scam, Nirmal Singh Bhangoo, investment fraud, investor awareness, money laundering, ED raids, CBI investigation, chit fund scam, white collar crime, economic offences, fraud exposed, indian economy, scam news, financial literacy, consumer protection
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