Investment opportunities or traps? ‘Cloud kitchens’ go for suspicious crowdfunding

In Facebook posts, some organisations are offering eye-popping profits

Obfuscating many people with false information about eye-popping profits in return for capital investment is not a unique phenomenon in Bangladesh. Plenty of scammers tried to benefit from such schemes over the years.

With the rise of technology, what the scammers need is a rock-solid social media presence, which would look, at least in real-time, valid until the house of cards starts crumbling down.

A couple of such suspicious Facebook-based schemes have been spotted lately. The so-called CloudKitchens -- food businesses that offer delivery only -- have called for investments through Facebook posts.

The Facebook post by Noor’s Kitchen did not elaborate on what kind of profit the possible investors can expect.

During a quick call to the number listed on the social media page, a representative of the organisation claimed they were offering 6 to 7 percent profits per month.

Green Oven’s offer is less lucrative but much clearer – 2 percent a month, according to its Facebook page. The rate is still double the profits offered by the National Savings Certificate, considered the most profitable and risk-free investment of idle money.

Dhaka Metropolitan Police, or DMP, confirmed to bdnews24.com that it had looked into the business of Noor’s Kitchen but could not locate someone tied to it.

FAKE ADDRESS

Noor’s Kitchen, which describes itself as a CloudKitchen and online catering service with at least 1,000 customers, claimed in a Facebook post on Feb 18 that it had won a contract to deliver food at a “first-rate state-run hospital in Dhaka”.

The post also stated that the so-called catering service requires significant investments, which is why it launched the crowdfunding scheme.

The investments will be for a minimum of one year to a maximum of three years, with the option to renew contracts.

As security, the investors will receive a copy of the deal, written and signed by both parties on government stamp papers, the start-up’s trade licence, and a bank cheque.

The investors, if they would like to withdraw their investment, would have to issue a prior notice in writing, and the money will be refunded within the next 30 days, reads the post.

During a recent visit, bdnews24.com found the corporate office address used in the post belongs to a different organisation named Workstation.

A staff member of Workstation in Uttara said he was unaware of any firm with the name Noor’s Kitchen in the building.

A woman claimed that Noor’s Kitchen moved to a different location in Uttara-12 when bdnews24.com dialled the number in the so-called CloudKitchen’s Facebook post. She, however, did not share the address.

After a few days, a woman on the same number claimed they had stopped seeking investments and referred to the business owner.

A man claiming to be “Anis” called back later and asked for an investment of Tk 20 million, showed interest in speaking face-to-face and promised to call the reporter later.

According to a police report, a copy of which is with bdnews24.com, a plainclothesman posing as an investor interested in Noor’s Kitchen’s offer obtained the phone number of Maria Farhin, who is purportedly involved in Noor’s Kitchen, from a Workstation staffer after much cajoling. The officer in plainclothes also got the Uttara-12 address of Noor’s Kitchen.

People at the new Uttara address told the police officer that Noor’s Kitchen was seeking investment after winning a bid to deliver food items for Dhaka Medical College Hospital patients.

Maria Farhin claimed over the phone to the officer in disguise that she owned Noor’s Kitchen and that the minimum investment amount was Tk 300,000.

When the police officer contacted the number on Noor’s Kitchen’s Facebook page, a person introduced himself as Munir and denied the involvement of anyone named Maria in the business.

He even rejected the claim that Noor’s Kitchen won a DMCH contract.

DMCH authorities confirmed to the police officer that Noor’s Kitchen is not listed as its approved food deliverer.

The officer, who refused to disclose his identity as he was not authorised to reveal information about an ongoing investigation, told bdnews24.com that he is confident that the whole thing is a scam.

“A unit is keeping a close eye on the matter,” he said.

‘NOT INTERESTED IN BANK LOANS’

In a Facebook post, Green Oven Limited claimed to have their hands on restaurant, catering and agro-business industries and promised similar fail-safes like a contract on government stamps and cheques.

However, the company has a better physical presence than Noor’s Kitchen, with an eatery called The Ranch Bistro in the Bashundhara Residential Area, according to its Facebook page. It also used the restaurant’s address in the post calling for investment.

A man named Mehedi Mohsin, who introduced himself as the marketing manager of the “CloudKitchen” firm Green Oven, claimed The Ranch Bistro is a sister concern of their firm.

He said they needed investment as the company recently won a significant bid to deliver food items at a school. bdnews24.com could not independently verify the claim as the school authorities did not take phone calls.

Mehedi also claimed that they had already secured a bid to run the office cafeteria of a mobile phone operator in Bangladesh. bdnews24.com could not verify the claim.

Mehedi said two brothers - Anwar Afzal and Abir Afzal - run Green Oven as the chairman and managing director, respectively.

They offered 2 percent monthly profits or 24 percent annually. Banks charge 9-12 percent interest annually on such loans, which means Green Oven would have had to pay half the money had they taken a bank loan.    

When asked why they were asking for crowdfunding instead of applying for a business loan at

any commercial bank, Mehedi said they were not interested in bank loans now.

He also claimed that crowdsourcing for business capital is common in Bangladesh, and admitted investment in such schemes is risky. He invited the bdnews24.com correspondent to a face-to-face meeting to clarify things.

‘CROWDFUNDING WITH OFFERS OF PROFIT IS ILLEGAL’

Bangladesh Bank spokesperson Md Mezbaul Haque said crowdsourcing funds to raise capital for re-investment is illegal in Bangladesh.

“Legally, there is no scope for raising capital in such a manner,” he said.

The central bank official alerted people to remain cautious about the offers to protect their savings and referred to law enforcement agencies to report such schemes.

“If someone takes deposits from people, it’s banking; and it’s controlled by the law,” he said.

“The law allows the central bank to take action against licensed entities only if they attempt to crowdsource funds. For unlicensed entities, we can advise people to lodge complaints with law enforcement agencies.”

[Writing in English by Adil Mahmood]