May 29 (Bloomberg) -- Amway Corp.’s Indian unit chief executive William Pinckney had a bail application rejected after he was arrested for the second time in a year on charges of violating laws protecting consumers from investment fraud and ponzi schemes.
Pinckney was remanded into police custody by the Kurnool district court in India’s southern Andhra Pradesh state, Raghurami Reddy, the Kurnool superintendent of police, said in a text message yesterday. The remand will start today and run until June 2. Pinckney was arrested on May 26 in Gurgaon near New Delhi.
Amway, which delivers goods directly to consumers without going through a retailer, had combined sales in India of about 21.9 billion rupees ($371 million) in 2012, according to the company’s website. Pinckney also faces charges of cheating and extortion, Reddy said.
The allegations are “frivolous and give a misleading impression” about Amway’s business, the Ada, Michigan-based direct seller of vitamins, air purifiers and cosmetics said in an e-mail May 27.
Pinckney’s detention comes a year after he was arrested in neighboring Kerala state on similar charges.
The complaint against Pinckney is “more detailed and elaborate” compared with the case last year, Chavi Hemanth, secretary general of the Indian Direct Selling Association, said by phone.
The latest arrest is the result of a consumer complaint and could have been “easily addressed as a consumer redressal since there was no criminality involved,” the Federation of Indian Chambers of Commerce and Industry, said in an e-mailed statement dated May 27.
The government needs to clarify the law to “facilitate a clear distinction between fly-by-night operators and legitimate business runners,” it said.
Officials from three companies including Amway were arrested in Kerala state on similar charges last year, Hemanth said.
Amway began operations in India 18 years ago and has invested $100 million in a manufacturing plant in the country, the company said in its statement.
Amway rival Nu Skin Enterprises Inc., a seller of skin-care products, plunged in New York trading earlier this year after China’s government announced an investigation of the company. The probe announcement followed a report in the Communist Party’s official People’s Daily newspaper saying that the maker of skin-care and nutritional products was operating a “suspected illegal pyramid scheme.”
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