Financial irregularities in the cooperatives sector are an old issue. What’s new is a modus operandi being used to deceive cooperative depositors in the name of financial settlement.

Of late, fraudulent cooperatives have started convincing depositors to buy land from real estate brokers at exorbitant rates and earning huge amounts of money from the deal.

Desperate to get their deposits back, the depositors are often ready to do as the cooperative operators suggest. But through such deals, some cooperatives have added financial burden on the depositors.

Ramchandra Phuyal, a 48-year-old resident of Kavreshthali in Tarakeshwar Municipality-2, Kathmandu, is one such victim. His journey into the world of cooperatives began some 10 years ago when he was working in Malaysia. It started with a neighbour’s request.

Phuyal’s neighbour Umakant Neupane—then chairman of the Mega Dream Multipurpose Cooperative-Machhapokhari, who is now in Dillibazar Prison, Kathmandu for embezzling depositors’ money—convinced him to open an account in the cooperative.

Phuyal, who returned to Nepal two years ago with a plan to run a liquor shop, had deposited Rs3 million since opening the account in the cooperative before it went belly up.

After multiple efforts, Phuyal, in June 2023, received a cheque from the cooperative, dated November 26 of the same year, supposedly to settle his dues. But the cheque bounced.

“When I got the cheque, I was in line to receive more than Rs3.4 million, including interest,” Phuyal said.

After giving the cheque, Mahashankar Regmi, the current chairman of the cooperative, took away the certificate of deposit from Phuyal along with the depositor’s passbook. “The bounced cheque is now the only proof of my involvement with the cooperative,” Phuyal added.

Instead of paying back the money after the cheque bounced, the same year Regmi introduced Phuyal to Him Prasad Subedi, who is a real estate dealer in Narayanghat. According to Phuyal, Subedi came up with a land deal that would worsen his financial woes.

Subedi convinced Phuyal to purchase land to settle the transaction saying that it was the only option.

Then, Phuyal bought two plots of land—one over 12 dhurs and the other over 21.71 dhurs—in Bharatpur Metropolitan City Ward 26, Chitwan, at Rs150,000 per dhur from Rabin Khatri Chhetri, who identifies himself as a representative of a real estate company. (One dhur equals 16.93 square metres.)

The total price of the land would exceed Rs5 million. Phuyal paid Rs1.65 million upfront, with the real estate representative Subedi promising to cover the remaining amount (Rs3.4 million which the cooperative owed to Phuyal) with a surety cheque.

Both plots were transferred in Phuyal’s name, and he even received the land registration certificate on September 13, 2023.

But, again, there was a twist in the tale. The surety cheque given by Subedi to Chhetri bounced too, and the remaining payment for the lands could not be made.

Subedi faces a case in Chitwan District Court. He denies being a real estate dealer and says he only represented the Mega Dream Multipurpose Cooperative.

Landowner Chhetri filed a case against Phuyal in the Chitwan District Court in April 2024. “To avoid legal trouble, I even proposed to settle the matter by returning both the plots of land to Chhetri on the condition that he would return my Rs1.65 million. But Chhetri refused to take back the land,” Phuyal said.

“We later compromised that he would take back 12 dhurs of land, and for the remaining 21.71 dhurs, I would pay the price,” added Phuyal.

Phuyal now got Rs100,000 per dhur while he had earlier agreed to purchase the same land for Rs150,000 per dhur. “Earlier, Subedi, the Mega Dreams Multipurpose Cooperative representative, had tried to take a cut of Rs50,000 per dhur from us,” Phuyal accused.

Phuyal’s ordeal has left him financially drained, and he appears emotionally exhausted. Not only did he lose the money (Rs3.4 million) he had deposited, but he also spent an additional Rs2.2 million on land he never wanted.

This shows how cooperative operators try to earn huge sums by forging deals between cooperative depositors and land owners.

According to Phuyal, now, when he tries to sell the land at the cost price of Rs100,000 a dhur, it does not find any buyer.

However, Subedi denies a profit motive behind cooperative victims purchasing land. He argues that the victims willingly buy the land after inspecting it.

“Demand and circumstances determine the land price. The price of a plot may constantly change,” Subedi argued.

Chhetri, the land seller, said: “After I did not get the money, I blocked the bank’s land transaction and filed a case.” He added that though he was promised payment in three months, he waited for seven months before filing a court case.

Despite all this ordeal, Phuyal didn’t get even a rupee of the Rs3.4 million deposited at the cooperative. He is still doing the rounds of the police offices.

Phuyal is not the only person to have been deceived by the Mega Dream Multipurpose Cooperative. So was Laxman Prasad Rizal, 59, his neighbour.

Rizal, a farmer, has deposited Rs4.5 million from his own income and the money sent by his son in Japan at the cooperative. He was also duped the same way.

Rizal had bought 41 dhurs of land in Divyanagar, Chitwan, the same place where Phuyal bought land from Chhetri, and in the same period. But, later, he returned nine dhurs while keeping 32 dhurs—and in the process has endured all the hassles that Phuyal did.

Rizal also lost his 56-year-old wife, Radhika, on November 28, 2024 as he was unable to pay for her cancer treatment.

“I could not manage money for my wife’s treatment as I was already deep in debt,” he moaned. “I lost her.”

In the name of financial settlement, many cooperatives are compelling depositors to buy land at inflated prices, says Jagannath Sapkota, who identifies himself as a former joint coordinator of the Laligurans Cooperatives based in Khusibu, Kathmandu. Of late, he has been facilitating the victims to recover their deposits.

Laligurans was declared a crisis-ridden cooperative after its failure to return the money of its depositors.

“Laligurans might not have conducted fraud after being declared crisis-ridden,” Sapkota said. “But, earlier, they committed a number of forgeries.”

Mohiki Mahato, 55, a permanent resident of Syangja district who now lives in Lazimpat, Kathmandu, has deposited more than Rs15 million in Laligurans Cooperative. She even borrowed money from her relatives to deposit in the cooperative so as to earn high interest. But in March 2023, when the cooperatives failed to return her deposit, she was forced to buy one kattha (20 dhurs) of land at Ratapur in Bharatpur Metropolitan City-25.

“The cooperative forced us to buy a kattha of land for Rs5.2 million. Later, we learned that the price of the land we bought at Ratapur was around 1 million,” Mahato said. “The cooperative operators deceived us when they made us buy the land, and including the interest I am still owed over Rs10 million.”

She also said the cooperative officials forced her to finalise the deal immediately. Mahato and her relatives were not even allowed to inspect the place and inquire about the going rate of the land. “They made us sign every document in the hotel room where we were staying,” she lamented.

A ward member of Bharatpur Metropolitan-25 also confirmed that a kattha of land in the area would sell for around Rs1.5 million.

The chairman of the Liligurans cooperative is Dhan Bahadur Tamang. The Post's multiple attempts to reach him for comment failed.

Superintendent of Police Sudheer Raj Shahi, spokesperson for the Central Investigation Bureau of Nepal Police, said they are knowledgeable about such cases. “But we cannot do anything unless someone registers a fraud case,” Shahi told the Post.