KATHMANDU: In a landmark verdict that has captured national attention, the Supreme Court recently released the full text of its decision in the Unity Life International fraud case, one of the country’s most notorious financial scandals.

The ruling has upended previous lower court decisions, clarifying responsibilities, convictions, and restitution procedures for investors defrauded of billions of rupees.

The Supreme Court bench, comprising Chief Justice Prakash Man Singh Raut and Justice Til Prasad Shrestha, handed down the verdict on April 15, 2025, confirming the culpability of nine key figures within Unity Life International, including founder and chairman Kashiram Gurung, directors Bhim Bahadur Gurung, Indra Bahadur BK, Krishna Bahadur Kshetri, Bishnu Bahadur Kshetri, Mahendra KC, Netra Rajbanshi, Bishwanath Gautam, and general manager Shishir Yogi.

Significantly, the court ruled that these executives need not serve additional prison terms or pay fines, as prior detention had already offset the sentences.

Instead, restitution of investor funds from 2005–2010 became the primary focus, to be recovered by liquidating company assets. Provisions were made to ensure that, if proceeds from asset sales fell short, claims would be proportionally distributed according to individual investment losses, without imposing liability on the personal estates of the company’s directors.

A Nationwide Fraud

Unity Life’s operations began officially on March 2006, when the company was registered as Insurance Unity Life International. Later, in September 2007, it rebranded as Unity Life Insurance, expanding its purported activities to include insurance, hydropower, real estate, tourism, agriculture, and even aviation.

From Kathmandu to Pokhara, Itahari to Hetauda, and districts including Baglung, Syangja, Damau, and Dang, Unity Life opened branches and solicited public investment under various pretexts.

The company attracted 366,342 shareholders across multiple schemes, collecting an astounding Rs 3.799 billion, with investments ranging from Rs 8,000 to Rs 15,750 per individual.

Yet, investigations revealed that much of this money was circulated internally as commissions—Rs 1.8375 billion in total—or invested in 37 subsidiary ventures, including hospital operations, departmental stores, dairy industries, hydropower projects, and bamboo plywood factories.

Unity Life’s business model functioned as a pyramid scheme. Members were incentivized to recruit new investors, promising weekly commissions of Rs 5,000 to 175,000 for each successful recruit.

This structure created the appearance of a thriving investment network while obscuring the gap between inflows and legitimate investment, ultimately defrauding ordinary citizens who were lured by the promise of guaranteed returns and employment opportunities.

Regulatory Oversight and Unauthorized Operations

Unity Life’s deception extended beyond its pyramid scheme structure. In an unauthorized move, the company rebranded a subsidiary as a bank without approval from Nepal Rastra Bank, effectively soliciting deposits illegally.

News of these irregularities prompted government scrutiny, and in April 2010, the Lalitpur District Government Attorney filed a formal complaint against the company’s executives for fraud, unauthorized financial operations, and misrepresentation of business activities.

Through a network of 22 affiliated companies, Unity Life operated in banking, insurance, real estate, and industrial sectors.

Public filings and investigative reports revealed that the firm amassed substantial assets—Rs 115 million in property and Rs 412.8 million in bank deposits—but these were insufficient to cover the losses suffered by thousands of investors, illustrating the systematic nature of the scheme.

Legal Proceedings and Sentencing

The criminal case against Unity Life began with the filing of charges against 113 individuals, including 12 key executives. Allegations included presenting 44 fraudulent investment schemes and operating insurance programs without proper regulatory approval.

Lalitpur District Court initially convicted 12 executives, sentencing each to three years’ imprisonment and imposing fines of Rs 10.626 million per person.

However, many defendants were acquitted by the then-appellate Patan Court, while some received compensation for pretrial detention.

The Supreme Court ultimately reinstated convictions for nine principal figures. Among these, seven—Gurung, Bishnu Kshetri, Bhim Bahadur Gurung, Krishna Kshetri, Indra BK, Netra Rajbanshi, and Mahendra KC—were found guilty under the National Code for fraud and received sentences of two years and six months imprisonment and Rs 25,000 fines each.

The general manager, Shishir Yogi, and director Bishwanath Gautam were sentenced to one year imprisonment and Rs 10,000 fines. Bishnu Bahadur Kshetri, having died during ongoing proceedings, was absolved of punishment.

The court also noted that overlapping sentences for multiple related cases would be consolidated, ensuring that pretrial detention satisfied all terms of imprisonment and fines.

Restitution: A Comprehensive Plan

To address the scale of investor losses, the Supreme Court devised a structured restitution plan that balances legal accountability with practical recovery.

The Lalitpur District Court revenue officer was tasked with overseeing implementation, coordinating with banks, land offices, and other agencies to catalogue all company assets, including frozen and unregistered holdings.

Public notices were issued nationwide, inviting investors to submit claims with documentary evidence within a one-month window, reinforced by repeated publications to ensure broad awareness.

All collected claims were to be forwarded to Lalitpur for verification, after which administrative costs such as notifications and operational expenses would be deducted from the company’s total assets.

Verified claims would be compensated using proceeds from both movable and immovable assets, including property auctions conducted under court approval. If total asset value fell short of total claims, remaining funds would be distributed proportionally, ensuring fairness without imposing personal liability on company directors.

Coordination with the defendants was also mandated to facilitate access to assets and records, emphasizing a practical approach to returning investors’ principal amounts.

Through this comprehensive framework, the Supreme Court ensured that restitution is achievable, transparent, and legally sound, providing a clear pathway for over 366,000 affected investors to recover losses incurred during Unity Life’s operations.

The Victims

The scale of victimization was unprecedented. Only 4,144 of over 366,000 investors filed formal complaints, leaving the majority to recover funds through restitution procedures rather than criminal prosecution.

The Supreme Court emphasized that all participants in the scheme, whether active recruiters or passive investors, had suffered losses and were eligible for compensation.

Unity Life’s operations misled citizens with promises of healthcare programs, free lifetime medical services, cooperative and microfinance opportunities, hydropower ventures, airline operations, departmental stores, and industrial enterprises. Many investors were drawn in by assurances of returns on small contributions, unaware that their funds would circulate primarily as internal commissions within the company.

Lessons from Unity Life

The Unity Life case underscores the importance of financial literacy, regulatory oversight, and investor vigilance. Thousands of ordinary Nepali citizens were lured into high-risk schemes by promises of rapid returns and national-scale ventures.

The case also highlights the limitations of regulatory frameworks in preventing complex corporate fraud and the challenges in prosecuting long-running financial scams.

From initial registration in 2005 to the Supreme Court verdict in2025, nearly two decades passed, illustrating procedural complexities, judicial backlogs, and persistent legal maneuvering by both defense and prosecution.

Yet, the case establishes a precedent for managing mass financial fraud, blending punitive accountability with practical restitution for victims.

Accountability Achieved

The Supreme Court’s ruling marks a historic moment in Nepali financial jurisprudence. While imprisonment and fines were largely offset by pretrial detention, the emphasis on structured restitution ensures that affected investors have the opportunity to reclaim their investments.

Over 366,000 citizens now have a clear, court-supervised pathway to recover billions lost to Unity Life.

Unity Life’s rise and fall serve as a cautionary tale about the allure of seemingly lucrative investment schemes, the importance of regulatory vigilance, and the vulnerability of investors to well-orchestrated deception.

By combining punitive measures with a detailed restitution framework presented in paragraph form, the Supreme Court has set a benchmark in addressing organized financial fraud, balancing justice with tangible relief for victims.