54 arrested and almost 2,000 caught up in Abu Dhabi’s ‘biggest-ever’ investment scam

54 people have been arrested in connection with an unlicensed investment Ponzi-style business, involving a luxury car scam, in Abu Dhabi.

Reports estimated that the scam was worth AED1.3bn and AED2.3bn and could have defrauded more than 3,700 people, in what is said to be Abu Dhabi’s biggest-ever investment scam.

Abu Dhabi attorney general, Ali Mohammed Abdulla Al Balushi, said that the number of complaints against the four investment funds was 1,909, with total deposits being AED800m. Al Balushi, said on Tuesday that 54 people have been sent to the criminal court on charges of fraud, money laundering and practicing various professions without a licence, according to various local news reports.

Abu Dhabi Police arrested the gang members in March 2017 after a six-month investigation into a Ponzi-style luxury car investment fraud, after more than 400 investors complained to them in five days, news outlet The Khaleej Times said.

The main defendants in the case are Emiratis while others are of various other nationalities, police said in what is the first case of investment fund fraud in the Emirate for five years.

Post-dated cheques

Prosecutor Hassan Al Hammadi said that the scheme worked in two parts. The men would buy second-hand cars using post-dated cheques. They would then sell them to other victims but not deliver them.

The money from the sale would be used to pay back previous investors, in a Ponzi-style scam, The Khaleej Times reported.

Speaking in March, Maktoum Al Sharifi, director general of Abu Dhabi Police told local reporters that it was the largest scam in the UAE capital city’s history.

Police said the three people who managed the scam disguised as car dealers and hoped to make sizeable returns from selling cars on credit.

Prosecutors said a total of Dh53m in cash was seized from the men’s homes and at car showrooms they owned.

“Another Dh100m in their bank accounts was frozen,” said prosecutors.

Officers said the fraudsters promised the investors a 100 per cent return on their money, before this changed to between 70-80%.

Unlicensed investment

One of the accused had admitted to authorities that he was part of an unlicensed investment business with fraudulent intentions.

Prosecutors said 423 vehicles were seized in 16 showrooms and 3,700 cheques were seized.

Investigations showed that the gang lured customers to buy cars from them and later they would encourage them to sell the cars through them at a higher price by offering them big profits.

The accused allegedly issued post-dated cheques to the investors. Those people who joined invested first received the promised profit, which encouraged others to join the scheme that went on for a few years, according to authorities.

Luxury cars

Investigations also revealed that the defendants later took possession of all the inventors’ money. They used part of the cash to buy luxury cars and special car numbers.

“Many of the accused also purchased properties and shares. One of the men bought a camel worth Dh10 million,” said prosecutors.

The UAE Penal Code punishes those convicted of fraud with up to three years in jail, while money laundering is punishable by imprisonment for up to ten years.

The Attorney General has praised all security organisations for their brilliant work and efforts in investigating such a big case and arresting all the men involved in the case.

ABOUT THE AUTHOR
Gary Robinson
Deputy Editor, International Investment and Head of Video at Open Door Media Publishing. A fully qualified journalist and filmmaker with more than 20 years' financial services experience, both as journalist and originally as an IFA.

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