Business | Banking
Police unearth Dh320m fraudulent savings fund scheme in Abu Dhabi
A bogus multi-million dirham investment portfolio involving 1,300 investors, who were defrauded of their life savings, was uncovered in Abu Dhabi, police said on Wednesday.
- Staff Report
- Published: 21:10 September 24, 2008
Abu Dhabi: A bogus multi-million dirham investment portfolio involving 1,300 investors, who were defrauded of their life savings, was uncovered in Abu Dhabi, police said on Wednesday.
An Emirati, S.A., sponsored a Sudanese, A.H., who reportedly duped 1,300 investors of Dh320 million, according to Colonel Maktoum Al Sharifi, director of the CID department.
“The accused claimed they were managing an Islamic portfolio that is based on the principle of Murabaha, where they share profits or losses with investors, who signed contracts preventing them from claiming their money in the case of losses,'' Al Sharifi said.
The accused promised their victims of 40 per cent monthly profits of their deposits, he added, adding Murabaha does not justify except partial losses of deposits but not all the deposits as claimed by the suspects.
Police said a victim of the fraudulent savings fund complained that a trading company represented by S.A., a citizen of a Gulf country, failed to pay profits for Dh100,000 deposited with the company.
S.A., who also works as a HR manager, reportedly confessed of taking the money from the complainant, but added that he gave it to A.H, to invest it in trading of electronics.
According Lt. Colonel Ebrahim Al Hannaei, head of the organized crime section at Abu Dhabi Police, said A.H. did not pay profits becausehe was jaoled in Dubai in connection with another crime.
Under investigation, the Emirati man said he acquainted with A.H. through his fellow citizen in 2004 and that he deposited Dh40,000 with him and got paid big profits.
He later deposited Dh700,000 and got huge profits.
“They then asked the Emirati to sponsor them and enter a partnership in return for a share of the profit. Through the company, they collected Dh320 million in savings from 1,300 investors, who got regular dividends until April, when the payments stopped,'' Al Hannaei said.
He added that the Emirati partner became suspicious particularly after the reports on bogus portfolios. “It was only then when the Emirati partner decided to review accounts and records of the company. A legal consultant told him the company was not licensed. He immediately demanded that his partners repay the capital including Dh20 million, which belongs to him. The Emirati partner was given a cheque for Dh320 million, which was found to be without sufficient funds.
The defendants were accused of receiving funds from the public in exchange for a return of up to 40 per cent every 45 days, in violation of the prevailing laws by exceeding the scope of his licence.
Bassam Al Ramahi, Director of Share Trading at the Emirates Stock Company, attributed the spread of the phenomenon of bogus investment portfolios to the poor financial control and the absence of awareness about secure investment.
He called on the Ministry of Economy, the Emirates Securities and Commodities Authority, Central Bank and chambers of Commerce and Industry to play a firm supervisory and control role to prevent such fraudulent cases.
An Abu Dhabi Judiciary Department official cautioned the public against investing their money with bogus investors and said these savings funds are illegal and only funds managed by banks or investment firms are licensed.
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