Dubai: Khoie Properties has filed a Dh2 billion lawsuit against the Ras Al Khaimah Investment Authority (Rakia), custodians of the stalled Dh5 billion La Hoya Bay project on Marjan Island, Ras Al Khaimah.

Dr Khater Massaad, CEO of Rakia, told Gulf News "We have just received custodianship over the La Hoya Bay and will hopefully this week plan how the project is to be financed making sure none of the investors lose their money.

"By filing this lawsuit, Frank Khoie of Khoie Properties is acting like he is a victim. It's very simple, he used cheques that bounced. He received Dh280 million in investments and has used only Dh20-Dh30 million. Investors were relieved when Rakia took ownership of the project."

Fraud allegations

Rakia is being sued on 15 counts of fraud and extortion. Khoie Properties has alleged that Rakia and its development arm, Rakeen, attempted to deliberately defraud Khoie Properties in order to take over the La Hoya Bay Project.

Speaking to Gulf News from London, Wahid Attalla, board member of Rakeen said: "This is a deliberate attempt by Khoie to gain control over the project. RAK courts had appointed Rakia as the custodian of La Hoya Bay to protect the investments of 800 investors that Mr Frank Khoie has created. We are trying to protect the investments as per the court ruling."

Attalla said he was not aware of the lawsuit. "I've been hearing about this but I have no formal information on the court case."

La Hoya Bay was brought into the spotlight after Khoie Properties' CEO, Frank Khoie was sentenced to three years in prison after a Dh57 million cheque issued to Rakia bounced.

After Khoie Properties was deemed to be insolvent, a local court appointed Rakeen with legal custodianship. The consent needed from Khoie for the development's receivership was subsequently withdrawn.

The project had 800 foreign property investors. So far, land payments worth Dh72 million out of a total of Dh302 million have been paid.

Accusations

Accusations by Khoie Properties state that the defendants allegedly bribed the developer's key staff into working together in the takeover scheme.

"I am not the only party damaged by the actions of these two and it is important to protect the investment environment for all businesses in RAK," said Frank Khoie.

Khoie Properties claims to have lost Dh1 billion in damages through lost projected profits, disrepute among its clients and damaged credibility.

The company is seeking a further Dh1 billion in punitive damages.