Dubai: In an alleged fraud involving a hotel project in Dubailand, investors are now looking to reclaim the rest of the investment they originally made with a German funds firm called Dubai 1000 Hotelfonds.
The project was introduced in 2005 and the amount that the claimants — around 900 mainly private individuals — invested comes to 24.8 million euros (Dh122 million).
The money was to be used to build a 1,000-room hotel in Dubailand. The project was supposed to be finished in 2007. However, the hotel never materialised and an arrest warrant — issued in November last year by the public prosecutor in Duesseldorf — is out for the fund manager, German national Georg Recker.
Gulf News reported the case in 2008, although at that time no legal action had been taken against Recker. Now not only an arrest warrant has been issued against him, but also the remaining accounts of the company and related firms in Germany have been seized by authorities.
According to documents obtained by Gulf News, out of an entire 24.8 million euro paid-in capital, there are only 910,000 euros left in an account at Commerzbank in Frankfurt (account number 6375050919), which belongs to Recker's Dubai 1000 Hotelfonds, and which has been frozen. Four other accounts related to him bearing smaller amounts have also been frozen. Altogether, 1.11 million euros have been blocked by German authorities.
Awaiting final result
"Unfortunately not all investors will get a repayment," Jens-Peter Gieschen, lawyer at German law firm KWAG, which represents 50 claimants, said in a statement. "We are awaiting the first result from the main trial later in 2010."
Gulf News also obtained a copy of the warrant. According to the documents, Recker, who is said to live in Dubai's Jumeirah district, is sought for having gained an "unlawful pecuniary advantage" out of his actions, meaning he is suspected to have cheated his investors.
In fact, today there is nothing more than an excavation and a few rusty cranes visible at the building site, situated at a plot between the Al Barari villa development and Emirates Road.
According to witnesses interrogated by German investigators, Recker never obtained a building licence. His original plans were to build the 1,000-room hotel and later another hotel in Ajman, said Recker's former employee Abass Mohammad A. (full name withheld by Gulf News). But he was unable to receive a building permit because the construction firm he acquired was not allowed to build higher than 12 floors — the hotel was set to have 34.
"Mr Recker started construction anyway, because he was under pressure to show his investors that construction has commenced," A. said.
After that, Recker was unsuccessfully travelling through the region trying to sell the plot to Arab investors, A. added. The original price of the plot was Dh80 million, he said. Two Saudi investors, who visited the site, later lost interest.
In several letters to his investors, Recker was denying the allegations, saying that construction had only been delayed. He also denied that any legal action had been taken against him.
However, according to documents by the German provincial court of Dortmund (file numbers 33Qs6, 170Js54/08 and 195AR10), which were also obtained by Gulf News, Recker appealed against an arrest order against him on March 10, 2008, which shows that he is well aware of the allegations against him. The appeal was rejected by the court.
Meanwhile, Recker was inviting German medics to Dubai and asking them to invest in a health care project, a German lawyer involved in the case told Gulf News on condition of anonymity. He said that Recker suggested an investment of 50,000 euros per person to establish a health care centre. "Investment seminars" have been held at plush locations in Dubai, the lawyer said. He warned any participant who might be interested to start a medical business in Dubai to invest money as normally health institutions themselves are paying fees for brokers for mediating highly qualified personnel.
Recker is said to have restructured his companies in Germany and currently runs a travel agency called Travel-Dubai AG based in Hamm, which offers golf and leisure trips to Dubai.
He is also publisher of Dubai Magazin, a colour magazine promoting Dubai and the Gulf region.
Recker's company Steuerlehrgang.de FZ LLC is still registered in Dubai Media City, building E3. Frequent calls by Gulf News remained unanswered.