Aalima Nowhera Shaikh Image Credit: Supplied

Dubai: Hundreds of UAE-based investors are believed to have been hit by a Ponzi scheme run by India’s Heera Group whose managing director Aalima Nowhera Shaikh was arrested in Hyderabad.

Gripped with a sense of foreboding, many trooped down to Heera Group’s Dubai office at Fortune Executive Tower in Jumeirah Lakes Towers (JLT) on Wednesday looking for answers. They got none as the office was locked. Visits to the company’s establishments in Sharjah and Ras Al Khaimah also drew a blank as did frantic calls made to Heera’s representatives in the UAE and India where the company is headquartered.

Since Shaik’s arrest, scores of investors have contacted Gulf News recounting how their entire life’s savings had been wiped out in the various ponzi schemes peddled as “halal” investment programmes.

Incredible returns promised, incredible losses incurred

“I’ve lost Dh70,000. I don’t know if I could ever recover my money,” said Abu Dhabi-based expat Sarfaraz.

Dubai resident A. Ahmad pegged his losses at Dh300,000 while J. Ali who lives in Sharjah said he had invested Dh150,000 in the firm. “I am ruined,” said another man who claimed to have lost Dh500,000.

Some investors said they didn’t suspect anything was amiss as the company gave them monthly returns. “Nowhera Shaik projected herself as a pious woman and visionary entrepreneur. Last year, Heera Group sponsored a cricket tournament in the UAE and recently Nowhera had announced Rs 10 million aid for Kerala flood victims. Who would have thought all this was a façade,” said a Dubai investor who is now weighing legal action against the company.

Lured by the incredible returns many invested all what they had in the company. When it was not enough, they borrowed from banks and illegal money lenders. Mohammad H, who works as a consultant with a multinational company took Dh50,000 from a loan shark while N.M. from Ras Al Khaimah signed up for a Dh100,000 bank loan. Some like Indian housewife S.K. even sold her jewellery.

Like any seemingly viable, but unsustainable money-making scheme the audacious business model looked good while it lasted, which in this case was around 8 years. But when the payments dried out, investors took to the streets and laid a siege outside Heera Gold’s head office in the Indian city of Hyderabad.

Following complaints, Heera Gold’s managing director Nowhera Shaik, 45, was taken arrested for cheating, criminal breach of trust and criminal intimidation. She was taken into custody in Delhi on Monday and brought to Hyderabad on transit remand the following day, said Hyderabad Police Commissioner Anjani Kumar.

Nowhera Shaik who floated the All India Mahila Empowerment Party, which contested the recent Assembly elections in Karnataka has been booked been under sections of the Telangana Deposits of Financial Establishment Act 1999 and The Prize Chits and Money Circulation Schemes (Banning) Act, 1978.

Police said she headed 15 different group companies spread across India and the Middle East and operated 160 bank accounts in India.

How investors were duped

In the UAE, Heera Group sought investments in three plans: Heera Gold, which promised monthly payouts of Dh3,250 against a minimum investment of Dh100,000 (lock in period: one year), Heera Textiles which guaranteed annual returns of 65-70 per cent against a minimum deposit of Dh15,000 (lock in: 2 years) and Heera Foodex where a Dh15,000 (lock in: 2 years) deposit was supposed to yield annual profits of up to 80 per cent.

What is a Ponzi scheme?

Ponzi scheme is an investment scam where investors are promised, and seemingly delivered, unusually high rates of return. Scam artists pool funds received from victims, living off some and paying a portion back to the investors as interest or gains.

Red flags to watch for; How to spot a Ponzi scheme

Low risk, high returns: Schemes offering unusually high/guaranteed returns with minimum risk.

Very consistent returns: Returns that hardly vary, should raise questions.

Complex business model: The nature of their business is usually complicated

Difficulty receiving payments: If you face trouble trying to withdraw money or not receiving any promised payments on time, you may be involved in a Ponzi scheme.