Dubai Bar Works victims who lost millions await sentencing of British con man
Renwick Haddow, whose alias was Jonathan Black, is to be sentenced in New York for $40 million hot-desk scam
Victims of a $40 million Ponzi scheme hope the sentencing of Bar Works mastermind Renwick Haddow will pave the way for the recovery of lost investments.
The British con man was due to be sentenced in New York City on October 23, three months after his accomplice Savraj Gata-Aura, known as Sam, was sentenced to four years in jail for his role in the hot-desking scam.
He was also sentenced to three years of supervised release. The US Department of Justice has delayed sentencing for Haddow until January 22.
Prosecutors said Gata-Aura earned as much as $3m from the con by selling shares in temporary office space in New York and Istanbul that could be leased with profits returned to investors.
I was shocked to know I had lost my lifetime savings after working years as a cabin crew
When the payouts dried up, the scheme collapsed and more than 900 investors realised their money was tied up in an elaborate hoax.
Judge Jed Rakoff, who sentenced Gata-Aura in July, said the con man was motivated by greed and ordered him to repay his victims through a restitution order.
Investors, some who lost as much as $300,000, hope the sentencing of Haddow will open up further opportunities for compensation.
Cabin crew Jocelynne Houghton, 32, was forced to leave the UAE after losing $50,000 in investments that she made on the advice of a financial adviser in Dubai.
“I used financial advisers Atom Alternatives in Dubai to help me make what I thought was an informed decision,” she said.
“[Founder] Dhilan Vithane said he had done the required due diligence on Bar Works and it was a sound investment.
“Bar Works had a great website and seemed fully functional and trustworthy.”
Ms Houghton, who lives in Sydney, invested in Bar Works in July 2016.
The $50,000 she paid would cover two units, which she understood were office workspaces at 70 White Street, in the Tribeca neighbourhood of Manhattan, New York.
The money was sent by wire transfer to a JP Morgan Chase account and a receipt followed shortly afterwards, along with a certificate of ownership.
“Bar Works was to pay me a monthly rental and I could sell the units in the future,” she said.
“I planned to later buy a house with the profits.
“After receiving approximately three months rental from Bar Works, those rental amounts began to be delayed.
“When that happened I Googled Bar Works and to my horror discovered it was a Ponzi scheme.
“I was shocked to know I had lost my lifetime savings after working years as cabin crew. I was devastated.”
In a separate legal claim by investors against JP Morgan Chase was dismissed. The bank denied it had any liability towards the plaintiffs.
Financial advisers who sold Bar Works units defended their actions, after dozens of investments were sold in the UAE.
Mr Vithane, who is also a partner at Atom Alternatives, said his company sold shares to 20 people.
“We had people on the ground in New York to do our due diligence to check Bar Works was doing exactly what it said it was doing,” he said.
“It fitted the scope of what we were trying to invest for some of our clients. Co-working space was a hot topic at the time.
“The investors were getting an income, so it had integrity.
“We could see it on the ground and working with enough revenue to pay investors back their returns.”
Although Mr Vithane said he never met Haddow, he was in regular contact with others who have since been implicated in the scheme.
A man, identified as Julian, was one of the contacts who distributed the investments to brokers.
Prosecutors said "Jessica Mayo" and "Julian Tzanev" of Bar Works were discovered to be fake identities.
One of Mr Vithane’s potential investors flew out to New York to visit one of the hot-desking sites and said it was "buzzing”.
“My business partner had a friend out there who also confirmed it was a thriving industry,” said Mr Vithane.
“The communication we got was spot on and we were getting updates through our distributor, who was in regular touch with Sam Aura [Gata-Aura].
“Towards the end it just went dry. We spoke with a couple of employees and then the news broke and it hit the fan.”
Mr Vithane said he had a “moral obligation” to fund a legal retainer in New York to pursue a class action against the people behind the scheme on behalf of some of his clients who lost their life savings on his advice.
None of the brokers who pushed Bar Works personally invested in the scheme, he said.
“We don’t invest in everything we sell. In this instance I was not particularly blown away by 14 per cent [returns] per annum,” said Mr Vithane.
“If every broker put their money into what they promote, all their money would be tied up.
“It doesn’t mean it’s a bad investment. This is unfortunate, but we have not given up for our clients.
“The case is dragging out and we can only wait for Renwick to be sentenced to see what happens next.”
US court promises justice for victims
After Gata-Aura was sentenced, Geoffrey Berman, US Attorney for the Southern District of New York, said the people behind Bar Works would be held to account.
“Haddow and co-defendant Savraj Gata-Aura allegedly solicited funds from investors with fictitious claims about Bar Works’ management and performance,” he said.
“They are now being held to account for the blizzard of lies they told to get money from their unsuspecting victims.”
Haddow, who went by the alias Jonathan Black, was initially charged in June 2017 and extradited from Morocco in April 2018.
Haddow has a long track record of financial misconduct in the UK and British regulatory authorities imposed an eight-year ban barring him from serving as director of any financial institution.
Meanwhile, the US Securities and Exchange Commission filed a civil case against Gata-Aura.
Now rebuilding her life as a lawyer, Ms Houghton is part of WhatsApp group with more than 50 other investors who want justice by claiming against the financial advisers who sold Bar Works.
“It has pained me to see the suffering of these people, like me, who have lost so much money to the hands of a criminal,” she said.
"I lost my job and had to leave the UAE and start a new life.
“Four years later and I am nowhere near where I was financially. The loss has changed who I am."
Updated: October 23, 2020 11:33 AM