Suspects in massive fraud case due in court this week

Two Emiratis and two Sudanese men are due in court facing charges of swindling investors out of Dh320 million.

ABU DHABI // Two Emiratis and two Sudanese men are due in court on Sunday facing charges of swindling about 1,300 investors out of Dh320 million (US$87m). The unlicensed investment scheme allegedly began in 2004 and continued until April of this year, when investors suddenly stopped receiving dividends. Abu Dhabi Police said they were told of the fraud by an Emirati who had given one of the Sudanese suspects, identified only as EH, Dh100,000 (US$27,000) to invest in a company identified as SH Trading Company.

The investor said he was promised monthly returns of 40 per cent on his investment. According to police, when a period of time had passed and he did not receive any dividends, he notified the police. Lt Col Ibrahim al Hana'i, head of the police department's organised crime unit, said one of the Emirati suspects, identified only as SE, told investigators that in 2004, he met EH, who asked for an investment.

SE agreed and began receiving high dividends on his investment, the amount of which was not revealed. SE then was asked by EH to get a legitimate business licence for an electronics trading company in the UAE. Encouraged by the profits, SE agreed, opened SH Trading and invested Dh40,000 (US$10,890) with EH in 2005. After receiving dividends, SE went on to invest Dh700,000 in the company. SE encouraged friends and family also to put money into SH Trading. Later, SE opened investment opportunities to the public. By the time SE and EH were arrested, they had persuaded 1,300 people to invest.

When investors began asking SE why their dividends were not being paid out, he confronted EH who told him that business was not going well. According to police, SE contacted a lawyer and was told the investments he was collecting from people were in fact illegal. SE then asked EH for the money he had invested. In response, EH gave SE a cheque drawn on a UAE bank for Dh320 million to pay back investors on June 12. But when SE went to deposit the cheque, he was told there were insufficient funds to cover it and filed a police complaint against EH. Both men were arrested.

The authorities provided no information on the other two men allegedly involved in the scheme. The case is being referred to by prosecutors as the "Shindigawy Case", but neither the police, nor court staff were able to say why. Youssed al Ebri, acting Abu Dhabi chief prosecutor, warned investors to be wary when investing in ventures that promised an unusually high return and to check the legitimacy of those they were investing with. Not all brokers must be licensed, he said.