Developer faces fraud charge

The chief executive of Lake View Real Estate, the property developer behind a five-tower project in Ajman, has been arrested on suspicion of fraud, Dubai Police have confirmed. Up to 30 investors in the project in Emirates City, Ajman, lodged police complaints against AQ, an Indian national, claiming to have lost track of him at the beginning of the year, when work on the towers apparently came to a virtual stop. AQ was arrested on August 24 at the Rifaa police station in Dubai after a criminal case was filed against him.

"This person has been transferred to the Central jail," said a source at the Rifaa station, who also confirmed the case number. An officer at Central confirmed that he had been detained and was accused of fraud. "The case is being investigated by Al Rifaa police station," he added. The case was filed in Dubai and not Ajman, as the company was registered in the city. Although the project was launched in 2007, and many clients have already paid more than 40 per cent of the total cost of their apartments, construction has not started on any of the buildings. Only piling works have been completed on towers one and two, a Lake View employee said.

The first of the five 21-storey towers was scheduled for completion in the summer and the second this month, according to the contracts. "When I visited the project site in March 2009 I was shocked because I found that nothing was done at all, despite regular paying of the finance," said Salah al Din Arif, an investor who bought a flat in August 2007 that had been due for completion in November this year. Mr Arif said he had paid more than 40 per cent of his property's price.

The company also cashed post-dated cheques, investors said, although developers are required by law to register with the Ajman Real-estate Regulatory Agency and open an escrow account before cashing payments. The National has copies of a cashed cheque and of a letter of "apology" from the company to the bank. "They apologised to the bank for cashing my cheque in May but they never gave me my money back," said Mr Arif.

A Russian investor who complained to the police said he had booked a floor in a non-existent project and paid a booking charge of 10 per cent. "In September 2008, I was told by Lake View Real Estate that there would be two more pre-launch projects in Eye of Ajman, in addition to the other five towers. They said it was called Lake View Twin Towers." The following January, said the Russian, he had been promised a refund "as they were planning to cancel the Lake View Twin Towers". He said he never got his Dh418,000 (US$114,000) back and went to the police five months ago.

Optimum Foundation Company, which was completing piling work on the two towers, has also chosen to file a case against AQ. "Our work on the second tower has had to stop, because we needed the money from [Lake View Real Estate]," said an executive of the company. AQ is expected to appear before court in Dubai later this month. [e-mail]