Investment scam arrests

Police arrest two men accused of running an unlicensed investment scheme that cost 1,300 people a total of Dh320 million.

Two men have been arrested for alleged Dh320 million investment fraud.

ABU DHABI // Police arrested two men accused of running an unlicensed investment scheme that cost 1,300 people a total of Dh320 million (US$87.1m), with some losing as much as Dh700,000. The men, an Emirati and a Sudanese, allegedly promised investors a monthly return of as much as 40 per cent on their initial investments. Abu Dhabi Police said the investment scam had operated since 2004 and continued to attract investors until April of this year, when dividends suddenly stopped. The scheme, as described by police, is reminiscent of the "case of the missing wallet", in which more than 8,000 people were promised monthly returns of 30 to 40 per cent and lost an estimated Dh400m. The alleged mastermind of that fraud, A Q Qublan, is awaiting trial with other defendants in that case. Today, the police said they were told of the latest fraud by an Emirati who gave the Sudanese suspect, identified as E H, Dh100,000 to invest in S H Trading Company. Police said the man called them after a period during which he had not received any dividends. Lt Col Ibrahim Hamad al Hana'i, who heads the Abu Dhabi Police organised crime unit, said the Emirati suspect, identified as S E, told investigators that he met E H in 2004. S E initially invested an unknown amount with E H and began receiving high dividends. S E then was asked by E H to get a legitimate business license for an electronics trading company. Encouraged by the profits, S E agreed and licensed SH Trading Company, which the men co-owned. S E invested Dh40,000 in 2005. With high dividends continuing, S E carried on investing in the company. He encouraged friends and family to also put money into SH Trading and later opened investment opportunities to the public, the police said. Until April, investors received dividends. After some of them asked S E about the missing dividends, he confronted E H, who told him that business was not going well. According to police, S E then contacted a legal consultant and was told that the investments he was collecting from people were illegal. S E then asked E H for the Dh20m that he had invested in SH Trading. E H on June 12 gave S E a cheque drawn on a UAE bank for DH320m, to pay back investors. When S E tried to deposit the cheque, he was told there were insufficient funds to cover it. He then filed a police complaint against E H, and both men were arrested. [e-mail]