How investors fell for a global scam selling space for start-ups

▶ Losses in global fraud expected to top $40 million with local investors likely to lose $15 million after backing US start-up selling bogus workspace developments, writes Nick Webster

UAE investors have told of losing their life savings to a scam selling bogus work spaces for start-ups across the globe.

The collapse of Bar Works and the high-profile arrest of Briton Renwick Haddow have exposed the Ponzi scheme.

UAE investors are estimated to have lost US$15 million (Dh55.1m), with global debts expected to top $40m.

Jocelyn Houghton, 29, worked for Emirates airline and saved $50,000 to put towards her first home. She was warned off investing in other scams in Dubai, such as Exential and UTMarkets, and persuaded to pile her savings into Bar Works.

“I was approached by an agent and told him it had to be a sound investment,” she said.

A trained lawyer, Ms Houghton did her own research into Bar Works and it seemed legitimate. “The money was my life savings. I was told I would get 125 per cent return on my investment over three years.”

At first glance it looked like the perfect opportunity to secure their retirement plans, pay for their children’s education or help buy their first home. But just months after handing over their life savings, as many as 150 investors are facing huge financial losses following the collapse of a US start-up company selling bogus workspace developments around the world.

Losses of US$15 million (Dh55.1m) are estimated from UAE investors alone, with global debts expected to top $40m after hundreds of investors piled their money into Bar Works.

Engineers, doctors and lawyers have all come unstuck from their investments, including Kamal Singh, who works in Abu Dhabi.

The father of two stands to lose $150,000 – money he had been saving to build a family home back in India.

“I was working in a nearby building in Abu Dhabi and saw this big Indian company selling investments, so I went in to take a look. It was the worst mistake of my life,” Mr Singh said.

“We exchanged business cards, and later received an email asking me to invest in Bar Works. It looked like a good opportunity. The returns were about 12 to 15 per cent a year. On exit, after either two or 10 years, we were to receive a further 25 per cent. We were told the plan was bomb-proof.”

The hotel seminar Mr Singh attended was one of hundreds held around the world in Singapore, India and Hong Kong, selling investment opportunities in Bar Works.

The American company claimed to provide workspaces in popular old bars and restaurants, but in fact primarily sold leases coupled with sub-leases that together functioned like investment notes.

The man behind the alleged con is Briton Renwick Haddow, a New York-based businessman with a murky track record in questionable financial dealings.

Haddow, 49, was arrested in Tangier this week after a notice was issued by Interpol.

His is charged with securities fraud in the US for allegedly cheating investors in what turned out to be a fake Bitcoin trading platform, and for Bar Works.

Scores of investors stand to lose their life savings in Bar Works.

Mr Singh was sold two units in San Francisco at a cost of $60,000, and another nine units in Istanbul. That took his total investment to $150,000.

“So many others have fallen into this trap,” he said. “We only knew of the involvement of Renwick Haddow after the problems started.

“The $90,000 I have invested is a bank loan, so I’m paying back Dh8,000 a month. It’s a huge commitment. Every day I go to work I think I’m not working for my kids, but to pay back this loan.”

Richard D’Souza, an investor living in Karama and working in the paint industry, invested $55,000 with his wife.

“Some friends of mine in the US did some due diligence and said Bar Works was a similar scheme to others that had been very profitable,” Mr D’Souza said.

“I was getting a monthly return until January, about $292 a month.

“In December, they called again and said the California operation was up and running and asked if my wife would like to invest.

“It was all of our savings for retirement.”

When the payments dried up, he tried to contact the broker who had sold him the deal. He called and left messages, but nobody replied.

“I finally got hold of one of them who said they had left the company as they had been working without a visa,” Mr D’Souza said.

“Then I realised something was wrong. I asked for a meeting and when I arrived, there were about 150 people there all asking the same questions as me.”

A Syrian doctor who works at a major Abu Dhabi hospital, who asked not to be identified, lost the $30,000 he had saved to educate his four children.

“They said it would be a good investment and they tried to push me for more money,” he said. “I’m glad I only lost $30,000.”

Jocelyn Houghton, 29, worked in Dubai for Emirates airline as a cabin crew member and had managed to save $50,000 to put towards her first home.

She was warned off investing in other notorious scams in Dubai, such as Exential and UTMarkets, but was persuaded to pile all of her savings into Bar Works.

“My money was sitting in a bank account in Dubai, and I wanted to invest in something,” Ms Houghton said. “I was approached by an agent and I told him it had to be a sound investment.”

As a trained lawyer, she did her own research into Bar Works and it seemed legitimate.

“I became cabin crew as I couldn’t find work as a lawyer in Dubai,” Ms Houghton said.

“The money was my life savings. I was told I would get 125 per cent return on my investment over three years.

“The agent became my friend. We would go out for coffee or lunch, and he was developing this bond to get me to invest.

“It was very attractive, so I signed up. It was everything I had in the bank. I thought it was all legitimate.”

One investor spent $150,000 to buy two units in San Francisco and nine in Istanbul