Fraudster Sydney Lemos to appeal against 500-year sentence for Ponzi scam in Dubai
‘Net closing in’ on masterminds of the $200 million fraud as victims are urged to register claims for their losses
A fraudster handed 500 years in prison for his role in a US$200 million (Dh734.5m) exchange scam has launched an appeal against his sentence, which was one of the heaviest issued in the UAE for a financial crime.
Sydney Lemos is understood to have initiated a costly appeal against the jail term for his role in the Exential fraud, which was a Ponzi scheme.
His Indian family has instructed lawyers and say he was running a legitimate foreign exchange business.
Wilbur Menezes, a lawyer, told The Times of India that Lemos was guilty of a civil wrong, not criminal.
“Sydney Lemos was running a legitimate forex trading business wherein customers knew the risks involved, in furtherance of which they entered into agreements,” he said. “At the most, the actions may make out a civil wrong for contractual breach.”
Lemos was jailed in April with a colleague, Ryan Fernandez. Both were sentenced for a year in each of more than 500 criminal cases.
Lemos’s wife, Valany, who left Dubai for Goa in January 2016 and has not returned since, pointed the finger at other Exential relationship managers.
The appeal came as investigators urged victims to submit official legal claims and evidence of lost investments to help them claw back funds.
Liquidators dealing with the collapse of Exential’s parent company, FCI Markets, have also advised clients to submit a “proof of debt” letter to give them the best chance of recovering their cash.
The court-appointed liquidator, Kalo, of the British Virgin Islands, and Carlton Huxley, a UK financial investigation company, claim to have recovered assets of more than $6m.
Letters have been sent to investors known to have had a financial relationship with FCI Markets to establish who is entitled to a share of the recovered money.
“This is the first part of a several-stage process in getting money back for the victims,” said William Ferguson, Carlton Huxley’s lead investigator.
“Not everyone will have got these letters because not everyone is shown as having a relationship with FCI Markets. It is imperative that people receiving these letters fill them in quickly and accurately and get them submitted as soon as possible.”
Investors ranged from Filipino churchgoers and Emirates airlines cabin crew to many others looking to build a nest egg.
Exential’s managers said that clients could open an account with a $25,000 deposit and the money would be invested in foreign currency, then traded when markets fluctuated using its particular algorithm.
Exential promised profit of up to 120 per cent. But any profit that was paid out was from the deposits of later investors – which is the mark of a classic Ponzi scheme – rather than from any actual profit.
Early investors profited significantly, to the tune of about $2.5m, including those who encouraged friends and colleagues to sign up.
The focus has now shifted towards those “bad faith” investors who knew the scheme was doomed to failure.
Mr Ferguson, who has been working for Exential clients since November 2016, said others could face criminal charges for their role in the fraud.
“It is very important people understand Sydney Lemos is the face of Exential, but not the ultimate controller,” he said. “We know who and where the masterminds of Exential are and the net is closing around them.
“They will not be able to hide behind their veneer of respectability and claims of being legitimate business people. Unless they approach us and start some serious efforts to work with the international liquidators and lawyers, they must expect a similar fate to Sydney Lemos.”
One of the Dubai lawyers acting for the scores of Exential’s clients is Barney Almazar, director of Gulf Law’s corporate-commercial department.
“Perpetrators of financial crime are not your ordinary criminals,” Mr Almazar said. “They are sophisticated enough to know the financial sector and are taking advantage of the safeguards.”
In the UAE, victims of financial crime can directly claim compensation for losses under the Criminal Procedures Code, which allows them to file a civil claim at any stage before the criminal court.
Local judgments awarded in favour of Exential’s clients in the UAE can also be executed in foreign jurisdictions where the funds can be traced.
“These criminals are using their victims’ money to prolong the case and evade justice,” Mr Almazar said.
He said it would be difficult to prove criminal intent by those who encouraged others to invest.
“Simply encouraging others to invest is not punishable by law,” Mr Almazar said. “Criminal intent must be established first before a person can be prosecuted.”
The focus has now shifted towards those ‘bad faith’ investors who knew the scheme was doomed to failure