Don’t fall prey to Ponzi scamsters
dubai — Despite authorities’ continuous awareness efforts against bogus investment portfolios, several people still fall prey to Ponzi schemes.
The number of people who end up losing all their hard-earned savings after investing in bogus schemes — lured by high revenues over a short span of time — are increasing every day, according to reports.
In recent years, the UAE witnessed several such bogus portfolios involving hundreds, if not thousands, of victims. Some of them still have outstanding claims before the courts.
In one of the most recent Ponzi schemes that were seen by the Dubai Courts, over 500 complaints had been filed against two Indian executives, who were involved in a $200-million fraud.
Hundreds of investors were lured into currency trading (Forex market) with promises of high monthly profits. At some point, the promoters stopped paying the investors, who then approached the court to recover their money.
The duo were sentenced to more than 500 years each in jail — one year for every criminal case.
Victims should not hesitate to take legal action as the defendant might dispose of his property and the claimants could consequently lose their chance to get their money back.” Abdul Moneim bin Suwaidan, lawyer
Some victims have received payments. Others did not get their money back yet because no more assets owned by the other party could be found in the UAE. The execution for civil lawsuits is ongoing. ” barney Almazar, advocate
Don’t go after illegal projects
Emirati lawyer Abdul Moneim bin Suwaidan of Bin Suwaidan Firm for Advocates and Legal Counsels warned against such portfolios, saying they are illegal.
“It usually starts with people amassing funds from their friends who also tell their friends about it. A fictitious project would then start where people are promised a high percentage of monthly profits, which are far higher than what banks deliver. The investments are made without guarantees, except for the cheques that are issued as security deposits to tempt and invite more depositors.
“In the first few months, people would indeed get a percentage of profits. However, they are unaware that it is paid from their own money, while the remaining larger amount of the deposit would be the scamster’s share.”
Such financial dealings are prohibited by law, and only banks are authorised to engage in such a business, with an authorisation from the Central Bank.
“With the security cheque (issued against the amount invested), an investor can file a criminal complaint at a police station. For civil claims, they resort to the civil court.
After the legal proceedings, the court may preemptively order sequestration of the property — real estate, cars, bank accounts and whatever assets the holder of the portfolio has locally and offshore.
“In some high-profile cases, special committees were formed by the Dubai Courts upon a royal decree. Those committees were assigned with assessing and liquidating the properties and freezing the funds and accounts of the individuals and businesses in question, for distribution among the depositors on ‘investment quotas basis’,” Bin Suwaidan explained.
If there is no such committee, the claimant, who filed a civil lawsuit, is compensated on the basis of ‘first come first served’, irrelevant of any other victim who did not file such claims.
“Victims should not hesitate to take legal action as the defendant might dispose of his property and the claimants could consequently lose their chance to get their money back. The execution judge may give the defendant a chance and (may) grant him bail for a month or two to arrange for a right way to settle his dues to the creditors,” Bin Suwaidan pointed out.
The criminal side of the case has nothing to do with the civil claim. “Whoever issues a dud cheque in such investments will serve time in jail, unless the complainants relinquishes their right to pursue the legal proceedings following a settlement.
“Better be safe than sorry. Such investments should happen through banks only. With banks, everything happens by the book and people’s funds and rights will be safeguarded,” the lawyer advised.
Filipino advocate Barney Almazar — who took up many cases for the victims of the above-mentioned currency trading — told Khaleej Times that some of his clients received compensations.
“Some of them have received payments. Others did not get their money back yet because no more assets, owned by the other party, could be found in the UAE.”
Almazar added that the claimants got payments of the same amounts they invested. “The execution for civil lawsuits is ongoing. There are claims which I filed on behalf of many clients. Some of them are still awaiting the execution of civil judgements that had been issued. All assets (of the sued party) in the UAE have been distributed. Now, authorities are looking for any bank accounts, properties and all kinds of possessions the defendants have outside the country,” he added.