UAE: 28 men sentenced to a total of 283 years for $173 million bank fraud

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The Abu Dhabi Criminal Court of First Instance has convicted and sentenced 28 men to a combined total prison term of 283 years for attempting to steal Dhs635 million ($173 Million) from the account of an Abu Dhabi bank.

The fraud was carried out by a bank employee who, upon accessing the bank’s electronic system with the password of another employee, transferred cash totalling Dhs635 million into the accounts of five companies in five different banks.  The Abu Dhabi Financial Prosecution, in coordination with Abu Dhabi Police’s CID, managed to recover Dhs625 million of the total cash stolen from the victims’ bank accounts within 24 hours after being informed of the fraud. The Financial Public Prosecution also issued an order to freeze the bank accounts to which the cash had been transferred, in addition to seizing 6,000 mobile phones that had been purchased with the stolen funds.

The convicted persons were ordered by the judge to return the remaining unrecovered sum of Dhs9 million to the bank. The men were also collectively fined a total of Dh635 million (an amount equivalent to the sum stolen) as well as ordered to pay a temporary civil compensation of Dhs21,000 to the bank, in addition to court fees.

The 28 men have since challenged the verdict handed down by the Abu Dhabi Appeal Court by denying all charges.  A retrial has been set for 11 September 2018.

Cayman Judge rules on “one of the largest Ponzi schemes in history”

A court ruling has addressed allegations that a prominent Saudi Arabian family was aware of a $330 billion Ponzi fraud. The 1,348-page Cayman Island Court ruling concludes a decade long family feud over Ahmad Hamad al-Gosaibi & Brothers Co. (AHAB) whose 2009 default was among the largest of the global credit crisis and spawned a global dispute that has involved courts in New York and London.

AHAB, which has interests in construction, shipping and hospitality, claimed Maan al-Sanea, a Kuwaiti businessman who married into the family and managed AHAB’s Money Exchange business, had engaged in unauthorized borrowing in the name of the al-Gosaibis, forging signatures “on an industrial scale”. Sanea, on the other hand, alleged the al-Gosaibis were fully aware of his actions. The judge found AHAB had “at all times been privy to and authorized Sanea’s activities” and that there was no evidence of forgery or bank document manipulation by him.  Further, the judge found the alleged scheme was so complex it could not be unwound; particularly as between 1981 and 2009, when the Money Exchange collapsed, its financial statements “deliberately and grossly understated” the extent of its borrowings and the extent of AHAB’s indebtedness to at least 118 banks around the world.

In the ruling, Chief Justice Smellie threw out the al-Gosaibi family’s $4 billion claim and a $5.9 billion counterclaim by the company belonging to Sanea. The judge noted that, in a period of just 9 years, 2,500 loans had been taken out by AHAB, many of which had to be repaid quickly and replaced by new loans, and by 2009 were maturing at a rate of 20 a day, making the rate of deception unprecedented. As a result, Chief Justice Smellie felt compelled to call the scheme “one of the largest Ponzi schemes in history” and state that “this type of Ponzi scheme had a much greater turnover than the scheme operated by Bernie Madoff”.

AHAB representatives are now considering next steps in light of the Court’s ruling. Whilst there is an automatic right to appeal in the Cayman Islands, a released statement from AHAB’s chief restructuring officer has confirmed that the earliest time any appeal is likely to be heard, if sought, is 2019.

International arrest warrant sought from Interpol by Dubai Authorities for bounced $58.2 million cheque

The Dubai Public Prosecution has issued a local arrest warrant, and is seeking an international arrest warrant, against an investor who was sentenced to three years in prison, in absentia, after supplying a business party with a false cheque for Dhs214 million ($58.2 million).

In spite of an agreement that was signed and later notarised by the two parties at Dubai’s Notary Public, the investor failed to honour the agreement and did not repay the money borrowed from the Claimant after handing the benefactor a guarantee cheque for Dhs214 million. In the UAE, issuing a bad cheque is a criminal offence under article 401 of the UAE Penal Code.

As the investor was sentenced in absentia, the accused will be entitled to a retrial once he is arrested or turns himself in to the authorities.

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