The acting management of a dormant gold trading company in Dubai has filed a lawsuit against its predecessors amid allegations of fraud and mishandling of funds that has reportedly left investors millions of dollars out of pocket.
Gold AE, a Dubai-based website that enables the online trading of gold and silver, wrote to its customers last week advising them that a criminal case has been filed in Dubai Courts and Bur Dubai Police Station against the previous management of the company.
In the meantime, the free zone with which the company is registered has set up a dedicated email address to compile customer complaints, and is also preparing to issue guidance to frustrated investors.
The Gold AE email, dated December 16 and seen by Arabian Business, states: “A criminal case has been filed in Dubai Court and Bur Dubai Police station…against the previous management to recover the asset, funds and commodities of clients and shareholders [following an internal investigation].”
The email adds that the acting management of Gold AE lacks “official access to the assets, funds and commodities that can be appropriately used to reimburse the clients their investment holding, due to mishandling of funds and the disappearance of the previous management.”
But it claims the acting management has been “trying to identify a solution for recovering the missing funds”.
Gold AE is registered with the Dubai Multi Commodities Centre (DMCC) free zone in Jumeirah Lakes Towers, and is a wholly owned subsidiary of a Dubai International Financial Centre (DIFC)-registered company, Gold Holding.
It is understood that the previous management team were replaced in March, resulting in the appointment of Andres Gauthier as CEO and, according to Gold Holdings' website, Mo Nico Consari as managing director.
Gold AE suspended its services without warning in October, according to a handful of its customers who claim not to have been able to access their accounts for several weeks.
One month later, the DMCC terminated Gold AE’s trading licence, stating in a letter to Gauthier that its grounds for doing so was on the basis that the company “has acted or is acting in breach of the terms of its licence or of [the free zone regulations or those of Dubai or the federation]”.
The December 16 Gold AE email to customers states that, during an internal investigation, Gold AE’s acting management found that members of the previous management team “had used significant amounts of client and shareholders’ money and transferred [it] to multiple locations, including Switzerland, Jordan, Turkey and Saudi Arabia.”
It noted that acting management was not given access to any of the bank accounts in Switzerland, Jordan, Turkey and Saudi Arabia “where the money is kept”.
The email added: “Several attempts were made to contact the relevant authorities but all in vain. We are still pushing the matter with legal authorities to bring this unfortunate set of circumstances to an end.
“Your support to take further actions…should help to speed up the recovery process of the investments.”
It is understood that Gold AE’s customers have been urged to initiate arbitration in Dubai’s courts on an individual basis in order to recoup their lost investments.
However, customers claim they have been left in the dark about what has been going on at the company and have been unable to trade their product or access their accounts.
One customer, who asked not to be named, told Arabian Business they were in touch with around 60 of Gold AE’s estimated 2,000 clients and that that minority alone claims to have around AED12 million ($3.2 million) locked up in the company.
It is thought the total amount of missing funds reaches $25-30 million.
The source claimed Gold Holding “has failed to take responsibility and that DMCC and DIFC are playing ping-pong with us customers while we go to appeal to try to solve this matter.”
The source added: “No one is taking responsibility to resolve this and we as customers are feeling very helpless.
“Even the police are not taking this up and are directing us towards the court. So we are in the process of appointing lawyers to represent us in court.”
Dubai Police and Dubai Courts did not immediately respond to requests for comment.
A spokesman for the DMCC said in an emailed statement to Arabian Business: “DMCC is aware of allegations relating to Gold AE, a wholly-owned subsidiary of Gold Holding Limited - a DIFC-licensed entity.
“We have conducted an internal investigation into the allegations of fraudulent activity by Gold AE. As a result of this investigation, DMCC has terminated the trade licence for Gold AE and have notified Gold Holding Limited accordingly.
“By terminating the trade licence of Gold AE, the company is mandated by law to cease all of its trade operations and not undertake any further commercial activities. We are closely monitoring the matter and have verified information that relevant authorities are taking necessary next steps.
“In its capacity as licensing authority, DMCC is unable to provide specific financial or legal advice to any customer of Gold AE. We encourage strongly that all customers of Gold AE contact Gold Holding Limited for further information.
“In order to assist customers of Gold AE who are experiencing difficulty in receiving information from Gold AE, DMCC is preparing further guidance for all clients of Gold AE, which will be issued shortly.
“In the meantime, please send any enquiries to firstname.lastname@example.org. We will forward them on to Gold Holding Limited who, we understand, is collating customer information at this time.”
A spokesperson for the DIFC said: “Dubai International Financial Centre is aware of the action taken by DMCC against Gold Arab Emirate [AE], an e-commerce trading company licensed by DMCC.
“We wish to make it clear that although Gold AE is a subsidiary of M/s Gold Holding, which is a DIFC-based holding company, Gold AE and M/s Gold Holding Ltd are two separate entities.
“We wish also to clarify that M/s Gold Holding Ltd is, to our knowledge, not involved in any trading operations, client-facing business affecting clients of Gold AE or the provision of any financial services. Accordingly, it is not regulated by the Dubai Financial Services Authority.”
Neither Gauthier nor Consari responded to direct requests for comment via LinkedIn, and when Arabian Business emailed the public enquiries email address for Gold Holding, email@example.com, it received a reply from Mohammad Abdel Khaleq Abu Al Haj, who is a member of Gold AE’s previous management team facing allegations of fraud.
Al Haj insisted in his email that Gold AE’s existing management team were responsible for the alleged fraudulent activity. He also claimed that requests by him for meetings with shareholders to discuss management issues had been refused.