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Thu 24 Dec 2015 12:58 PM

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Dubai gold retailer speaks out over fraud investigation

Dubai AE seeks to offer explanation to investors as it files legal case against former management

Dubai gold retailer speaks out over fraud investigation
Gold bars

A Dubai-based gold company has issued a statement to investors attempting to offer clarity over an alleged fraud thought to involve up to $30 million.

Gold AE, which enables the online trading of gold and silver, had its licence terminated last month by the Dubai Multi Commodities Centre (DMCC) free zone with which the company is registered.

Frustrated clients of Gold AE say they have been unable to access their accounts since, as the company is unable to trade.

They also claim they have not been told what has been happening with the company, or when their money will be returned.

One source claimed that just 60 of Gold AE’s estimated 2,000 clients have a total of $60 million invested in the company, and the total amount of missing funds is thought to reach $25-30 million.

Amidst the confusion, Arabian Business reported on Wednesday that Gold AE’s parent company – the Dubai International Financial Centre (DIFC)-registered Gold Holding – has filed a criminal case with Dubai Courts and Bur Dubai Police Station against the previous management of the company, alleging fraud and mismanagement of funds.

An email sent to customers on December 16 and seen by Arabian Business states that, during an internal investigation, Gold AE’s acting management found 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.”

Following publication of the story on December 23, Gold AE’s acting management sent an email to clients attempting to explain the situation. 

The email below, which was copied to Arabian Business, stated:

“Dear Client,

“A group of minority shareholders of GOLD HOLDING suspected that there were questionable financial transactions being undertaken in Gold AE DMCC ("the Company"). Acting on these suspicions they initiated internal investigations.

“During the course of the investigations the entire then management team abruptly resigned with no notice. Since the majority shareholders also seemed to be unavailable, the minority shareholders did not accept this resignation.

“However, these persons went to DMCC, submitted their resignations and managed to get their visas cancelled.

Following this, in August 2015, Mr Andre Gauthier [was] appointed as the manager of the Company so that investigations continued and, once completed, necessary action [could] be taken to secure the interests of the clients and shareholders of the company.

“His appointment took effect from August 9 2015. When he took over, new management realised that he now had access to more information concerning the activities of the previous management and realised that there had been substantial withdrawals from the company’s account to the personal accounts of some of the management and majority shareholders.

“Management has also uncovered information with respect to the existence of a bank account with Arab Bank (Switzerland) Ltd in Switzerland in the name of the Company.

“An attempt has been made to approach this bank but, since none of the current management or minority shareholders are signatories to the account and, due to the stringent Swiss banking laws and regulations regarding confidentiality, no additional information or access has been provided by the bank.

“In order to try and secure/recover monies that had been taken out of the accounts of the company, Mr. Gauthier in his capacity as manager has filed various cases as against the recipients of the funds from the Company (Dubai Police ( Bur Dubai Police Station), Case No: 24378).

“The minority shareholders are doing everything within their powers to support him in his efforts to recover these monies that were withdrawn from Gold AE in questionable circumstances.

“DMCC has alleged that some of these activities undertaken by the previous management are in breach of DMCC’s rules and as such they have taken the decision to terminate the license of the Company. We are working closely with DMCC to find a solution and in the meanwhile, we request that you bear with us.

“In the meanwhile, as a statutory consequence of the license being terminated, the trading platform of the Company has to shut down as of the date of termination of the license which is 24th November 2015.

“We trust the forgoing is of assistance. Sincerely.”

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Hany Elhosary 3 years ago

How this happened at Dubai, the first in everything, it was the last thinking come to mind that I'll lose my money like this happened and in a very quiet way !!! Where is the fast actions ? The only thing that makes Dubai different than other countries around the world is the fast action and active authorities, we hope our money come back to us, I still can't believe what happened, it's crazy

Mitesh Bhalla 3 years ago

This has been one of the biggest frauds and has affected so many families. For the benefit of one so many people and their families suffer. The laws in this country for such businesses and companies should be stricter and monitored by government on regular basis so they can't cheat people so easily and get away with it. Further if such a fraud happens there should be a quick action to punish such people before they skip the country like Abu Al Haj in this case. #DMCC as a regulator was also very careless here and just cancelled the Gold AE company license to quickly get out of the picture without warning the company's customers or thinking about their interests.

I request #DubaiPoliceHQ and other authorities to look in to this and get justice for the victims to win the trust of people back and assure them that any money invested in #Dubai and its economy is safe and people can trust the law here. This will boost every investors confidence.