Independent experts have been appointed to calculate the total amount of money believed to have been lost to customers in an alleged fraud at Dubai-based online gold trading company Gold AE.
It is understood that Dubai Public Prosecution has launched a full investigation into the alleged fraud, after around 60 of Gold AE’s estimated 2,000 clients claimed their accounts were frozen last year with a total of AED12 million ($3.2 million) in funds they have been unable to access.
Since then, up to 200 other customers have come forward claiming their accounts have been frozen.
Sources told Arabian Business that “a smaller group of customers” allege they have lost at least AED300,000 ($82,000) each, and that the total amount of missing funds could reach in excess of $25-30 million.
This group hired lawyers last month in an attempt to commence legal proceedings against Gold AE.
The law firm is understood to have lodged an inquiry at Al Barsha Police Station that is now being investigated by public prosecutors and includes the appointment of independent experts, according to two well-placed sources.
However, it is understood that no case can be filed in the courts until the prosecution has decided against whom it should be directed.
Other Gold AE customers have reportedly filed separate complaints at other police stations across Dubai, prompting the president of the General Prosecutor’s Office to transfer all reports to one station to deal with as a single case, according to one of the sources.
As part of the investigation into the allegations, complainants will be called to Al Barsha Police Station to give testimony after which the prosecution will decide whether or not to file a criminal or civil case.
The law firm acting for the group of investors declined to comment, and Dubai Police said it was unable to provide such information to media.
Gold AE suspended its services in October. One month later, the Dubai Multi Commodities Centre (DMCC) free zone, within which the company is registered, terminated Gold AE’s trading licence, stating in a letter seen by Arabian Business 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 acting management of Gold AE, which claims to have been instated last March, filed a criminal case against its predecessors, which it claims left the company that month resulting in the appointment of Andres Gauthier as CEO. The other directors of parent company Gold Holding are listed on the public register of DIFC, where the company is registered.
Mo Nico Consari, who is named as managing director of parent company Gold Holding according to its website, has contacted Arabian Business to say he has no “business attachment [to] nor interest [in]” Gold AE and has never been a board member or employee of Gold Holding. He pointed Arabian Business to the list of Gold Holding directors named on the DIFC public register.
In a statement emailed to Arabian Business on Friday, Gauthier said he had been appointed by Gold AE’s board directors last March “to try to unravel the situation and recover as much client money as possible”.
“Outside the UAE and refusing to return, the [previous management] launched personal lawsuits against [the new management] for damages. The courts have yet to unravel this sordid tale.
“The [new management] have made efforts to recover client money and will continue to do so. All the [alleged] legal complexities, forgeries, false accounting and manually changed computer records will eventually come to light.”
A small number of Gold Holding executives were arrested in December. One was released and two remain in custody.
One customer who wished to remain anonymous told Arabian Business: “I am one of the many [allegedly] defrauded customers. While some customers may have actively traded, most of us saw this as a safe means to buy gold.
“It is ironic that our cautious approach has resulted in us losing substantial sums of money. I, myself, have lost 40,000 euros ($45,000) in this [alleged] fraud.”
Another customer said: “I am part of a group of some 200 defrauded customers exchanging information on the activities of Gold AE (and its holding company Gold Holding, registered in Dubai International Financial Centre [DIFC]).
“As of now, it is not clear who the target of legal action should be – current or previous management – nor how a criminal action would lead to a return of our money if the targets don’t have access to the funds or gold.”
Gold AE shareholders said they held an extraordinary general meeting in London last week to discuss the situation and work out how to return lost funds to clients.
A DIFC spokesperson said: “We are aware of a number of statements reported in the press by clients of a company that was registered and trading in the Dubai Multi Commodities Centre Free Zone (DMCC), known as Gold AE DMCC. DIFC Authority wishes to clarify yet again that Gold AE DMCC (Gold AE) is not a company based at DIFC and that it is not in any way regulated by the Dubai Financial Services Authority or the DIFC Authority.
“We have previously clarified that Gold AE is a subsidiary of Gold Holding, which is a DIFC-based holding company. From what the DIFC Authority has been able to establish thus far, there is no evidence that Gold Holding operated in any way other than being a holding entity for its shareholders and did not directly engage in operating and trading activities or engaged directly with Gold AE’s clients.
“We are also aware of multiple court actions filed between the shareholders of Gold Holdings and the clients of Gold AE in various court jurisdictions. DIFC Authority, therefore, does not consider it appropriate to comment any further on this matter at present.”For all the latest retail news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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