The Company is Dead, Long Live the Creditors

UAE Financial Scams Continue

Dubai, the city of gold, has witnessed myriad financial scams in recent years. Most of the scams in UAE relate to trading companies that are able to silently operate under the radar of regulatory authorities. In UAE, the frequency of reports related to the financial scams has increased tremendously in recent years. Since 2013, approximately 15 trading companies have disappeared after buying millions worth of goods against post-dated checks. In every scam, it’s the ordinary businessmen that get hurt as they do not have sufficient skills to vet the trading company.

Reliancee Group was the biggest financial scam that the UAE saw in recent years. The swindlers at Reliancee Group used to operate from a plush two storey office building located in the industrial area. Reliancee Trading Company affected around 50 businesspersons in UAE and left the country with several millions of dirhams. Reliancee Trading, along with all other phony trading companies, adopt the same tactic of purchasing goods from the supplier against a post dated check and receiving money in advance from the trader to whom the goods were to be delivered and leaving the country after accumulating millions. All the checks issued by Reliancee Group bounced in the month of May and the staff of Reliancee Group vanished on the day when the checks were to be honored.

Apart from Reliancee Group, Barnabio General Trading LLC, is the recent company that has duped businessmen by issuing Dh.10 million worth of dud checks. This company was setup by Ayaz Syed, who claimed to live in Mumbai before coming to UAE for business.

Most of the trading companies that are set up to cheat with the market participants are established by Indians and Pakistanis with an Arab partner and shareholder.  

Modus Operandi of Trading Scams

Step 1 A phony trading company sets up a website and rents out an office in a popular area in Dubai or Abu Dhabi.

Step 2 These trading companies acquire trading license that allow them to do business in the UAE. These trading companies then approach other firms to buy goods.

Step 3 Now the trading company set up by a con artist starts making purchases and honor all its financial obligations mainly to gain trust among other market participants.

Step 4 After the trust is established, the trading company starts to place large orders with the suppliers against a post-dated check. This should act as an indication that something is wrong with the trading company.

Step 5 With the goods in hand, the trading company starts to sell them at a rock bottom prices that are well below the market prices. This is done to quickly turn those goods into cash.

Step 6 Before the checks can be cashed, the con artist(s) that have set up the whole trading company now closes the doors of office and fly out of the country along with millions of dirhams.