In a major trade fraud scheme that has rocked Dubai’s business community, an Indian-owned company called ‘Dynamic’ has allegedly swindled multiple businesses out of goods valued at over 12 million Dirhams (approximately Rs 29 crore) before vanishing without a trace.
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Company
The company, which had established operations in Dubai Silicon Oasis (DSO), has abandoned its offices and warehouses, leaving them completely empty. The Indian owner, who spearheaded this fraudulent operation, has reportedly fled the UAE.
The perpetrators employed a calculated strategy to build trust with suppliers. They initially made small cash purchases and gradually obtained short-term credits with post-dated cheques for various products, including iPhones, building materials, laptops, and even 15,000 towels. According to Khaleej Times, the fraudsters abruptly disappeared two weeks ago, leaving suppliers with bounced cheques and vacant offices.
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Trail of Victims
A Pakistani businesswoman who supplied food items, lost goods worth 800,000 Dirhams despite initially receiving a 300,000 Dirham upfront payment. Similarly, MMC Global Information Technology’s Wajeeh Shahid lost Lenovo laptops and routers valued at 267,000 Dirhams after an initial successful transaction convinced him of the company’s legitimacy.
The scam’s impact has been widespread, affecting approximately 200 companies and consumers. Jernaus Britto of Offsetfi Trading, who lost 78,000 Dirhams in laptops and network cables, revealed that the scammers presented legitimate-looking trade licenses and fabricated audit reports to establish credibility.
Mohammad, a sales representative for a Chinese power tools company, not only lost 52,000 Dirhams in goods but also his job after being blamed for insufficient verification. A Lebanese supplier lost 180,000 Dirhams in high-grade hotel towels, expressing how the incident has eroded trust in new business relationships.
Some victims discovered their stolen goods in a Sharjah Industrial Area warehouse, but were unable to reclaim them as the warehouse owner claimed to have purchased them legally.
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Victims have filed complaints at Al Barsha Police Station, reporting both the fraud and the bounced cheques. Police investigations have uncovered links between Dynamic’s fraudulent audit reports and other suspicious companies, including Royal Luck Food Stuff and Harbine Middle East Marine Services, which had similarly defrauded suppliers before disappearing.
This elaborate trade scam orchestrated by ‘Dynamic’ highlights significant vulnerabilities in Dubai’s business ecosystem, particularly affecting small and medium-sized enterprises. The fraudsters’ sophisticated approach of building credibility through initial legitimate transactions before executing their scheme demonstrates the evolving nature of commercial fraud in the UAE. The case has not only resulted in substantial financial losses exceeding 12 million Dirhams but has also shattered business confidence and trust among traders in Dubai’s traditionally robust trading community.
The incident underscores the crucial need for enhanced due diligence processes and stronger regulatory frameworks to prevent such fraudulent activities. It serves as a stark reminder for businesses to implement more rigorous verification procedures when dealing with new trade partners, regardless of their apparent legitimacy. As investigations continue and authorities work to track down the perpetrators, this case may lead to stricter monitoring of new businesses in free zones and more comprehensive background checks for company registrations in the UAE.
How did the company ‘Dynamic’ build trust with suppliers before executing their fraud?
Dynamic built trust through a calculated strategy of making small initial purchases in cash, followed by successful transactions with post-dated cheques. For example, they paid one supplier 300,000 Dirhams upfront before defrauding them of 800,000 Dirhams worth of goods. They also presented valid trade licenses and fake audit reports to appear legitimate. This pattern of small successful transactions convinced suppliers of their credibility before they executed larger fraudulent deals.
What was the total scope of the fraud and what actions have been taken by victims?
The fraud amounted to over 12 million Dirhams (approximately Rs 29 crore) and affected around 200 companies and consumers. Victims included suppliers of various goods ranging from electronics and building materials to food items and hotel towels. The affected businesses have filed complaints at Al Barsha Police Station, reporting both the fraud and bounced cheques. Police investigations have revealed connections between Dynamic and other fraudulent companies like Royal Luck Food Stuff and Harbine Middle East Marine Services. The victims are now urging UAE authorities to treat this as intentional fraud.