Dubai Regulator Cracks Internet Fraud

by Lorys Charalambous, for LawAndTax-News.com, Cyprus

16 February 2007

The Dubai International Financial Services Authority (DFSA) announced on Wednesday that it has obtained injunctions in the Dubai International Financial Centre (DIFC) Court against individuals and companies involved in internet fraud.

The orders against Husam A. Abu-Amara, Globalstar Telecom & Technology and others relate to closing down the operation of fictitious websites called the Dubai Options Exchange, the United Arab Emirates Commodity Futures Board and Cambridge Capital Trading, that were claiming to offer financial services within the DIFC. The orders also relate to internet service providers. The orders were made by the Chief Justice of the DIFC Court, Sir Anthony Evans.

The DFSA’s application stated that the defendants had falsely represented that the Dubai Options Exchange and the United Arab Emirates Commodity Futures Board existed in the DIFC, and that DFSA Authorised Firms were Members of the Dubai Options Exchange and could trade currency options on behalf of investors. The fraudulent scheme targeted Australian and Singaporean investors who were cold-called by representatives of Cambridge Capital Trading, who directed investors to the false websites and asked for funds to be transferred into a bank account in Malaysia.

The DFSA conducted a joint investigation with the Emirates Securities and Commodities Authority (ESCA) and the Dubai Police, and worked closely with other international regulators such as the UK Financial Services Authority, US Securities and Exchange Commission to Australian and Securities Investments Commission and the Malaysian Securities Commission. In addition to the injunctions, the Dubai Police have arrested an individual in connection with the fraud. His passport has been confiscated and his case referred to Dubai Prosecutions. The investigation is continuing.

Commenting on the case, David Knott, Chairman of the DFSA stated:

“This was a carefully planned scam using advanced technology to convince investors that the fictitious Dubai Options Exchange was a legitimate entity within the DIFC. The perpetrators took great care to construct realistic documents to fool investors and to conceal their identities. They even invented a fictitious regulator called the UAE Commodity Futures Board to give comfort to investors."

“The investigation of internet fraud requires sophisticated electronic surveillance techniques and close co-operation between international regulators. I am pleased that by working jointly with ESCA and Dubai Police, the DFSA has closed down a fraud that was truly international in nature. Our counterparts in the United Kingdom, USA, Australia and Malaysia have all contributed to this successful outcome."

Knott concluded:

“At this stage we cannot be certain about the size of the scam or investor losses, but we know that approximately US$600,000 has passed through a bank account set up by these fraudsters in Malaysia. We hope that our actions have prevented any further substantial losses to the public. Our investigations are continuing.”

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