Abu Dhabi Matters2

THE ABU DHABI INVESTMENT SCAM

A NEW PRINCE

We have all heard about the old Nigerian prince scam – wherein a mysterious prince gets in touch with you and offers you thousands of dollars. And all you have to do is transfer him some money upfront so he can send your vast riches to you.

Sounds too good to be true, doesn’t it? That’s because it is.

Now, there is a new scam that is specifically targeting start-ups – and the Nigerian prince has been replaced with His Excellency Hyper Rich Oil Tycoon from the UAE.

I WILL MAKE YOUR DREAMS COME TRUE

This tycoon wants to invest in your start-up – can you imagine anything more exciting? He is absolutely fine with the valuation that you put forward and he does not see the necessity of carrying out due diligence because he is ready to invest. This is a dream come true and, on top of all that, he wants you to go to Dubai to iron out the details.

At this point, you may begin to feel nervous. His email address points to a website that was registered less than one year ago, and his lawyer’s email is just a gmail one. Both emails have in their signatures addresses in downtown Abu Dhabi… and yet he wants you to go to Dubai in only 14 working days. On top of this, the fact that you weren’t able to find any useful information about this mysterious tycoon (or his lawyer) doesn’t help your restlessness.

You know this sounds strange, unorthodox, bizarre even. Like the Nigerian prince, it seems that all which glitters is not gold. And then, when you receive his latest email, you read the catch in his own words:

“According [to] the local laws, you will have to file, register and notarize the transaction and your accompanying documents at the court of First Instance in the UAE as required by law before we can be authorized to release the investment amount to you.”

And the cost to you? Almost $10,000

Abu Dhabi Matters2

THE FARCE

Luckily, this investor doesn’t seem very sophisticated about crafting a scam that has any resemblance of legitimacy… And the paperwork that his lawyer produced is farcical at best.

It recently happened to one of our clients: their company is UK based, with no operations or interests in the UAE – why would they need to file anything in another country? They are fundraising and this investor contacted them out of the blue with a tempting message:

“Assalamualaikum Warahmatullahi Wabarakatuh,

I will be interested to provide you with the required funds for a good return on investment.
Contact me with a copy of your detailed business proposal for further discussions.
Best Regards,

His Excellency Dr. Xxxxx Xxxxxxx
Global Tower, Plot C21,
East 11, Electra Street,
Abu Dhabi, United Arab Emirates”

Shortly after, we received an attachment with a scanned ID and what they thought might pass for a proof of funds. They didn’t send a statement from a bank or any other verifiable third party – but just a PDF with a “solemn declaration”:

“I, [name of the supposed investor] hereby  solemnly  and  sincerely  declare  as  follows:

  1. I  hereby  make  this  declaration  knowing  that  its  contents  will  be  relied  upon  by  way  of  representation.
  2. I  hereby  confirm  and  declare  that  I  have  available  in  excess  of  £5,000,000.00  (Five  Million  Great  Britain Pounds  Only)  on  deposit  with  my  bankers  as  approved  for  equity  investment  to  [name of a private individual that has nothing to do with this and that our scammers have probably forgot to edit out] and  that  these  funds are  good,  clean  and  clear  and  of  non-criminal  origin.
  3. I  further  declare  that  said  funds  have  been  earned  in  the  course  of  normal  commercial  business  and  are of  commercial  origin  and  legally  generated  and  the  information  supplied  in  this  documentation,  and  the  funds  and assets  involved,  are  not  in  breach  of  any  Money  Laundering  Regulation/Accord  howsoever  interpreted  and defined,  whether  within  the  host  state  of  the  transaction  or  internationally.
  4. I  further  declare  that  I  have  full  and  complete  legal  title  and  authority  to  commit,  place  or  invest  those funds  as  I  so  choose,  decide  or  confirm,  and  that  I  have  initiated  any  actions  of  my  own  free  will,  without  any further  solicitation  or  influence.
  5. I  further  declare  that  there  are  no  liens,  commercial  obligations  or  encumbrances  of  any  kind  afflicting  or attached  to  said  funds  and  that  there  are  no  other  currently  valid  or  pending  commitments.

I  make  this  solemn  declaration  conscientiously  believing  the  same  and  by  virtue  of  the  provision  of  the  statutory declarations  act.

Signed  and  Sealed  this  17th  day  of  February,  2021”

Needless to say, this is not a valid proof of funds. This, if nothing else, should be a major red flag.

Here instead you can see the handout that they’ve sent in relation to the supposed notarisation costs for the company. This really transforms a dubious and preposterous proposition into a fraudulent one:

EXERT CAUTION

Founders of start-ups sometimes have to deal with these kinds of scams, and that’s far from the only obstacle they will encounter. There is no way to avoid muddy situations, so what lesson can you take away from these Abu Dhabi scammers?

As a founder, you must facilitate the due diligence that any investors will carry out on your company, but it is equally important to do your own due diligence concerning your investor. It is something that makes sense for many different reasons but it is absolutely essential in cross-border transactions, or when you are not 100% sure about the legitimacy of your investors.

A FEW ADDITIONAL WORDS FROM OUR SIDE

We cannot disclose the name of the false Abu Dhabi investor due to the possibility of his assumed identity having been stolen from someone innocent, and we do not intend to bring harm to who is potentially another victim of dubious people.

At the same time, this article is meant to leave an on-line trace that founders may find useful if they’ll ever find themselves in similar situations. Please always think twice if an investor seems too good to be true – and involve a trusted mentor or an advisor to help you judge the situation.

Also, you can get in contact with us, and ask us what we think about your situation. This predatory behaviour hurts the whole market and we’re committed to helping founders throughout their funding journey: just send us an email here and we’ll give you our feedback… no strings attached.

Abu Dhabi Matters2

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