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.
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.
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:
- I hereby make this declaration knowing that its contents will be relied upon by way of representation.
- 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.
- 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.
- 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.
- 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:
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.