Dubai financial regulator unearths Internet fraud

The Dubai Financial Services Authority (DFSA) obtained injunctions of the Dubai International Financial Centre (DIFC) Court on Wednesday evening to close down fraudulent web sites in which predominantly Australian and Singaporean investors had already invested at least $600,000.The modus operandi involved setting up web sites for fictitious and non-existent entities claiming to offer financial services within the DIFC — the Dubai Options Exchange, the UAE Commodities Futures Board, and Cambridge Capital Trading.

The fraudsters had created dummy web sites on which they posted detailed fabricated documents, which looked like official ones. "The documents appear to have been copied from genuine exchanges and regulators," said DFSA chief executive, David Knott, while addressing the media yesterday. Investors were also told that the Dubai Options Exchange was regulated by a specialist derivatives regulator, the UAE Commodities Futures Board. Injunctions were brought against a person named Husam Abu Amara, and Globalstar Telecom & Technology, forcing them to close down the fraudulent web sites. The orders also relate to Internet service providers (ISPs).

The DFSA's application to the court stated that the defendants had falsely represented that the Dubai Options Exchange and the UAE Commodity Futures Board existed in the DIFC and that the DFSA Authorised Firms were members of the Dubai Options Exchange, and could trade currency options on behalf of investors. Prospective investors -all of whom have so far been located in Australia and Singapore but could also be in other countries- were cold-called by representatives of Cambridge Capital Trading. They were given a convincing story about the opportunity to make good returns based on the current weakness of the US dollar against currencies like the Australian dollar. Investors were directed to contact these fake websites and asked to transfer funds into a bank account in Malaysia.

It is likely that money from the Malaysian account has been "bled" to an offshore account. Cambridge Capital Trading also created a fictitious London address and a telephone contact point in Dubai. This turned out to be the office of Globalstar and was serviced by a digital answering machine. The false websites were established through "GoDaddy", an ISP in Arizona, USA, using a billing address in Singapore. Although the Singapore authorities are chasing down this address, it is expected that it will lead to a cyber café with a prepaid access account.

The DFSA also stresses that there is no reason to believe that the ISP was aware of these websites being used for fraudulent purposes. The DFSA conducted the investigations in association with the Emirates Securities and Commodities Authority (ESCA) and the Dubai Police, and worked closely with other international regulators to bring the scam to an end within six weeks. It is hoped that quick action has limited losses to the public. One person has been detained in connection with the fraud. His passport has been confiscated and the case referred to Dubai Prosecution.