DUBAI // A local businessman has been accused of embezzling US$36 million (Dh132.2m) by a group of investors planning a class-action lawsuit in Italy.
The case is a complex financial puzzle that stretches from the British Virgin Islands through Europe to the UAE. The Italian investors do not know what happened, only that they lost their life savings.
"I feel that it won't come back, this money," said Paolo Pasquini, 44, a father from Tuscany who lost €50,000 (Dh230,000). "Nobody will help us."
The money was gathered from about 400 investors by Gforex, a company based in Milan before it went into bankruptcy.
The owner of Gforex, Claudio di Fonzo, said he sent the money to a brokerage account that he opened with MR, a Pakistani businessman based in Dubai, to trade on the foreign-exchange market.
"You give money to these companies in a way that you can buy and sell foreign-exchange transactions," Mr di Fonzo said. "You buy euro, you sell dollars. You try to gain."
He claimed MR siphoned money from the account and blocked his access to the trading platform.
MR's lawyer in Italy, Matteo Cornali, denied the allegation, blaming the Gforex bankruptcy on mismanagement.
"My client believes that Gforex has issued false statements to their investors, committed fraud in their bookkeeping and misinformed the Italian regulator," Mr Cornali said.
Reached by phone, MR said he was out of the country, had nothing to say and hung up.
The investors are caught in the middle of the accusations and counter-accusations.
"We are families, many of us," said Maria Bietolini, 51, a communications consultant from Milan who lost €70,000. "I'm working but many of the investors are retired people … they feel humiliated."
The Italians have split into groups seeking different solutions. Those organising the class action say they are suspicious of Gforex's role and want to sue Mr di Fonzo as well.
He says the story began in 2008, when he visited Dubai and met MR, with whom he decided to open a foreign-exchange trading account.
The Pakistani businessman's local company, GTL Trading, is licensed by the Dubai Multi Commodities Centre. But Mr di Fonzo said the account opened was with another of MR's companies, operating out of Switzerland.
In 2009, MR bought a third of Gforex, Mr di Fonzo said, but a year later the Pakistani businessman mentioned financial problems.
Mr di Fonzo said he asked for Gforex's money back and eventually received "some hundreds of thousands of euros".
"When you open an account with a broker your money is supposed to be segregated and you make operations with this money on the market," Mr di Fonzo said.
"We did this. We did not lose this money with our operations."
Gforex last met MR in spring last year, he said. "We were really at the end of our company business because we had to give back moneys to customers," Mr di Fonzo said.
"We had a final meeting in which we were saying, OK, we need to give our money back. And he was proposing to us what we believe was a big Ponzi scheme."
Gforex went into liquidation soon after.
Mr Cornali tells a different story. He said MR worked closely with Gforex through a British Virgin Islands company called Global Tradewaves.
Global Tradewaves "did suffer market instabilities" in 2010, Mr Cornali said.
But at that point, MR and Mr di Fonzo signed an agreement saying any money Global Tradewaves owed Gforex had been converted into a $20m loan, which GTL Trading in Dubai guaranteed.
Mr Cornali said Global Tradewaves repaid some money but the company had been unable to repay the full amount because the agreement needed to be clarified.
Gforex has not responded to attempts to renegotiate, he said.
A financial regulator based in the US said the international nature of the case will make it hard to resolve.
"You look at the finance sector, there's no such thing as a geographical boundary any more," said Joe Borg, chair of the international committee at the North American Securities Administrators Association.
"Unfortunately, when it comes to laws and prosecutions it's all local."
Some of the investors say they feel desperate. VL, 53, a journalist from Sicily, lost hundreds of thousands of euros invested in Gforex.
"[It was] the savings of three generations," he said. "My father, my mother, my granny, my whole family."
Others feel helpless. "We are very sad, believe me, because you know how life is hard," said Rita La Rocca, a housewife from Sicily whose family lost more than €100,000. "We hope and that's it."