853e7f0ec96ea210VgnVCM200000e66411acRCRDapproved/thenational/Articles/Migration/2010-09Appeal for Dh1bn scam put on hold753e7f0ec96ea210VgnVCM200000e66411ac____Appeal for Dh1bn scam put on holdThe appeal of 94 defendants convicted of swindling more than 5,200 investors out of almost Dh1bn was adjourned yesterday.<p>ABU DHABI // The appeal of 94 defendants convicted of swindling more than 5,200 investors out of almost a billion dirhams was adjourned yesterday after financial experts presented the court with a report into the scam, one of the UAE's largest "Ponzi" schemes.
Under the scheme, people were encouraged to pay money into a property investment company that offered annual returns of up to 40 per cent, prosecutors claim.</p>
<p>Some were paid for their first few months in order to encourage them to invest further. Many sold property and cars to put cash in the bogus scheme and encouraged their family and friends to give money.
At the appeal court yesterday, more than 80 people, including victims and defendants, appeared before the judge.
Defence lawyers asked for the adjournment to give them time to study the financial experts' report on the documents and cheques presented to the court in the original case.</p>
<p>The defence also asked the court to re-examine witnesses involved in the original case, including a police officer and two computer experts.
The defendants were convicted in February by the Abu Dhabi Criminal Court of fraud and forgery.
The ringleader, an Emirati identified as A A Q, was sentenced to three years in jail and fined Dh100,000 for fraud. He was also sentenced to a year in prison and a Dh50,000 fine for running a company without a licence, a further three months for hiring a foreign labourer who was not under his sponsorship and three months for dealing in loans illegally.
The other defendants, including A A Q's sister and two brothers, were sentenced to two years in prison and fined Dh50,000 for assisting in fraud and possessing illegally obtained money.
The fraud scheme is the largest known Ponzi scheme in Abu Dhabi and the largest in the country in terms of victims.
Prosecutors say the ringleader promised investors annual returns of 30 to 40 per cent, paid monthly. He wrote more than 5,000 fraudulent postdated cheques to investors as a guarantee their investment was secure.
To lure the victims into increasing their investments, some of the victims were paid for their first few months. Many sold their belongings to raise funds and encouraged others to get involved.
The Abu Dhabi Judicial Department recovered Dh134million, which was distributed among the victims. In 2008, the Judicial Department ordered that A A Q's assets, as well as those of his siblings, be auctioned off. It was estimated that just three of their 63 vehicles were worth a total of more than Dh1m.
A A Q, his siblings and several associates were arrested in April 2008. Victims included expatriates and nationals from across the Emirates.
The case was adjourned until October 25.
The court has yet to rule on the appeal of four people convicted over a similar scheme, in which 4,832 people were defrauded of Dh800m. Three were sentenced in February to four years in jail and fined Dh150,000. The fourth was sentenced to two years and fined Dh50,000.
In another case that has yet to come to trial, 325 victims are alleged to have been duped out of Dh140m.
<p>A Ponzi scheme is, in essence, a pyramid in which money flows from the bottom to the top. As the pyramid grows, those at the bottom move towards the middle - and a cut of the cash flow.
The problem with a Ponzi scheme is that it has no underlying assets. When the money stops coming in, it collapses.
The schemes are named after Charles Ponzi, whose financial shenanigans in America in the early 20th century won him short-term cash, mid-term prison and long-term infamy. He died in poverty.</p>