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Dynasty Zarooni fraud probe widens, bail set at US$109 million
Source: BI-ME and Dow Jones Newswires , Author: BI-ME staff
Posted: Sun January 25, 2009 12:00 am
UAE. Dubai’s public prosecution has raised the bail to AED 400 million (US$109 million) for Dynasty Zarooni’s Chairman Kabir Mulchandani, who is being held by police on fraud allegations, as more aggrieved investors lodge complaints, officials said.

Mulchandani, whose mobile phone was turned off when called on Thursday, has previously denied any wrongdoing.

An official at the public prosecution said in an interview for Zawya Dow Jones that Mulchandani is being held on allegations of “fraud and embezzlement” and that he would have to pay the full bail amount in order to be released.

According to lawyers at Al Shaali, one of a number of Dubai-based law firms acting on behalf of the investors pursuing Mulchandani, the cases against the Indian businessman and Dynasty Zarooni involves projects in Dubai and Abu Dhabi worth more than AED 5 billion.

“We’re currently handling about AED 500 million worth of cases,” Said Al Akkad from Al Shaali said.

The law firm says the final value of cases against Dynasty Zarooni could rise much higher as other investors involved in Dynasty Zarooni’s apparent AED 21 billion real estate portfolio come forward.

“There are a lot more investors out there who want to file complaints against Dynasty Zarooni. The whole process takes a long time,” said Al Akkad.

Mulchandani was arrested by police in early January and has since been referred to the public prosecution. Mulchandani’s bail was set at AED 76 million when he was first arrested.

Hilal Al Zarooni, Mulchandani’s local partner in Dubai, referred the media to his lawyers Global Advocates & Legal Consultants when called. Global, who are also representing Mulchandani and the company Dynasty Zarooni, declined to comment on the case.

Investors at six of Dynasty Zarooni’s developments worth approximately AED 6.35 billion have so far lodged complaints with the police, according to Al Shaal.

The complaints so far refer to property at the company’s Ebony & Ivory, Berlin Tower, K Hotel, Panoramic Heights, Sheffield Classique and Al Quorashi Tower developments.

The cases include the taking of deposits and instalment payments without depositing the money into an escrow account, the issuing of contracts worth just one dirham after the full value of the property has been paid and the misrepresentation of property during the sale.

Some investors at the Ebony and Ivory project in Dubai’s Jumeirah Lake Towers district have also lodged a complaint with the police against Dynasty Zarooni for allegedly misleading them about the progress made on the building’s construction.

Prominent advertising campaigns in Dubai showed pictures of the Ebony and Ivory real estate project under construction 24 hours a day, but a visit to the site revealed that no work was underway.

In an advertising campaign published in local media last year the company said that as a company it had earned AED 20 billion in revenue, as well as AED 6 billion for its investors.

Lawyers say Mulchandani is also being investigated for allegations that he conned a small group of wealthy investors into pledging large sums of money with the promise of a hefty monthly return.

Investors say Mulchandani received subscription fees of AED 300,000 a month from 12 members of the so-called 'investment club'.

Mulchandani promised a return of AED 1 million a month after six months after investing their money in Dubai real estate projects.

The investors say Mulchandani has so far failed to deliver any returns, or their initial capital.
 

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