Check your cheques to avoid being defrauded

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Check your cheques to avoid being defrauded

This businessman’s travails after being defrauded of Dh460m by trusted accountant and aides must be an eye-opener for all who leave their cheque books and finances with others and highlight banks’ failure in protecting interests of customers

By Marie Nammour

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Published: Fri 18 Oct 2013, 12:01 AM

Last updated: Tue 7 Apr 2015, 6:38 PM

A businessman based in Dubai for the last 20 years is facing the consequences of being too credulous. He has already spent a year and a half in jail, has been divested of over Dh480 million and is still facing the prospect of more cases and claims being filed against him.

All these because the 50-year-old Iranian trusted his accountant too much — being a compatriot — and his bank failed in protecting his interest as much as it should have, especially when he is a high net-worth customer.

His ordeal, as recounted by his lawyer, Adel Awad Jr, started to-wards the end of 2011.

The businessman, identified as S. only, has been living in Dubai and running four companies manufacturing/dealing in chemicals for 20 years. He entrusted his compatriot accountant with the finances of the companies, bank transactions and collecting money transferred through exchange agencies.

And the accountant took him for a royal ride in a fraud worth Dh480 million which is believed to have run for four months while S. was in Iran and Germany taking care of other companies he owned there.

Forgery of signature

The accountant, 30, identified as M., who has been in provisional detention in connection with many cases of forgery, breach of trust and fraud, allegedly forged the businessman’s signature on as many as 257 cheques for the total value of Dh311 million.

“He handed those cheques to other individuals, also Iranians, who encashed them. At a certain point, my client’s account ran out of balance and the cheques bounced,” Awad Jr explained.

Apart from the forgery, the accountant, with the help of his brother and the owner of an exchange agency — also Iranian — allegedly embezzled around Dh125 million in cash.

“It all happened when my client was away in Germany taking care of businesses he owned there,” the lawyer said.

On another occasion, the accountant forged 160 cheques worth about Dh100 million and handed them to others to encash them. “He had a well-devised plan. He aimed at causing my client trouble and put him away in jail and for that, he sought his accomplices’ help to keep himself out of suspicion,” Awad Jr said.

Money wired and gone

M. and his accomplices, who the lawyer referred to as a “mob”, forged an authorisation letter which wrongly stated that S. had entrusted them with ordering money transfers from Iran totalling Dh112 million. “They sent an application for wiring money for business purposes claiming they have an authorisation from my client as ‘they need liquidity to run the business’. Accordingly, the money was sent to them. The authorisation proved to be fake later.”

Bank at fault

“When my client confronted the bank’s administration about the reason why he had not been notified of all withdrawals, the only justification he got was that the bank did not have any suspicion because the businessman’s dealings used to be huge.

“In February this year, we filed a civil lawsuit against the bank claiming Dh1.6 billion in damages, including the interests on the original capital. The bank stands at fault as it did not verify the authenticity of my client’s signatures on the cheques. The bank did not protect the best interest of one of its valued and outstanding customers. It also fell short of notifying and alerting my client of the transactions that were being conducted on his ac-count,” Awad Jr pointed out.

As for the dud cheques, the bank did not bother to check the signatures on them. “But it (the bank) was rather hasty in giving subsequent statements that there was no sufficient balance for those same cheques. And for all the legal repercussions my client has been enduring ever since, we are suing the bank and claiming compensation in accordance with the damages he suffered because of the bank’s shortcoming in the routine security procedures. This lawsuit is still being examined by the civil court and it may take quite some time,” he added.

Entangled in cases

“My client was thrown in jail for more than a year and a half. He was released only after it was proved, according to the Dubai Crime Lab report, that the cheques were forged and falsified. While the prosecution has completed investigation into some of these bad cheque cases, it is still probing other similar cases filed against my client and we don’t rule out that more bad cheque complaints could come up from police stations as well.

”Of those bounced cheque cases, there is one case which was filed against his client in Sharjah.

“The complainant in Sharjah’s case was one of those individuals who had been handed the cheques by M. The authorities sought the help of the Dubai Crime Lab in examining the cheque. The lab’s re-port said that even though the forgery was almost perfect, small flaws were still there.

”When caught, the accountant claimed he did not have anything to do with the forged cheques and claimed at times during the investigation that it was S. who had given them to him. “At other times, he alleged he was given the cheques by a woman employee at one of S.’s companies.”

The Public Prosecution interrogated 18 people while 15 others have fled the country. The runaways had filed bad cheque criminal complaints but those cases were closed later by the prosecution.

This lawyer came from the Unites States especially to take up S’s cases.

“I have been taking up his cases for around 15 months. I expect these entangled cases to take one more year,” said Awad Jr, who has more than 18 years of experience in law and has been practising in New York.

Nine bad cheque cases have already been referred to the Court of Misdemeanours. Nine other similar cases are still under investigation by the Public Prosecution. And other complaints might also be filed against S. in the future.

Life turned topsy-turvy

“Apart from the 18 months my client spent behind bars in Al Aweer Central Prison, he has been en-tangled in criminal cases. He lost hundreds of millions of dirhams and that is without mentioning all the stress, mental pain and financial toll the trouble had on my client’s life and that of his family. His business was brought to a halt during the time he was in jail. After he was released, he reopened his companies.”

However, the businessman is depressed and mentally wary. “That would be the normal state of mind of anyone who falls a prey to fraudsters because of his good intentions and faith in others.”

He has also been deprived of his freedom. Because of these cases, S.’s passport has been held back by the Public Prosecution and he is denied permission to leave the country.

Lessons to be learned

Banks have the responsibility to instruct their customers on the importance of keeping their cheque books in safe custody, unreachable for others.

“Banks should advise their customers that it is very necessary to make sure not to misplace or leave their cheque books with anyone. Not anyone, no matter how close he thinks the person is, can be trusted with a cheque book. No matter how much someone trusts his staff or relatives, it would always be advisable for him to keep track of his account records,” the counsel said.

This story is a fair example of how greedy someone could be, he added. “The person concerned, whose cheque book has been misused, will face legal trouble and go to jail. Even if the authorities found out that he is a victim of forgery sometime later, it would be too late as none can pay you back the time you lost whether in jail or in court and prosecution,” Awad Jr said.

Banks need to modify their procedures. “They should first impose restrictions on issuing cheque books. They should also refrain from accepting and honouring cheques, especially when they are for a big amount, without first checking with the person who had issued the cheques,” he concluded.

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