Investors who pumped millions of dirhams into a business start-up in New York are demanding answers from the brokers who sold them the deals.
As The National reported last week, hundreds of people in the UAE were promised up to 125 per cent returns on their investments into hot-desking firm Bar Works, that transformed old restaurants and bars into office space.
Units were sold for $30,000 each in the US, and for $10,000 in Istanbul. When it emerged the mastermind behind the scheme was rogue businessman Renwick Haddow, it was revealed the project was in fact a $40 million (Dh147 million) Ponzi scheme and doomed to failure.
Hundreds of units were sold in the UAE, from the offices of Square Yards – a real estate firm selling Dubai property to rich investors in India, Singapore and Hong Kong.
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Read more:
How the Bar Works mastermind made a career of duping investors
UAE investors caught up in Bar Works financial scam
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Those who have now lost their life savings are demanding answers as to how much the brokers knew about Bar Works and its shady operator behind the scenes.
One of the investors who lost $150,000 said he was contacted by the Square Yards chief executive in May, warning him there may be issues with future payments he was owed.
Investors were given the names of Bar Works relationship managers who were dealing with their portfolios, but now they are unsure if those names were real, or just convenient pseudonyms.
“I was given so many names,” said Mr Singh, who bought nine units in Istanbul in March, two months after Haddow’s involvement in Bar Works became public knowledge.
“Jonathan Black, Franklin Kinard,Julian Tzanev, Sam Aura, Graham Edwards, and Jessica Mayo – now I realise they were all likely false names to entice us in to hand over our money.”
Black is understood to be the alias used by Haddow, and the signatory on many of the investment contracts.
When they complained to Square Yards, they received a reply from the CEO’s office inviting them to join a class action lawsuit against Bar Works, but lawyers would be charging $650 an hour for their services.
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Read more:
UAE Bar Works agent quit after 'realising what they were asking us to sell'
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Square Yards told investors they were only made aware of the FBI investigation into Bar Works at the end of June, just weeks before Haddow was arrested in Tangiers.
In an email to investors, Square Yards CEO Tanuj Shori told them his staff were fully complying with the FBI investigation.
“Recent news concerning Barworks, Inc.(sic) has made us increasingly concerned that representations made by that company were not true, and in fact, may well have been fraudulent,” the email from CEO Tanuj Shori said.
“We ourselves are shocked at these revelations and have been coordinating and communicating with a large number of people to come up with a way forward for our investors.
“We intend to be in contact with the Securities and Exchange Commission to fully cooperate and assist with their investigation.
“Our hope is that, if there are any Barworks assets available, the SEC will collect them into a fund for the benefit of all investors to share equally and that is one significant reason why we will be cooperating with the SEC.
“While we are hopeful that SEC will be able to ferret out any available assets that can be recovered for the Barworks investors, we are also aiding our investors by retaining an independent investigator to search for useful information about Barworks and its owners as well as assets that may be recoverable.
“We will share the information uncovered by the investigator with SEC and, if the SEC deems it appropriate, we will share that information with you as well.
“We have also learned that at least two civil lawsuits have been filed in US courts against Barworks on behalf of Barworks investors.”
Square Yards told investors that Zoe Miller and Jonathan Black - who identified themselves as founders of Bar Works, may have misrepresented their identities.
Zoe Miller’s true identity is believed to be Zoia Kyselova, a close associate of Renwick Haddow, they said.
The brokers also confirmed Jonathan Black is a fictitious person and probably an assumed identity for Haddow.
Samuel Aura, who identified himself to be senior member and equity holder in Bar Works, claimed he was only a master agent and never an employee or shareholder, Square Yards said.
The brokers said Bar Works had not been paying the assured rental to their investors as agreed under their contract.
Haddow was arrested in Morocco and could face up to 40 years in prison if convicted.