The case of the UAE-based The Abraaj Group has entered a new legal phase but in the United States this time. Its founder Arif Naqvi, one of its arrested officials in New York, faces a series of fraud charges and inflated property values.
US authorities have arrested a former CEO of the Abraaj Group, which collapsed last year in the world’s largest private equity insolvency, on charges of fraud. He was arrested immediately after arriving in New York with his wife and son to look for an academic college for their son, according to Bloomberg.
Mustafa Abdul Wadood, a former administrative partner, was arrested in the US on Thursday in New York where he remains in federal custody.
Former founder and CEO Arif Naqvi was arrested on Wednesday in the UK and is awaiting extradition to the US for trial in the same case.
“The government moved forward because this defendant was present in the U.S. this week unexpectedly,” Assistant U.S. Attorney Andrea Griswold said in a hearing in Manhattan.
Abdel-Wadood said he was not guilty and was scheduled to return to court on April 18, next Thursday. After graduating from the American University in Cairo, he received a master’s degree from Georgetown University in Washington and was arrested at a hotel while in New York while looking for a college for his son.
His lawyer, Benjamin Brafman, refused to comment after the court and did not give the names of the schools the family was looking for. Al-Naqvi’s lawyers in Dubai did not immediately follow an e-mail asking him to comment on the charges, according to Bloomberg.
Founded in 2002, Abraaj has become the largest private equity fund in the Middle East and one of the most influential investors in emerging markets worldwide with holdings in the healthcare, clean energy, lending and real estate sectors across Africa, Asia, Latin America, and Turkey.
Last year, however, Naqvi surrendered control after it was found that the company’s main revenue had not covered operating costs for years.
Abraaj, which managed to manage about $ 14 billion, was forced to liquidation in June 2018 after a group of investors, including the Bill & Melinda Gates Foundation, conducted an audit to verify the mismanagement of the alleged funds in its health care fund.
Naqvi and Abdul Wadood are accused of inflating the value of the Dubai-based company and stealing hundreds of millions of dollars.
Prosecutors say that between 2014 and 2018, the two men, in collaboration with others not identified in court papers, inflated the value of Abraaj’s investments in emerging markets by more than $ 500 million artificially.
Prosecutors said the company used investment funds to cover its operating expenses without informing investors.
Naqvi is also accused of stealing investors’ money for himself and his inner circle, including Abdul Wadood, a resident of Dubai, UAE. Both were also charged with conspiracy, electronic fraud, and securities fraud.
In the court, Griswold said the evidence against Abdul Wadood included secret calls and meetings, encrypted messages and millions of documents and computer files.
She also explained that the United States planted a geographical locations tracer on Abdul Wadood’s phone, while he was wearing a sports jacket, a black shirt, and jeans, and did not speak during the deliberations.
Naqvi was indicted in the UAE for a $ 217 million check that ended in a three-year prison term, although he was outside the UAE at the time.