Organized gangs, lax law led to laundering of over KD 700 million in real estate fraud

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Media empires sold ‘mirages’ to customers

KUWAIT CITY, July 20: The volume of money laundering operations related to real estate fraud taking place in Kuwait in recent times is estimated at about 700 million dinars, and those behind the operations belong to an organized gang that took advantage of the regulatory inaction to create fake entities and managed to sell “mirages” to customers with the help of the famous media empire that promoted those property, reports Al-Qabas daily.

They took advantage of their critic followers on one hand and lack of accountability by government agencies for their fraudulent activity on the other hand, until the number of victims reached about 10,000.

The daily quoting real estate sources noted these operations were not performed individually; rather they were organized, noting the procedures of fraud are similar in all suspicious companies.

They affirmed the similarity of fraudulent methods used by several companies between 2013-2017 is evidence that those behind the fraud operations are organized gangs, and in Kuwait, they found an incubating environment for such operations- especially as the term money laundering was not in circulation in the country at the time.

They pointed out that the issue of money laundering through “real estate fraud” takes precedence not only in Kuwait but the region. This was proven through a Court of Cassation ruling, which considered the activities of a company as a form of money laundering. From 2013 to 2017, a feverish and significant activity emerged about the number of real estate exhibitions held in Kuwait amid generous and very good offers to own real estate inside and outside Kuwait.

The real estate exhibitions were then surrounded by a set of official guarantees that encouraged many people to make purchases through exhibitions.

The same sources stated “it was very difficult to discover any fraudulent operations by the companies involved, because the companies surrounded their operations with procedures confirming their actions were real. They did so through obtaining legal licenses and also followed all regulatory procedures that were determined by government agencies coupled with other factors that helped them to deceive many victims, which led many to seal purchase contracts at the time, then after a while, the companies failed to deliver their units or rents.

They pointed to a number of reasons leading many of those affected to fall into the real estate fraud trap, saying:

1. The ease with which regulations governing sales operations in Kuwait are considered binding legal legislation; As the content of the regulation indicates that no project may be proposed inside the exhibition, except it has been reviewed by the official authorities, and that the company preserves the assets of approvals and hands them to the Real Estate Department at the Ministry of Commerce and Industry to grant the license. Therefore, the victims found themselves in front of legislation and official routine confirming the real estate exhibitions were real and without fraud.

2. The companies have real documents for some projects inside and outside Kuwait certified by concerned official authorities.

3. A number of projects are already under construction, some of which have already been handed over to customers but found out the property were not owned by those companies.

4. Providing the option to pay via local banks as payment for those property were not in cash but through the local banks, which gave more confidence to customers.

The same sources indicated the people affected by real estate fraud deserve compensation from the state for the losses they sustained for several reasons, saying those victims numbering more than 10,000 had paid the money based on official permit from the Ministry of Commerce and Industry and during approved exhibitions. After the Ministry’s strictness in granting licenses for exhibitions, real estate fraud operations have disappeared, which means the defect was in the old exhibitions, not those affected.

Based on the previous data, requests for compensation are due, according to the law, constitution, ethics, and all criteria, because purchase were made based on an existing, organized and arranged legislation and oral statements of officials in the media.

Therefore, all judicial precedents in Kuwait obliges the state to compensate those who fall victim to the mistakes of administrative authorities. On the reasons for the prevalent money laundering related crimes in recent times, sources confirmed that the weakness of supervisory authorities in fulfilling their role of monitoring the movement of money is the reason behind the explosion of money laundering operations.

The sources called for holding some famous media personalities involved in false promotions accountable for promoting companies involved in real estate fraud, and deceiving customers to partner in real projects. Some of them were even “bragging” about huge received in exchange for advertisements created or endorsed for those companies.

The huge sums received indicate their participation in fraud, and therefore, the celebrities deliberately lied to promote the projects. Some of them even claimed to have already received real estate and units, which proved to be incorrect later! They noted a number of celebrities were involved in money laundering cases that did not come out of the blue, despite the tricks they used in concealing their illegal work, such as inflating the value of advertisement contracts, which is clearly money laundering.

Sources confirmed that Sabah Al-Ahmad Seaside region had the largest share of real estate fraud operations in Kuwait, especially with the emergence of a number of companies in simultaneous times to announce the sale of real estate units and fake chalets that later turned out that the land was owned by a person who subsequently declined to hand over those units to clients due to fees imposed on the land by Ministry of Finance.

This is in addition to the fact that the land is mortgaged by a number of banks, coupled with the company’s violation of regulations on converting a private housing area to an investment site.

Lawyer Ali Al-Attar sent awareness messages to the people affected by real estate fraud, saying: The silence of those affected exposes others to the same fraud and taking inaccurate measures in the interest of the swindlers could lead to the loss of rights of those affected.

He pointed to the need for the affected people to raise issues related to money laundering against the companies to ensure the recovery of their money again, because money laundering cases work to track the dinar obtained through various bank accounts that removes the curtain on the movement of money poured into the interest of the real criminals hiding behind those companies and people, unlike other tracks of litigation.

Al-Attar said he sent several messages to officials on behalf of a number of those affected, which included many scenarios and solutions capable of solving these problems, but so far, he has not seen any positive interaction from them, which caused an increase in the number of money laundering operations in Kuwait.

He called on the Ministry of Commerce not to renew the licenses of any of the companies – except they submit a bank statement and undergo examination by the money laundering department to compare sales and the sum in the bank account, which reveals the practices of fraud and money laundering. He added, “It is imperative that any citizen coming to buy real estate units adhere to the rule of Pay and Receive”.

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