A vacation rental scam in Dubai could have netted criminals tens of millions of dirhams, says an agent who sold Evernest Holiday Homes.
An employee who joined the company in 2020 told exclusively The National how he quickly grew from just a few properties to over 200 and two teams of over 20 agents.
Tenants and landlords duped by the property management company before its demise late last year are likely to have lost a total of 48 million dirhams in deposits, fees and prepaid rent.
The Dubai Department of Economy and Tourism (DET) has confirmed that it is investigating the matter.
“We consistently advise all clients and investors to review the relevant guidelines advised in the 2020 Vacation Home Guide to ensure their rights are protected,” said Khalid Saeed bin Touq, Executive Director of Tourism Operations and Classification at the DET.
Victims can report concerns or scams to [email protected] or by calling +971 600 55 5559.
Advantageous rental offers
The scam involved Evernest renting properties from landlords, promising high returns from rental income from subletting the properties above market rates.
What actually happened was quite the opposite.
Evernest provided landlords with post-dated checks and then sublet the properties at an extremely low annual rent.
The catch is that bargain-hunting tenants of Evernest have prepaid rent for the entire year.
The agent, who used the name Jason, which is not his real name, said the landlords probably owed around Dh25 million and the tenants had paid around Dh22.5 million.
“In the beginning, the three main owners were pretty laid back and the targets weren’t that crazy, so there was no stress,” Jason said.
“It was easy for me to climb the ladder because there were not many employees at the time.
“We started to achieve our goals and that’s when we started to grow.”
Business appeared to be booming for Evernest at the end of 2021, with over 60 apartments rented in the last quarter of the year.
Base salaries for agents were relatively low at around Dh5,000, but could double in sales commission.
“At the end of 2021, they asked us to hand over all our mobile phones because they didn’t want us to be bothered with work over Christmas,” said Jason, who estimates he owes her around Dh12,500 in salary payments.
“They were promising landlords a lot more than they were asking tenants, so it didn’t fit at all.
“We were told a new team was coming. When I look back now, I realize that was the exit strategy.”
The empty 17th floor offices of Sidra Tower in Al Sufouh and API Trio Office Tower in Barsha are the last remnants of the scam, which is currently under investigation by authorities.
Victims with nowhere to go
British computer scientist David, who declined to give his real name, handed over Dh108,000 to rent a high-rise apartment overlooking Dubai Marina.
Like more than 450 other tenants and landlords, he was shocked after realizing the business had disappeared before millions of dirhams, just days after his check was cashed.
“It was my first rental after recently moving to Dubai,” said David, who works for an online payment company.
“I was told that the place I was looking for in Dubai Marina would only be taken off the market once I paid a deposit.
“As soon as I told the agent that I had sent the money, the communication stopped.”
Two days later, still without news of a move-in date, David managed to contact an agent who confirmed his worst fears that the money was gone and he had lost his dream home.
Evernest Holiday Homes has registered as a business with the DET, but its tourism license is due to expire later this month.
Registered holiday homes in Dubai can only be legally rented for a maximum of three months.
Canadian businessman Michael paid a full year upfront for an apartment in Dubai Marina in September.
“They asked for Dh100,000 upfront, Dh8,000 security deposit and some other administration fees,” he said.
Michael, who also wouldn’t give his real name, moved into his apartment overlooking Dubai Marina with spectacular views of Bluewaters Island and beyond in early November.
He had no contact with the landlord until the man knocked on his door Tuesday to serve an eviction notice.
“I had no idea what was going on and was shocked,” Michael said.
“I was suspicious when the cleaner didn’t show up two weeks ago.
“I tried calling Evernest to find out what was going on but none of the numbers worked.”
A trip to the Evernest office in Barsha confirmed his fears, with premises abandoned except for another landlord and tenant in a similar situation.
Dozens of complaints had been pinned to the door of the company’s main administrative office.
Some tenants are waiting for angry landlords to knock on the door and threaten eviction, while others have already been disconnected from utilities and are without electricity or water.
The DET urged people looking to rent properties to follow the guidelines.
Khalid Saeed bin Touq, Executive Director of Tourism Operations and Classification at DET, added, “DET’s Dispute Management Team is always available to support all parties and find amicable solutions.
“Whenever a complaint is received from tenants, they will be notified of the outcome directly by the DET once the investigation is complete.
“The DET also regularly revises legislation and guidelines in line with the development and evolution of the international tourism and hospitality industries.”
Owners offered legal advice
Michael Kortbawi, a lawyer with BSA Legal at DIFC, said those responsible for the fraud can expect to be hunted down.
“Fraud is an internationally recognized crime, which means it can lead to the involvement of Interpol, which could issue international arrest warrants for the perpetrators,” he said.
“This would likely lead to the arrest of the perpetrators in the country to which they have now fled.
“Further forensic work would be carried out in an attempt to trace the money obtained through the fraudulent scheme, ideally resulting in compensation for the victims.”
Mr Kortbawi advised tenants to always check a landlord’s documents and ask for proof that the party they are renting to has permission to sublet a property.
“The owners will have to take legal action against Evernest in order to obtain a conviction for fraud,” he said.
“This appears to be a clear case of fraud, as evidenced by his well-planned scheme to deprive the ultimate landlords of rental income, so Ernest can get the biggest rent from his tenants before suspicion is lifted.
“The objective would be to obtain an arrest warrant against the Evernest executives followed by a follow-up and seizure of the money obtained fraudulently.”
Mr Kortbawi said landlords could consider legal advice before taking eviction notices against tenants who secured their homes at below-market rates.
“They should seek to reach an agreement where the tenant pays additional rent with an extension of the lease, thereby achieving a fair outcome for both parties,” he said.
Evernest Holiday Homes has been contacted for comment.
Updated: January 19, 2022, 9:32 a.m.