Maltese citizen pleads guilty to fraud involving millions in US court

Maltese citizen Mustafa Abdel Wadood, 49, has pleaded guilty to fraud in a US court in a case in which he is charged of misappropriating millions of dollars.

Abdel Wadood was listed in the Government Gazette of 21 December 2018 as being granted Maltese citizenship. He was arrested in the US less than four months later, The Shift News had revealed.

While it is likely that Abdel Wadood bought his Maltese citizenship, this cannot be confirmed because of the lack of transparency in the government’s list on those acquiring citizenship since it does not differentiate the names from those who acquire citizenship ‘through naturalisation’ by spending time in the country.

When The Shift News had asked Identity Malta whether his citizenship would be withdrawn following his arrest, the Agency had said it could not comment since the case was “sub judice”, even though the case was being held in the US and not in Malta.

Read: Identity Malta mum on whether ‘Maltese man’ arrested in the US could lose citizenship

A former executive of collapsed Dubai private equity firm Abraaj Capital Ltd, Abdel Wadood has reached a plea agreement. He is facing up to 125 years in prison for the charges levied against him.

“I share responsibility for what happened. I regret my involvement more deeply that anyone can imagine,” he told the court. “I knew at the time what I was doing was wrong”.

In a statement read in court, Abdel Wadood said that ‘things turned bad” in 2014 and continued to deteriorate from there. In the meantime, he acquired Maltese citizenship raising questions on the due diligence process for those acquiring Maltese citizenship, which the government and its concessionaire Henley & Partners insist are rigorous.

Abdel Wadood pleaded guilty to a number of charges including fraud and conspiracy as well as lying to investors about the financial health of the company. Three more former executives were charged earlier this month.

The former executive explained that his firm had lied to a number of US-based investors when they were raising over $3 billion for a new investment fund.

He also admitted that the money was not spent in the way they were told it would be and that the money was “co-mingled” when it should have been kept separate.

His actions are reported to have led to the “world’s largest equity insolvency” in 2018.

He was then arrested in April in New York before being released on a $10 million bail bond on condition that he could not leave his apartment. He then reached a plea agreement with prosecutors, leading him to plead guilty and offer his cooperation.

Under Maltese law, citizenship can be revoked under instruction from the Home Affairs Minister. This can be done in the case where a citizen (who acquired citizenship via registration or naturalisation) is convicted of a crime and sentenced to more than 12 months. It can also occur when the individual in question can be judged as being “not conducive to the public good”.

Malta’s cash for passports scheme has come under heavy criticism from the European Commission, which said such schemes were exposing the bloc to money laundering, corruption and organised crime.

Bed Cowdock, a senior researcher at Transparency International recently told Forbes that he was unsure whether European background checks were effective in identifying those linked to corruption.

“Our research has found all too often firms and professionals unwittingly or knowingly offering services to high-risk individuals, enabling them to launder both their money and reputations.”