IN FOCUS: A case study from FACT’s corporate investigation team, showing how due diligence uncovered fraud where trust alone could not.

Due diligence applies wherever money, assets, or reputation are at stake; be it in mergers, acquisitions, private investments, or real estate purchases. It is a critical part of asset tracing, helping to establish true ownership, verify the origin and destination of funds, and confirm the people and companies involved are exactly who they claim to be. Conducted early, due diligence can prevent significant financial loss.

Fraud and scams are on the rise, with bad actors increasingly using AI technology to dupe people out of their money. UK banks reported almost 15,000 investment scams in 2025 with about £221.5 million lost to fraudsters who persuaded people to move money to fake or fictitious funds; a staggering 40% rise from the previous year.

But what happens when a potential investment opportunity arises from someone you know, a long-term family associate, or a friend of a friend?

In a recent case FACT was involved with, an established and successful businessman in the Middle East invested a large amount of capital into a residential property development scheme in another continent.

The opportunity was presented by a long-term family associate who had relocated to the country where the proposed development was taking place. The discussions took place in person, backed by a professional and comprehensive investment prospectus.

The glossy prospectus provided detailed information on the development plot, architectural plans, market research, timelines, and risk assessments. It also included costings and expected dates for realising returns following the sale of the completed units.

Importantly, the prospectus also set out the mechanics of the investment. It specified the companies involved and provided details of the company that had purchased and now owned the development plot.

The businessman went ahead with the investment on the understanding that the development construction and sale of numerous residential dwellings would all be completed within two years.

About a year later, the investor received a comprehensive update report, which contained a Land Registry document relating to the development plot, which appeared to show that one of the relevant companies did indeed own that parcel of land. The update report also detailed the local council’s development approval and stated that construction had begun. There was even a link to a construction update video showing bulldozers and earth movers at work.

There were no indications of any problems and returns on investment were deemed to be on track and on time.

However, it was only after the anticipated completion date had passed and when repayment of the investment returns was due, that it became apparent that something was amiss. Only token payments were made. It was then reported that the project had lost money and that most of the residential units remained unsold.

Separately, the investor was informed via other sources that the bulk of the units had been sold and there was potential financial mismanagement.

From a due diligence perspective, unsuccessful investments typically fall into two broad categories: commercial failure, where legitimate risks materialise, or fraud, where material facts have been misrepresented or concealed. In practice, the distinction is not always clear-cut, and some cases involve elements of both.

In this instance, the indicators pointed beyond poor execution or adverse market conditions. FACT was instructed to investigate, and its enquiries quickly established that the proposed property development scheme bore the hallmarks of a deliberate scam.

FACT discovered that the plot of land had never been owned by any of the companies or individuals involved in the proposed scheme. Instead, the property was still owned by the same couple who had acquired it in 2001.

The Land Registry document provided in the developers’ update report had been fraudulently altered to show that the property was owned by one of the development companies.

The property had been listed for sale 18 months after construction was supposed to have started. The listings revealed that no construction work had taken place at the site. Satellite image research also appeared to show that no development had taken place and a subsequent site visit directed by FACT confirmed that to be the case

Investigations confirmed that the video in the update report was taken at a different location to the site of the proposed development.

Local Council and Planning Department enquiries established that there were no recent planning applications or development approvals in relation to the site. Meanwhile, real estate research could find no evidence of any new-build properties being marketed for sale at the location.

There was also no evidence of the companies involved having any track record in property developments, despite them advertising to the contrary.

The investor’s money had been obtained under false pretences and used for entirely different purposes.

Had the investor carried out due diligence on the scheme and the companies involved before investing, red flags would have surfaced early, giving him the information needed to make a fully informed decision and avoid significant financial loss.

There are of course cultural considerations to be taken into account. A lot of business in the Middle East is relationship-driven, especially when long term family relationships are already established.

This story raises an important question: when it comes to business relationships, transactions and investments, how do you know who to trust?

The answer is that when large sums are at stake, trust always needs to come second to due diligence.

At FACT we have an ABC for situations like these, namely:

Assume nothing.
Believe nothing without evidence.
Check everything.

FACT is an independent and trusted provider of due diligence, full risk profiling, and corporate investigation services working across multiple jurisdictions and industry sectors.