NEW YORK/LONDON (Reuters) - The chief executive and a managing partner of the collapsed Dubai private equity firm Abraaj Capital Ltd have been arrested on U.S. charges that they defrauded their investors, including the Bill & Melinda Gates Foundation.

FILE PHOTO: Arif Naqvi, Founder and Group Chief Executive of Abraaj Group attends the annual meeting of the World Economic Forum (WEF) in Davos, Switzerland, January 17, 2017. REUTERS/Ruben Sprich/File Photo

Abraaj founder and Chief Executive Arif Naqvi was arrested in the United Kingdom last Friday, while managing partner Mustafa Abdel-Wadood was arrested at a New York hotel on Thursday, Assistant U.S. Attorney Andrea Griswold said at a hearing in Manhattan federal court.

Griswold said prosecutors would seek to have Naqvi, who is charged with the same crimes, extradited. Casey Larsen, a spokesman for Naqvi, could not immediately be reached.

A statement from Naqvi’s external PR firm said Naqvi maintained his innocence in relation to the charges.

“Mr Naqvi maintains his innocence, and he fully expects to be cleared of any charges. For almost a year since the commencement of the provisional liquidations, he has been working tirelessly to maximize returns for Abraaj’s creditors,” the statement said.

Abdel-Wadood appeared at the Manhattan hearing and pleaded not guilty to securities fraud, wire fraud and conspiracy charges. His lawyer, Benjamin Brafman, did not immediately request bail, saying he needed more time to become familiar with the case.

Abraaj had been the largest buyout fund in the Middle East and North Africa until it collapsed in the middle of 2018 after the Gates Foundation and other investors raised concerns about the management of its $1 billion healthcare fund.

In brief indictments unsealed on Thursday, U.S. federal prosecutors claimed that from about 2014 until Abraaj’s collapse, Naqvi and Abdel-Wadood lied about the performance of Abraaj’s funds, inflating their value by more than half a billion dollars.

The U.S. prosecutors also said that Naqvi and Abdel-Wadood caused “at least hundreds of millions” of investor funds to be misappropriated, either to disguise liquidity shortfalls or for their personal benefit or that of their associates.

Griswold said that Abraaj had represented itself as a pioneer of “impact investing” that promoted social progress, for example by investing in hospitals in developing countries.

“In truth, Abraaj was engaged in a massive fraud,” she said.

The indictments were short on detail, Griswold said, because authorities moved quickly to arrest Abdel-Wadood upon learning he was in the United States with his wife and son to visit colleges.

She said prosecutors intended to file more detailed charges by the end of May.

After the hearing, Abdel-Wadood spoke briefly to his wife, who had watched from the courtroom gallery, before U.S. marshals led him away in handcuffs.

Naqvi appeared in a court in London on Thursday and was remanded in custody to appear again on April 18 at Westminster Magistrates Court for the extradition case via video link, a court official told Reuters on Friday.

Abraaj and Naqvi face related civil charges filed on Thursday by the U.S. Securities and Exchange Commission. Naqvi denies these charges. Liquidators of Abraaj could not be immediately reached for a comment.

The SEC alleges that Naqvi and his firm raised money for the Abraaj Growth Markets Health Fund, collecting more than $100 million over three years from U.S.-based charitable organizations and other U.S. investors.

According to the SEC’s complaint, Naqvi misappropriated money from the health fund and commingled the assets with corporate funds of Abraaj Investment Management Ltd and its parent company, and used it for purposes unrelated to the health fund.