Yes, even Muslims get deceived by Ponzi scams

Yes, even Muslims get deceived by Ponzi scamsAli Akbar’s convenience store in Chicago.
Christians and Jews are not the only religious people being defrauded. Muslim investors and three banks were deceived by three men who claimed to be following Islamic principles of sharia, which does not allow money to be made by charging interest. The company promised investors annual returns of 15 to 30 percent.

Unfortunately, the investments turned out to be a classic Ponzi scheme, where old money from investors pays the new investors. It was also considered a case of what’s called "affinity fraud," where an investor abuses the trust of a religious community.

One of the company’s owners, Salman Ibrahim, was considered a pious man in his Chicago North Side South Asian community. Mr. Ibrahim 37, and Mohammad Akbar Zahid, 59, are believed to have fled the country. Amjed Mahmood, 47, still in the United States, was arrested.

The banks lost about $13.7 million.

Individual victims lost about $30 million:

Fazal Mahmood, an engineer from suburban Des Plaines, invested $50,000 around 2004 after a friend on Devon Avenue told him Ibrahim was an upstanding community member whose investments made good profits. Mahmood, a 52-year-old Pakistani immigrant, met Ibrahim and liked him.

"He seemed like a good, dependable man," said Mahmood, who wanted to earn money for his two daughters’ tuition to private colleges.

For three years he received an 18 percent return, as Ibrahim had promised. Last year, Ibrahim persuaded him to borrow $200,000 against his home, Mahmood said.

In return, Ibrahim gave Mahmood an unsecured promissory note, which Sunrise was not licensed to issue.

An unsecured note serves as proof of an investment but doesn’t provide collateral, so investors had no recourse after Ibrahim disappeared, said Azam, the investors’ attorney.

During a meeting in August, Ibrahim told about 50 investors, including Mahmood, that banks were demanding $1 million more from him. The investors decided to chip in and help Ibrahim, Mahmood said. A few weeks later, Mahmood learned that Ibrahim had disappeared.

"You trust your fellow man and then he does such a thing," said Mahmood. "It’s disturbing."

Chicago Muslims devastated by investment scam, Sulekka>>
Three men accused of Sharia-law Ponzi scheme, Reuters>>
$43M Ponzi Scheme Targeted Islamic Investors: Charges, MyFox Chicago>>

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