Prosecutors: $30M Ponzi Scheme Targeted Muslims
Chicago (AP) - A taxi driver turned prominent businessman in Chicago's South Asian community is among three people indicted for defrauding hundreds of Muslim investors out of $30 million, in part by promising that investments complied with Islamic law, federal prosecutors said Wednesday.
Salman Ibrahim, 37, who vanished in 2008 after allegedly persuading hundreds of Pakistani and Indian immigrants to contribute their savings and mortgage their homes to finance real estate deals, is believed to be abroad, possibly in his native Pakistan, the U.S. Attorney's Office in Chicago said.
The FBI is trying to locate him.
One alleged victim, Fazal Mahmood, said he lost more than $200,000, some of which he intended to use to put his two daughters through college.
"I will never trust anyone with my money again," the 54-year-old told The Associated Press. "I'm a Muslim and he's a Muslim. I was always taught ... a Muslim will never cheat another Muslim."
The other two men indicted were Mohammad Akbar Zahid, 59, who investigators believe also fled the U.S., and Amjed Mahmood, 47, of Des Plains, a Chicago suburb. Mahmood, who isn't related to Fazal Mahmood, has not been arrested but is expected to be arraigned soon, U.S. Attorney's Office spokesman Randall Samborn said. A phone message left Wednesday for a Amjed Mahmood in Des Plaines wasn't returned.
Prosecutors allege that Ibrahim, the majority owner of the now-bankrupt Sunrise Equities Inc., along with Zahid and Mahmood, who were part owners, told investors they would not be paid interest, which is prohibited by Islamic law.
Instead, they were told they would share profits from real estate projects, according to the indictment.
More than 300 investors nationwide fell victim and three banks lost more than $13 million after the alleged Ponzi scheme collapsed in 2008, the indictment alleges. Such schemes use new investors' money to pay previous investors.
Ibrahim and Zahid face bank fraud and other charges, while Amjed Mahmood is charged with conspiracy to commit mail, wire and bank fraud. Each fraud count carries a maximum penalty of 30 years in prison.
The indictment also seeks forfeiture of more than $43 million.
Before he disappeared, Ibrahim lived in a bustling South Asian enclave on Chicago's North Side that has a large Muslim population. The neighborhood hugs Devon Avenue, where men often wear knee-length shirts and caps, many women cover their heads and Urdu is spoken as often as English.
The indictment accuses Ibrahim of misusing investor money to, among other things, operate an Islamic school to enhance his reputation in the community.
During a 2008 meeting, Ibrahim told investors that his Chicago-based Sunrise Equities needed more than $1 million to continue. They knew at the time that Sunrise had expended nearly all investor funds and couldn't recover more than $40 million owed to investors, according to the indictment.
"He said, 'Trust me, trust me,'" Fazal Mahmood, one of the victims and a Pakistani immigrant, recalled. "And people were willing to help."
But within weeks, Ibrahim disappeared.
"A lot of people lost their homes, they went through divorces - some lost their kids," said Mahmood, a suburban Chicago engineer. "All their dreams have shattered."
Mahmood said he first invested $50,000 after a friend vouched for Ibrahim, and for three years received an 18 percent return. In 2007, Mahmood said Ibrahim persuaded him to borrow $200,000 against his home in return for an unsecured promissory note that was never paid.
Those who knew Ibrahim said he put himself through college by driving a taxi. He graduated from Northeastern Illinois University in Chicago with an accounting degree in 1997.
Ibrahim was a member of the Shariah Board of America, a group of Islamic clerics in the Chicago area that advises Muslim investors. The board certified Sunrise Equities as conforming to an Islamic law, or Shariah, that prohibits Muslims from earning interest on investments.
What irks Mahmood the most is not that Ibrahim could, if he's never found, evade justice in the U.S. It is that some of the rumors swirling in his old Chicago neighborhood.
"Some people say he is living well somewhere, maybe in Dubai or Pakistan," he said. "It makes me angry that he might be living a good life somewhere."