Three men have been indicted for allegedly running a Ponzi scheme and stealing $43 million from investors who thought they were putting their money in a Sharia-compliant investment strategy.
According to federal officials, the men ran a firm called Sunrise Equities and told Pakistani-American investors and banks in Chicago that their money would go exclusively into real estate development. Earning interest is prohibited under Sharia, or Islamic law, and observant Muslims cannot invest in financial products that earn interest.
Instead, the money allegedly went to finance the men’s other businesses, including a motorcycle parts company in Pakistan and a gas station outside Chicago. They also allegedly used the money to buy and renovate their homes and lease cars, and one of the men built an Islamic school “in order to enhance his reputation in the community.” The feds say they used the money from new investors to pay off older investors, and even convinced some clients to refinance their homes so they could give Sunrise more money.
According to the indictment, some clients lost between $120,000 and $300,000 to the scheme.
“This is the first time in Chicago that an alleged fraud scheme has been uncovered that used a pillar of Islam to induce potential victims to invest their funds,” the special agent in charge of the FBI’s Chicago office said. ” A key element in securing the charges was the extraordinary cooperation provided by members of Chicago’s Pakistani community, who were the primary victims of this alleged fraud scheme.”
The two alleged leaders of the scheme, Salman Ibrahim and Mohammad Akbar Zahid, have been charged with several counts of mail and wire fraud and could face up to 30 years in prison. Both Ibrahim, a Pakistani national and Zahid, an American citizen, are thought to have fled the country and their whereabouts are unknown. The third defendant, Amjed Mahmood, was charged with one count of conspiracy to commit fraud. He is from Des Plaines, Ill., and will be arraigned in federal court.