Earlier this week, Amjed Mahmood pled guilty to bank fraud, mail fraud,
and conspiracy to commit wire fraud in connection with a $40 million
Ponzi scheme that authorities say defrauded 300 people ("Des Plaines man pleads
guilty in $40M Ponzi scheme," Associated Press, March 30, 2011).
The scheme primarily targeted Muslim investors living in the Chicago area.
According to prosecutors, Mahmood, along with his partners Mohammed Akbar
Zahid and Salman Ibrahim, persuaded 300 investors to mortgage their homes
and invest their savings in fraudulent real estate deals. They told investors
that they would share in the profits of the deals rather than be paid
interest on their investments, which is prohibited by Islamic law ("Alleged
investment fraud rocks Chicago's Muslim community," InvestmentNews,
November 18, 2010). When the scheme collapsed in 2008, many of the investors
were left with nothing.
Fazal Mahmood, a victim of the scheme, told InvestmentNews: "A lot
of people lost their homes, they went through divorces - some lost their
kids. All their dreams have shattered....I will never trust anyone with
my money again."
As reported by the AP, Amjed Mahmood is required (as part of his plea
agreement) to cooperate with the prosecution in cases against his two
former partners, both of whom remain at large. Mahmood could be sentenced
to up to five years in prison for his part in the investment scheme. He
also faces a $250,000 fine. His sentencing date has not yet been set.