Ahmed Alabadi, citizen of Iraq and former resident of Dearborn, Michigan, pled guilty this week to defrauding U.S. investors out of $2 million in an affinity fraud investment scheme. He wasindicted on fraud charges earlier this year, after 114 Iraqi-Americans filed a class action lawsuit against him and his partner, Abdzahra Shalushi.
In the 2010 lawsuit, investors claimed that Alabadi and Shalushi "exploited cultural taboos forbidding dishonesty and financial self-dealing when dealing with tribal brothers and sisters, as well as the Arab custom of doing business with cash and a handshake, to dupe thousands of Iraqi-Americans into investing in Iraqi and Middle-Eastern projects.”
The prosecution agreed. According to authorities, Alabadi told potential investors in his company, Fedek Group, Inc., that their funds would be used for (among other things) rebuilding efforts in Iraq. In reality, however, the funds were used to perpetuate a Ponzi scheme. Though investors were told they could expect substantial returns of up to 100% within one year, many of the investors lost their entire investments.
“The victims of this scheme were under the impression they were making legitimate investments around the world but were in fact being swindled out of large sums of money," saidSpecial Agent in Charge Brian Moskowitz of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
As part of his plea, Alabadi has agreed to pay $2.3 million in restitution. He also faces more than five years in prison. His sentencing date is scheduled for Oct. 4.