He's been called the Muslim Bernie Madoff.
Instead of investing his victims' money, as he promised he would, Syed Qaidsar Madad spent large amounts on himself and donated to many Muslim and non-Muslim charities-- charities who are now struggling with the idea that they have to pay back the money to the victims.
Madad, 66, of the Los Angeles area was sentenced to a 151-month sentence for his Ponzi scheme, reports The Courthouse News Service. He swindled his victims out of an estimated $32.7 million, largely in the wealthy Muslim community of Los Angeles.
But his Ponzi scheme unravelled in March 2011, when he was sued by one of his investors.
What is a Ponzi Scheme?
A Ponzi scheme is an investment scam where the investors are promised high returns with little or no risk. The scheme organizers typically don't invest the money, so essentially, the money doesn't generate any real returns. The scheme is maintained by paying older investors with the money obtained from new investors.
But eventually, the bottom falls out on a Ponzi scheme and many investors are left with empty pockets. If, for example, several investors demand payback at the same time, the scheme can unravel.
The Muslim Madoff
Syed Qaisar Madad pleaded guilty to wire fraud and tax fraud. For 5 1/2 years, Madad used his investment firm, Technology for Telecommunication and Multimedia Inc., to run his scam. He made claims to his investors that he had never lost money in a single day of trading with the exception of one day in 2006.
Madad boasted "remarkable" rates of return, sometimes in the range of 30 to 65% per year.
He also promised investors that he wouldn't take any fees or commissions. But in actuality, he spent over $15 million on himself and his family. According to his indictment, Madad spent that money on his wife's business, personal expenses, and gambling.
Like Bernie Madoff, Syed Qaisar Madad was a respected man within his community. He was known to invite his investors to events at his Diamond Bar home, once even for a dinner with former Pakistani President General Pervez Musharraf.
Madad also made many philanthropic contributions, donating to charities such as the Pakistan-oriented Developments In Literacy (DIL). According to a confidential reliable source, Madad gave millions to Muslim charities, many of whom now may have to return the donations to repay Madad's victims.