RE: Chicago Muslims devastated by investment scam

[Shawn Ladak]

 

http://www.dawn. net/wps/wcm/ connect/Dawn% 20Content% 20Library/ dawn/news/ economy/chicago+ muslims+devastat ed+by+investment +scam+szh
Chicago Muslims devastated by investment scam

By Rupa Shenoy

Sunday, 28 Sep, 2008 | 03:55 PM PST |

Rafi Mohammed, left, talks to Ali Akbar at Akbar's convenience store in Chicago on Tuesday, Sept. 23, 2008. AP

 

CHICAGO: Between the prayers that fill the holy month of Ramadan, during the long fasts that stretch from dawn to dusk, Muslims have been meeting to discuss the disappearance of Salman Ibrahim.

The respected businessman persuaded up to 200 Pakistani and Indian immigrants to contribute their savings and mortgage their homes to finance real estate deals.

But Ibrahim vanished in August, leaving his investors with losses that could total 50 million dollars — in some cases their life's savings.

'The scale of impact that this stands to have on a lot of people in the South Asian and Muslim communities is potentially very drastic,' said attorney Salman Azam, who filed a petition last week to force Ibrahim's company, Sunrise Equities Inc., into bankruptcy.

'There are a lot of very, very sad stories and dire financial situations.'

But it's the loss of trust that has really shaken people along Devon Avenue on Chicago's North Side, home to one of North America's largest South Asian communities.

Ibrahim lived in the neighborhood lined with South Asian groceries and businesses — where men wear shalwar kamiz and prayer caps, most women cover their heads and Hindi and Urdu are spoken as often as English. He wore a beard and traditional dress, and attended the local Jame Masjid mosque.

'Everyone here knows him,' Ali Akbar said from behind the counter of his convenience store. 'He was a very pious man.'

Perhaps most significant to investors: Ibrahim was a member of the Shariah Board of America, a Devon-based group of Islamic clerics who advise Muslim investors. The board certified Sunrise as conforming to an Islamic law, or Shariah, that prohibits Muslims from earning interest on investments.

Instead of interest, Sunrise Equities paid dividends in lump sums.

The firm was founded in 2001 and developed, managed and sold properties throughout Chicago. Its projects included an unfinished 12-story West Loop condominium building and a 52-unit, mixed-use building under construction on the near west side.

Fazal Mahmood, an engineer from suburban Des Plaines, invested 50,000 dollars around 2004 after a friend on Devon Avenue told him Ibrahim was an upstanding community member whose investments made good profits. Mahmood, a 52-year-old Pakistani immigrant, met Ibrahim and liked him.

'He seemed like a good, dependable man,' said Mahmood, who wanted to earn money for his two daughters' tuition to private colleges.

For three years he received an 18 per cent return, as Ibrahim had promised. Last year, Ibrahim persuaded him to borrow 200,000 dollars against his home, Mahmood said. In return, Ibrahim gave Mahmood an unsecured promissory note, which Sunrise was not licensed to issue.

An unsecured note serves as proof of an investment but doesn't provide collateral, so investors had no recourse after Ibrahim disappeared, said Azam, the investors' attorney.

During a meeting in August, Ibrahim told about 50 investors, including Mahmood, that banks were demanding 1 million dollars more from him. The investors decided to chip in and help Ibrahim, Mahmood said. A few weeks later, Mahmood learned that Ibrahim had disappeared.

'You trust your fellow man and then he does such a thing,' said Mahmood. 'It's disturbing.'

He will now have to work two jobs to keep his daughters in school.

Many believe Ibrahim and his family have returned to his native Pakistan.

Sunrise's Devon Avenue offices are closed. The director of the Illinois Securities Department said the company doesn't have a lawyer. No one responded to a telephone message left by The Associated Press at Ibrahim's last known residence or at the home of Sunrise's senior vice president, Amjed Mahmood. No phone number could be located for senior vice president Mohammad Akbar Zahid.

The state Securities Department took steps Wednesday to safeguard investors' money by suspending Sunrise's rights to buy and sell assets. Director Tanya Solov said her office may work with Attorney General Lisa Madigan or the U.S. Attorneys' office to pursue criminal charges against Ibrahim or Sunrise.

Such cases are known as 'affinity fraud,' where someone uses a position in a religious community to build faith with investors, Solov said.

'The victims have something in common with the perpetrators so there's tremendous trust,' she said. 'We don't get notified until they don't get paid, the offices are shut down and the perpetrators can't be located.'

However, many still have faith in Ibrahim, who they said put himself through college in the 1990s by working long hours driving a taxi. Ibrahim — said to be in his late 30s or early 40s — graduated from Northeastern Illinois University in Chicago in December 1997 with a bachelor's degree in accounting.

Noor Mansuri, a 60-year-old engineer from Chicago's Albany Park neighborhood who has invested 600,000 dollars with Sunrise since last November, still expects Ibrahim to return.
He and others think Ibrahim got into some kind of trouble, speculating that he overextended himself financially and was caught in the real estate market's decline.

Even so, Mansuri and other investors gathered Sept. 5 at a home near Devon Avenue and decided to file the bankruptcy petition before banks that Sunrise did business with seized the firm's assets and nothing was left. Bank representatives did not return calls seeking comment.

'The man I know wouldn't do this,' said Ghazi Feroz Alam, a Devon-based businessman who invested with Ibrahim. 'We don't know what happened. All this is guessing.'

 

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