Last Friday (2/3/12), Ahmed Alabadi, citizen of Iraq and former resident of Dearborn, Michigan, was arrested at the Detroit Metropolitan Wayne County Airport on charges related to an alleged massive Ponzi scheme.In 2010, 114 Iraqi-Americans filed a class action securities fraud lawsuit against Ahmed Alabadi and another man, Abdzahra Shalushi. In their Complaint, the plaintiffs alleged that Alabadi and Shalushi, through two interrelated Ponzi schemes, defrauded investors out of millions of dollars by posing as “altruistic, religious and civil-minded do-gooders." The Complaint further alleged that the men "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.” Many investors claimed they were promised annual interest payments of 80 to 100 percent and a repayment of principal within eight to 12 months. Instead, the lawsuit alleged, many investors lost everything. (For more information about the civil Complaint, read the 2010 Courthouse News Service articlehere.) Now, Alabadi has been indicted on criminal charges related to the alleged affinity investment fraud. According to the United States Attorney’s Office for the Eastern District of Michigan, the indictment alleges that Alabadi solicited investments in purported rebuilding projects in Iraq from investors of primarily Iraqi descent. Instead of investing the money as represented, however, Alabadi allegedly used the money to operate a Ponzi scheme. When the investment scheme began to unravel, authorities say, Alabadi fled to the Middle East.Alabadi faces charges of bank fraud, attempted bank fraud, and money laundering. Due to the fact that Alabadi left the country after the civil lawsuit was filed, prosecutors are requesting that he be held in custody until the criminal charges against him are resolved.
