Washington: A Pakistani-American was sentenced to twelve and half years of imprisonment by a Los Angeles court on charges of enticing investors to put USD 49 million into his bogus day-trading venture as part of a Ponzi scheme that caused more than USD 30 million in losses.
A well-known figure in the Pakistani-American community, Syed Qaisar Madad, 66, headed and co-owned an investment company in California, in which he invited his investors to donate money.
Madad pleaded guilty in February 2013 to wire fraud and tax fraud, admitting in court that investors lost more than USD 30 million over the course of five and half years, when his scheme collapsed in March 2011.
In the court, Madad admitted that he spent well over USD 15 million of investors’ money on personal expenses, including real estate, jewelry for his wife and daughters, vehicles, and cash disbursements to himself and family members.
These expenditures included the purchase of a 5.25-carat diamond ring and a USD 180,000 sapphire and diamond necklace; a USD 600,000 down payment on a house for his daughter; and approximately USD 6 million to pay personal credit cards bills – including charges for numerous luxury items.
Madad, who had emigrated to the United States in 1972, also used USD 1.3 million of investor money to pay for improvements to his personal residence, and an additional USD1 million of victim money to purchase an empty lot next door.
“Madad used victims’ money to make contributions to numerous charities in Pakistan, India, Egypt and the United States. More than USD1 million donated to charity and US political figures was money that Madad misappropriated from victims,” the Justice Department said yesterday.
“Many of the victim-investors were invited to fundraisers and other events that Madad hosted, including a dinner with former Pakistan President Gen Pervez Musharref at Madad’s home in Diamond Bar,” the Justice Department said.
Madad formed Technology for Telecommunication and Multimedia (TTM) in 1993, and by 2005 he was using the company to tout his alleged mastery as an investor.
“Friends, family and professional colleagues of Madad – as well as associates of his wife, a medical doctor who operated a practice in Lynwood – entrusted their money to Madad, who promised to use a day-trading strategy that would generate consistent, substantial profits. However, over the course of a five and half-year scheme, Madad’s investments resulted in losses of more than USD 9 million,” federal prosecutors charged.
In October 2009, Madad reported that the value of all the investments being held by TTM was more than USD 50 million – but TTM’s assets at the time were only USD 825,000, notwithstanding the fact that investors had deposited at least USD 1.2 million during that month.
The daily profit reported on the statements sent to investors was also false, the Department of Justice said.
