An Iraqi and Michigan citizen was sentenced to serve fifty-seven months in prison for operating a Ponzi scheme that preyed on Middle Eastern investors and ultimately defrauded victims out of over $2 million. Ahmed Alabadi, 45, received the sentence after pleading guilty to a single charge of wire fraud in July 2012. Along with the sentence, Alabadi was ordered to pay $2.3 million in restitution to his victims and serve three years of supervised release following completion of the sentence.
According to authorities, Alabadi used his company, Fedek Group, Inc., to solicit investors who thought their funds would be used to support rebuilding efforts in post-war Iraq, fulfill contracts with the United Nations, and various other ventures. Alabadi preyed on individuals of Middle Eastern descent, relying on cultural taboos forbidding dishonesty and self-dealing when dealing with tribal brothers and sisters. Investors were promised annual returns of up to 100% and told that their funds would be safe.
However, Alabadi did not conduct legitimate investments, but instead ran a classic Ponzi scheme by using investor funds to pay returns to existing investors. Following the collapse of the scheme, Alabadi was the subject of a civil lawsuit brought by over 100 investors, who subsequently obtained a $170 million default judgment. Alabadi was arrested in February 2012 at a Detroit airport after being charged with bank fraud, attempted bank fraud and money laundering. A federal judge later denied Alabadi's request for release following his arrest, citing his potential flight risk.
For more news and analysis of Ponzi schemes, visit Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.
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