California Man Charged With $49 Million Ponzi Scheme

California Man Charged With $49 Million Ponzi Scheme

Federal authorities arrested a California man of Pakistani descent on charges that he masterminded an investment scheme that raised nearly $50 million from investors.  Syed Qaisar Madad, 65, a Pakistani native with Canadian citizenship living in the US as a lawful permanent alien, was charged in a sixteen-count indictment that included twelve counts of wire fraud, one count of making a false statement to a government agency and three counts of subscribing to a false tax return.  If convicted of all charges, he faces a statutory maximum of up to 260 years in federal prison.  

Madad was the CEO and co-owner of Technology for Telecommunication and Multimedia, Inc. ("TTM"). While details remain scarce as to the government's allegations due to the indictment remaining sealed, a January 2010 article from Pakistanlink.org provides a glimpse into Madad's life.  Portraying Madad as the "zenith of the American dream," the article paints a rags-to-riches story of a man who completed two Masters degrees in five semesters who spent over 25 years working in the oil and gas industry.  After he left the oil and gas industry, Madad founded TTM in 1993, which claimed to be in the business of securing large orders for the supply of equipment to a video-conferencing company in Massachusetts.  However, in a move that likely marks the beginning of his alleged scheme, TTM then transitioned to a primary focus on investments and trading in 1999.  According to the article,

Exploring and developing oil and gas fields involves operation and investment risks that require an educated, calculated estimate regarding available reserves. And as an added buffer to the speculative nature of the business, Madad's engineering background was very useful in predicting market movement with chart and trend analysis.

Madad stated that his investment strategy centered around both beginning and ending the trading day with 100% cash.  Putting an emphasis on preservation of capital, Madad purported to first begin the day monitoring trends from European markets to determine how US markets will react when they open several hours later.  Despite never investing more than 10% to 15% of his cash in the market at any given point, Madad claimed to achieve extraordinary returns that regularly exceeded 30% and some years approached 65%.  

Now, according to authorities, Madad's purported investment prowess was nothing more than an elaborate Ponzi scheme, using money from new investors to pay fictitious returns to existing investors.  The scheme is estimated to have taken in nearly $50 million, and authorities have preliminarily pegged investor losses at $32 million due to trading losses and personal expenses including gambling.  Madad also allegedly provided the FBI with fraudulent documents supposedly representing brokerage statements for UBS accounts in Switzerland.  Madad is also accused of hiding income and benefits he received from TTM since 2007.  

A copy of the PakistanLink article is here.

For more news and analysis of Ponzi schemes, visit Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.

For more information about LexisNexis products and solutions connect with us through our corporate site.