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Financial Crimes
06/28/2012

Michigan man pleads guilty in Ponzi scheme

DETROIT – A Michigan man pleaded guilty Thursday to wire fraud in connection with a $2 million investment fraud scheme. The plea comes after a joint investigation by the FBI, U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) and the Internal Revenue Service.

Ahmed Alabadi, a 45-year-old dual citizen of Iraq and the United States, pleaded guilty to wire fraud in connection with an investment fraud scheme in which multiple victims were defrauded of over $2 million.

United States Attorney Barbara L. McQuade stated, "Investment fraud is just a sophisticated way of stealing people's money and sometimes leads to the financial ruin of victims."

"The victims of this scheme were under the impression they were making legitimate investments around the world but were in fact being swindled out of large sums of money,"said Brian M. Moskowitz, special agent in charge of HSI Detroit. "HSI special agents will continue to aggressively investigate those who seek to profit by taking advantage of others."

Alabadi sought investments in his company, Fedek Group, Inc., by promising that investors would earn a substantial return, sometimes of up to 100% within one year, and that the money invested would be safe or guaranteed.

Alabadi represented that investors' money would be utilized to support rebuilding efforts in Iraq, engage in real estate transactions and an export/import business, and to fulfill contracts that his company had with the United Nations and various foreign countries. In reality, Alabadi failed to deliver the returns that were promised to investors, and many investors never received their principal investment back after their period of investment expired.

In addition, money collected from investors was not used for legitimate rebuilding or business activities. Instead, money collected from later investors was used to pay earlier investors in a Ponzi scheme fashion.

As part of his plea agreement, Alabadi has agreed to pay restitution in the amount of $2,349,000 to the defrauded investors who are listed in the First Superseding Indictment. Alabadi also faces a sentence of up to 20 years in prison. The suggested range for his sentence under the federal sentencing guidelines is 51 to 63 months imprisonment.

The case is being prosecuted by Assistant United States Attorney Louis P. Gabel.