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Financial Crimes
10/04/2012

Michigan man sentenced to 57 months for role in Ponzi scheme

DETROIT – A Michigan man was sentenced Thursday to nearly five years in prison for his role in a $2 million investment fraud scheme. The joint investigation was conducted 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, was sentenced to 57 months in prison followed by three years of supervised release and ordered to pay restitution of approximately $2.3 million to the victims of the scheme.

Alabadi pleaded guilty in June 2012 to wire fraud in connection with the investment fraud scheme in which multiple victims were defrauded of more than $2 million.

"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 percent within one year. He told victims 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.