Muslims say cleric swindled money, trust

Community shaken

By Associated Press | Sunday, September 28, 2008

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CHICAGO | Between the prayers that fill the holy month of Ramadan, during the long fasts that stretch from dawn to dusk, Muslims have been meeting to discuss the disappearance of Salman Ibrahim.

The respected businessman persuaded up to 200 Pakistani and Indian immigrants to contribute their savings and mortgage their homes to finance real estate deals.

But Mr. Ibrahim vanished in August, leaving his investors with losses that could total $50 million - in some cases their life's savings.

“The scale of impact that this stands to have on a lot of people in the South Asian and Muslim communities is potentially very drastic,” said attorney Salman Azam, who filed a petition last week to force Mr. Ibrahim's company, Sunrise Equities Inc., into bankruptcy. “There are a lot of very, very sad stories and dire financial situations.”

But it's the loss of trust that has really shaken people along Devon Avenue on Chicago's North Side, home to one of North America's largest South Asian communities.

Mr. Ibrahim lived in the neighborhood lined with South Asian groceries and businesses - where men wear knee-length shirts and caps, most women cover their heads and Hindi and Urdu are spoken as often as English. He wore a beard and traditional dress, and attended the local Jame Masjid mosque.

“Everyone here knows him,” Ali Akbar said from behind the counter of his convenience store. “He was a very pious man.”

Perhaps most significant to investors: Mr. Ibrahim was a member of the Shariah Board of America, a Devon-based group of Islamic clerics who advise Muslim investors. The board certified Sunrise as conforming to an Islamic law that prohibits Muslims from earning interest on investments. Instead of interest, Sunrise Equities paid dividends in lump sums.

Fazal Mahmood, an engineer from suburban Des Plaines, invested $50,000 around 2004 after a friend on Devon Avenue told him Mr. Ibrahim was an upstanding community member whose investments made good profits. Mr. Mahmood, a 52-year-old Pakistani immigrant, met Mr. Ibrahim and liked him.

“He seemed like a good, dependable man,” said Mr. Mahmood, who wanted to earn money for his two daughters' tuition to private colleges.

For three years he received an 18 percent return, as Mr. Ibrahim had promised. Last year, Mr. Ibrahim persuaded him to borrow $200,000 against his home, Mr. Mahmood said. In return, Mr. Ibrahim gave him an unsecured promissory note, which Sunrise was not licensed to issue.

An unsecured note serves as proof of an investment but provides no collateral, so investors had no recourse after Mr. Ibrahim disappeared, Mr. Azam said.

During a meeting in August, Mr. Ibrahim told about 50 investors, including Mr. Mahmood, that banks were demanding $1 million more from him. The investors decided to chip in and help Mr. Ibrahim, Mr. Mahmood said. A few weeks later, Mr. Mahmood learned that Mr. Ibrahim had disappeared.

“You trust your fellow man and then he does such a thing,” Mr. Mahmood said. “It's disturbing.”

Many believe Mr. Ibrahim and his family have returned to Pakistan.

Sunrise's Devon Avenue offices are closed. The director of the Illinois Securities Department said the company doesn't have a lawyer.

No one responded to a message left by the Associated Press at Mr. Ibrahim's last known residence or at the home of Sunrise's senior vice president, Amjed Mahmood. No phone number could be located for senior vice president Mohammad Akbar Zahid.

The state Securities Department took steps Wednesday to safeguard investors' money by suspending Sunrise's ability to buy and sell assets.

Director Tanya Solov said her office may work with Attorney General Lisa Madigan or the U.S. Attorneys' office to pursue criminal charges against Mr. Ibrahim or Sunrise.

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