Diamond Bar Man Pleads Guilty to Federal Fraud Charges for Running Day-Trading Ponzi That Raised $49 Million from Investors
|U.S. Attorney’s Office February 25, 2013|
LOS ANGELES—The CEO and co-owner of a Diamond Bar investment company pleaded guilty this afternoon to two federal felony counts arising from his scheme to defraud investors who put $49 million into his bogus day-trading venture.
Syed Qaisar Madad pleaded guilty to wire fraud and tax fraud, admitting in court today that investors lost more than $31 million when his scheme collapsed in March 2011.
Starting in 2005, Madad collected money from investors who believed he generated consistent, substantial profits and that their money would be safe and available upon request. During the five-and-a-half-year life of the scheme, Madad received more than $49 million from investors.
Madad, 66, a resident of Diamond Bar who ran his scheme through a company called Technology for Telecommunication and Multimedia Inc. (TTM), portrayed himself as a successful investor who had not lost money in a single day of trading—except one day in 2006. Madad, who was profiled and interviewed in media serving the Pakistani-American community, told reporters and potential investors that he had developed a day-trading technique that was always profitable.
Over the course of the scheme, Madad sent victims monthly account statements that always showed gains in their accounts, and some victims gave Madad additional funds based solely on these account statements. Madad admitted today that the balances shown on these statements were false, and that, in fact, he lost more than $15 million in unsuccessful trading.
While Madad promised that he would not take any fees or compensation for managing the invested funds, Madad admitted today that he spent well over $15 million of investors’ money on personal expenses, including real estate, jewelry for his wife and daughters, vehicles, and cash disbursements to himself and family members.
Although Madad returned approximately $17.7 million to investors, many of the payments he made were Ponzi payments, meaning that the money came from funds entrusted to him by other investors, rather than from profits or interest he had earned.
Madad also admitted today that he under-reported his income for tax year 2009 by approximately $4.9 million on tax returns filed with the Internal Revenue Service.
Madad’s scheme originally came to light two years ago when he was sued by one of his investors.
Prior to and following Madad’s arrest in October 2012, pursuant to court-authorized warrants, the government seized a Mercedes-Benz C63, numerous pieces of diamond and other precious gemstone jewelry, and funds that were traceable to investor money. As part of his agreement with the goverment, Madad has agreed to forfeit his Diamond Bar mansion, the Mercedez-Benz, 68 pieces of jewelry, and other luxury items, including silk and wool handmade oriental carpets. Madad also agreed to pay the IRS approximately $5 million in unpaid taxes for tax years 2006 through 2010.
Madad is scheduled to be sentenced by United States District Judge Percy Anderson on June 24. As a result of today’s guilty pleas, Madad faces a statutory maximum sentence of 23 years in federal prison.
The case against Madad is the result of an investigation by the Federal Bureau of Investigation and IRS-Criminal Investigation.
Assistant United States Attorney Ranee A. Katzenstein
Major Frauds Section
Assistant United States Attorney Jennifer M. Resnik
Asset Forfeiture Section