A Diamond Bar man pleaded guilty today to two federal counts related to bilking investors out of $49 million.
Syed Qaisar Madad, CEO and co-owner of an investment company, pleaded guilty to wire and tax fraud, saying in court that investors lost $31 million after his day-trading scam collapsed in March 2011, according to a Department of Justice news release.
Madad, 66, did day trading through a Diamond Bar-based company called Technology for Telecommunication and Multimedia, Inc. He told investors that he was a successful trader who never lost money except for one day in 2006, authorities said.
In 2005, he started collecting money from investors. He ran the scheme for 5 ½ years. Madad was interviewed by and featured in media serving the Pakistani-American community and told reporters and potential investors that he had developed a guaranteed day-trading technique, authorities said.
He reportedly sent victims monthly account statements that always reflected gains and some victims gave him more money based on the results. One of his clients sued Madad two years ago.
Madad said in court today that the balances on the statements he showed his client were false and he had lost more than $15 million. He also said that while he promised not to take any fees or compensation for managing the funds, he spent $15 million of the investors’ money on personal expenses ranging from real estate to jewelry for his wife and daughters to cars.
He reportedly returned around $17.7 million to investors, but many of those payments were made using a Ponzi scheme in which he repaid them with funds he got from other clients instead of from profits or interest he had earned.
Madad also said in court that he under-reported his income tax in 2009 by about $4.9 million to the Internal Revenue Service.
Before and after his arrest in October 2012, the government seized a Mercedes-Benz C63, jewelry, and funds traceable to the investor money, according to the Department of Justice. The defendant also agreed to forfeit his Diamond Bar home, the Mercedes-Benz, 68 pieces of jewelry, and other luxury items, including silk and wool handmade Oriental carpets.
He also agreed to pay $5 million in unpaid taxes for 2006 to 2010.
Madad is to be sentenced by U.S. District Judge Percy Anderson on June 24. He faces a maximum sentence of 23 years in federal prison.
