Last July, FBI Special Agent Mark Munster received a phone call from a retired law enforcement officer who went on to a second career as a land developer. The man and his wife told Agent Munster that they had invested more than $400,000 with a firm called First Financial, LLC only to discover they could not redeem their funds.
The investor, who was not identified, told Agent Munster that Feisal Sharif, his financial adviser, and his company, First Financial, LLC, could not honor his redemption request for his $400,000. And “he further acknowledged that he had been running a Ponzi scheme.”
After that first conversation, Agent Munster began an investigation into First Financial and Sharif, that last week led to Sharif’s arrest and the disclosure that many investors from Sharif’s religious community lost major investments when they gave him money thinking it would be invested in the commodities market.
Marcia Chambers Photo
Sharif, 42, lives in a third-floor condo (pictured) at 49 Rose St., about a block from the Branford Town Green. Last week, Sharif was arrested at his condo on wire-fraud charges. From July until last week when Agent Munster filed a criminal complaint in U.S. District Court in Bridgeport, the Ponzi scheme was run out of his apartment, the FBI said.
Sharif appeared before U.S Magistrate Judge Holly B. Fitzsimmons in Bridgeport and was released on $150,000 bond co-signed by his family members. The federal criminal investigation is continuing and additional charges may be filed, the FBI affidavit said.
U.S. Attorney David B. Fein wrote: “I commend the FBI, U.S. Postal Inspection Service, CFTC and Connecticut’s Department of Banking for their quick and expert work in shutting down this scheme. The investigation is ongoing, and I encourage any potential victims or anyone with information related to this scheme to contact law enforcement.”
Over a period of two months, Agent Munster said in a 15-page criminal complaint, he spoke to many other investors “who believed they were investing in some sort of commodities pool. “
Many of the investors told the FBI that they knew Sharif or his family for years “and are connected to him through his religious affiliation.” As a general matter, these investors have reported that they invested tens to hundreds of thousands of dollars with Sharif and that, for the most part, they have not received their requested redemptions.
Over the course of a two-year period, bank records show that approximately $3 million was deposited into an account. During the same period, records show that at most about $124,800 “may have gone toward investment activity,” the complaint says.
Agent Munster is assigned to a white-collar squad in the FBI’s New Haven division. His inquiry covered the period from January 2010 to the present; that period covers the man’s first investment with Sharif. The man made the investments, he told the agent, because a mutual acquaintance had told him “he had known Sharif for a number of years and trusted him as a financial adviser.”
According to Agent Munster’s sworn affidavit, the Ponzi scheme involved a number of investors who unwittingly gave funds to Sharif to invest in funds in commodities futures. Instead, as in most Ponzi schemes, the investors are actually giving funds to pay earlier investors, which may have been the case with the man who had high praise for the company and told his friend to invest. Early participants obtain high returns in a short period of time and tell their friends of their good fortune. As more investors participate the scheme invariably collapses.
At one point, when the investor became upset after checks started to bounce, Sharif gave him a document that purported to be a statement from an entity called Velocity Futures, LLC. Some time in 2010, Sharif gave the investor a statement for an account held at Velocity in the name of First Financial. The Velocity statement purported an account balance of $861,036.
It turns out that this statement was bogus and that “the real Velocity statement corresponding to March 1, 2010, showed that First Financial account at Velocity actually had a balance of only $1,858.
When the investor received the bogus statement of $861,036, “he continued to invest with Sharif,” Munster said.
The FBI agent also said in the complaint that he reviewed the financial statements Sharif provided to the investor. One of the statements for March 1, 2010 reported a closing account balance for First Financial LLC of $836,036. Another statement, allegedly for May 1, 2012, to March 31, 2012, shows a closing account balance for First Financial LLC of $2.265 million.
During the course of the FBI inquiry, the complaint says, the FBI obtained the actual Velocity Futures statements for First Financial LLC and found that the actual closing balance for March was $1,858 — not $836,036. For May the actual balance was $1,192 as opposed to the $2.265 million balance supplied to the investor, the complaint says.
Agent Munster said that the investor who alerted him to the fraud back in July engaged in several “consensually monitored and recorded telephone calls and one in-person meeting with Sharif. “These recordings tend to corroborate the information the investor supplied.” These conversations would be used at trial.
A second investor, the complaint said, became concerned after examining Sharif’s financial statements. He was worried about whether his “money was safe.” He told Sharif he needed to do due diligence and Sharif responded by sending him Velocity Futures monthly statements. One purportedly had a balance of $1.881 million when there was actually a zero balance and another showed a balance of $537,207 when the actual balance was $1.59.
Anyone with information in this case is asked to call FBI Special Agent Mark Munster at (203) 777‑6311.
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