Investment Scam
A person approached different individuals and asked them to give him money for business purposes. For example, he would say, “Give me R100 000. I will use it to purchase a particular product, sell it, and after a few days, I will return your capital together with a R40 000 profit.”
At times, he promised extremely high and unrealistic returns; approximately 40% to 50% or even more, within a short period. He would explain what product he intended to purchase, how it would be sold, and how the profit would supposedly be earned. The people therefore believed that their money was being used in a genuine buying-and-selling business.
Later, it was discovered that although this person may have been involved in some form of business, he was not necessarily using the money in the manner that he had described. He was already heavily in debt and was taking money from one person to pay another. When payment became due to a previous person, he would take money from a new person and use it to repay that person, including the amount described as profit.
Therefore, in many cases, the so-called profit was not earned from the specific business transaction that had been presented to the person. The people who gave him money genuinely believed that they were investing in a lawful business, and that the additional amount they received was genuine business profit. They were unaware of what he was actually doing.
Eventually, the entire arrangement collapsed. The person now has no money, while he owes large amounts to many people.
Q1) Since there was no genuine business transaction connected to much of the money, will the additional amounts paid as “profit” be regarded as interest?
A1) If there was no transaction that took place and it was merely a fake investment, then the extra amount over and above the capital will be interest.
Q2) Are the people who previously received such profits required to return it, even though they were told something else but have now become aware?
A2) They should give the extra amount away in Sadaqah.
Q3) Should all those that were involved, be informed that their so-called “profits” are doubtful?
A3) Yes.
Q4) Since the person now has no money and is in debt with many people, how should the matter be dealt with?
A4) You should approach a senior Aalim or Jamiat in your city/area and request them to assist the investors by calling him in and addressing the issue.
Q5) What is the Shar’i responsibility of the person behind all this, and what must he do to correct the situation and seek forgiveness?
A5) Firstly, he should make sincere Taubah to Allah Ta’ala for deceiving people, and secondly, he must make a concerted effort to pay back every cent that he owes them. If he doesn’t pay back what he owes people in this world, he will have to pay back in the Aakhirah with his good actions. Allamah Ibn Nujaim Rahimahullah writes in his Kitaab, “Al Ashbah Wannadhir” that a person will be commanded to give 700 accepted Salaah on the day of Qiyaamah in lieu of usurping one Daaniq (one sixth of a Dirham) from another person.
جَاءَ فِي بَعْضِ الْكُتُبِ أَنَّهُ يُؤْخَذُ لِدَانَقٍ ثَوَابُ سَبْعِ مِائَةِ صَلَاةٍ بِالْجَمَاعَةِ (الأشباه و النظائر 1/33)
قَالَ عُلَمَاؤُنَا إِنَّ سَبِيلَ التَّوْبَةِ مِمَّا بِيَدِهِ مِنَ الْأَمْوَالِ الْحَرَامِ إِنْ كَانَتْ مِنْ رِبًا فليردها على من أربى عليه، ومطلبه إِنْ لَمْ يَكُنْ حَاضِرًا، فَإِنْ أَيِسَ مِنْ وُجُودِهِ فَلْيَتَصَدَّقْ بِذَلِكَ عَنْهُ (الجامع لأحكام القرآن الكريم للقرطبي 3/366)
ويردونها على أربابها إن عرفوهم، وإلا تصدقوا بها لأن سبيل الكسب الخبيث التصدق إذا تعذر الرد على صاحبه (الدر المختار و حاشية ابن عابدين 6/385(
ALLAH TA’ALA ALONE IN HIS INFINITE KNOWLEDGE KNOWS BEST!
ANSWERED BY:
Mufti Abdul Kader Fazlani
Date: 01 Safar 1448 / 16 July 2026
CHECKED AND APPROVED BY:
Mufti Yacoob Vally Saheb