Understanding the operating mechanism of the Modaraba scam: Victims’ perspective on a ponzi scheme

Authors

Irfan Ullah, Government College of Management Sciences, Thana, Malakand
Waqar Ahmed, Department of Management Sciences, University of Malakand
Arshad Ali, Department of Management Sciences, University of MalakandFollow

Abstract

This study aims to explore the operating mechanism of the Modaraba Scam that emerged as a viable investment opportunity in Pakistan and ultimately unraveled as a mega Ponzi scheme. Thematic analysis of the findings reveal that the scam emerged with the conception of a sharia-compliant business and gained validity by the intermediation of religious clerics. Initially the scam operators paid out substantial profits to attract maximum investment. However, soon after, the profit was discontinued and the agents escaped. This research adds to the literature on fraudulent investment traps and can help in the identification of similar Ponzi schemes in the future.

Keywords

Modaraba, Modaraba scam, Ponzi scheme

DOI

https://doi.org/10.54784/1990-6587.1031

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Recommended Citation

Ullah, I., Ahmed, W., & Ali, A. (2019). Understanding the operating mechanism of the Modaraba scam: Victims’ perspective on a ponzi scheme. Business Review, 13(2), 81-93. Retrieved from https://doi.org/10.54784/1990-6587.1031