Massive Pyramid Scheme in Morocco Results in 71-Year Combined Prison Sentence

Thursday 26 December 2024 - 10:20

By: Dakir Madiha

Massive Pyramid Scheme in Morocco Results in 71-Year Combined Prison Sentence

In a landmark ruling, a Moroccan court has sentenced 25 individuals to a combined 71 years in prison for orchestrating the "Al Khair Group" pyramid scheme, which defrauded investors of approximately MAD 7 billion ($700 million).

Following an extensive 45-hour court session in Tangier, the two primary defendants each received 5-year prison terms and MAD 5,000 fines. Their husbands, who were found to be active participants in the fraudulent operation, received identical sentences.

The scheme began in February 2022 when three women established the Al Khair Group in Tangier. Operating primarily through WhatsApp groups, they initially targeted local women before expanding their reach to Moroccan communities across Europe and North America.

The operation employed an increasingly aggressive investment structure. It started by promising MAD 5,000 returns on MAD 1,000 investments, contingent on recruiting eight new members. As the scheme evolved, the entry requirement rose to MAD 1,800, promising MAD 10,000 returns within six months for recruiting five new members. In its final iteration, investors were required to pay MAD 12,600 with promises of MAD 30,000 returns for recruiting just two new participants.

To establish legitimacy, the group showcased supposed humanitarian initiatives, including mosque construction, well drilling, and medical campaigns in remote areas. They reinforced their credibility by circulating videos featuring "supervisors" and alleged beneficiaries praising the scheme's rapid returns.

The fraud unraveled in September 2023 when deposits reached MAD 720 million ($72 million) and benefit payments suddenly ceased, prompting nearly 1,000 victims to file complaints. The collapse triggered numerous personal tragedies, including one supervisor's suicide and multiple families facing eviction after mortgaging their homes to invest.

After attempting to evade authorities, one key defendant was apprehended on September 22 at Tangier's train station, alongside her husband and a taxi driver, following technical surveillance operations.

The court handed down varying sentences to other participants: eight women received 4-year terms, five received 3-year sentences, and one defendant got 2 years. Three accomplices were sentenced to one year each, while another received three months. Two defendants received three-month suspended sentences. Most convictions included MAD 5,000 fines.

While victims' families have welcomed the court's decision, the defendants' relatives have announced plans to appeal, arguing the sentences are excessive. The civil component of the case, involving hundreds of victims seeking compensation, remains pending before the court.

This case has become one of Morocco's largest financial fraud investigations, highlighting the devastating impact of pyramid schemes on communities and the increasing sophistication of financial fraud operations in the digital age.