Billion-Dollar Pyramid Scheme Rivets Lebanon

Billion-Dollar Pyramid Scheme Rivets Lebanon - 9/16/2009

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HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

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Billion-Dollar Pyramid Scheme Rivets Lebanon
Robert F. Worth

International Herald Tribune. September 16, 2009
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EXCERPT: The investor, a heavyset man in a gray polo shirt, sat back in a plastic chair in his hardware store and sighed, unable to explain how his life savings had vanished so quickly into thin air. “It’s a disaster, a tsunami,” he said. “Some farmers mortgaged their fields and brought in cash. Others sold land they had inherited from their parents. Teachers gave up all their savings. Old people lost everything they had.” The money disappeared, judicial authorities say, in a billion-dollar pyramid scheme that has riveted this country. Its mastermind, a businessman named Salah Ezzedine, was charged with fraud on Saturday and is being called the “Lebanese Bernie Madoff” in local newspapers. Bankers say it is the biggest fraud of its kind this country has ever seen. But the dollar figures have drawn less attention here than Mr. Ezzedine’s close links with Hezbollah, the militant Shiite movement. Many of the investors — mostly Shiites living in Beirut and southern villages like this one — say those party links were the reason they chose to risk their hard-earned savings with a man who offered 40 and 50 percent profits but never showed any paperwork. The scandal has embarrassed the party, which prides itself on a reputation for honesty and selfless piety. It has also illustrated the way many of Lebanon’s Shiites, despite their ascent from near feudal poverty just a few decades ago, remain in some ways a nation apart. Their residual distrust of mainstream Lebanese institutions, which helped fuel Hezbollah’s rise as a virtual state within a state, also appears to have made them vulnerable to Mr. Ezzedine’s schemes. “We got guarantees that were stronger than any bank,” said the investor here, who like others associated with Mr. Ezzedine, spoke only on condition of anonymity for fear of reprisals.

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