U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21310 / November 20, 2009
Securities and Exchange Commission v. Shidaal Express, Inc. and Mohamud Abdi Ahmed, United States District Court for the Southern District of California, Case No. 09 cv 2610 JM (POR) (filed Nov. 19, 2009).
SEC HALTS AFFINITY FRAUD TARGETING THE SOMALI COMMUNITY
The Securities and Exchange Commission ("Commission") obtained a court order to halt a securities fraud targeting investors in the Somali immigrant community in San Diego, Seattle, and elsewhere.
The Commission's complaint names Mohamud A. Ahmed ("Ahmed"), age 45, of Spring Valley, Calif., and his company, Shidaal Express, Inc. ("Shidaal Express"), which operates in the San Diego area. The complaint alleges Ahmed formed Shidaal Express to provide check-cashing, money transfer, and other financial services for the Somali immigrant community, and a sign at one storefront location listed "Investment Opportunities" among the services provided. According to the complaint, Ahmed raised at least $3 million, including $200,000 from a San Diego mosque, by promising exorbitant guaranteed returns of 5% per month, or 60% annually.
The Commission charged Ahmed and Shidaal Express with committing securities fraud by making false and misleading statements to persuade people to invest with them. According to the complaint, Ahmed solicited investors through word-of-mouth, at a mosque in San Diego, at a presentation given in a Seattle-Tacoma hotel, and through Shidaal Express's website. The Commission alleges that Ahmed lured investors by assuring them they could receive their money back at any time. While initially paying investors monthly returns, the complaint alleges Ahmed tried to extract more money from the investors. The complaint alleges Ahmed eventually stopped paying monthly returns but continued lulling investors.
The Honorable Jeffrey Miller, United States District Judge, granted the Commission's application for emergency relief and froze the defendants' assets. The Judge also appointed Thomas Hebrank as the temporary receiver over the assets of Shidaal Express and its affiliates. On November 30, 2009, the Court will hold a hearing on the Commission's motion for a preliminary injunction and appointment of a permanent receiver.
The Commission's complaint charges defendants with violating the antifraud provisions, Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, of the federal securities laws. In addition to the emergency relief, the Commission's complaint seeks preliminary and permanent injunctions, disgorgement, prejudgment interest, and financial penalties against Ahmed and Shidaal Express.