Salim Damji

Salim Damji is a convicted fraud artist who defrauded millions of dollars in an affinity fraud. The money came mostly from relatives and members of the closely-knit Ismaili community. His $75 million scam was among the largest in Canadian history.

Salim Damji claims to have met extortionists in Miami, who threatened to kill him and his family if they did not comply with his demands. According to Damji, these individuals forced him to defraud thousands of community members. However, the judge in Damji's case did not believe this story. Had he done so, Damji may have been found not criminally responsible for his actions (see duress).

Damji later purported to own a company called Strategic Trading Systems (STS), and that he had invented a product called Instant White- a tooth whitening spray. While the product itself was real, it was not actually invented or owned by Damji. Salim Damji went so far as to fly to New York to discuss buying the company that owned Instant White; but this deal was never materialized.

Damji also claimed to be a dentist, although he in fact never graduated from university.

Salim Damji collected what is estimated to be over 78 million dollars [http://www.afarber.com/corporate/studies.html#white] in the scam. Investors were told that they were being given first priority since they were members of the community and/or relatives of Damji. They were promised to receive 20-to-1 returns after the company was sold to Colgate-Palmolive. Colgate denied any involvement with STS, but this did not stop many investors from continuing to pour money into the scheme— an estimated 45-million dollars were raised after Colgate denied involvement with STS. It is worth noting that Damji returned investors money upon request, which did a great deal to establish trust between him and the community.

Salim Damji continued this fraud over a period of two years, promising the 20-to-1 returns at the end of this time period. Some investors were told to send their money by wire to "Montanas Magicas", which was eventually discovered to related to an internet gambling site. A total of $8.5 million was wired directly to Montanas Magicas.

In the mean time, Damji claimed to be getting small payments from Colgate, which he used to support his decadent lifestyle. He purchased an $800,000 condominium near Toronto's waterfront, two houses in Markham, a strip mall in Toronto, and nine luxury cars. Damji also pledged 1.5 million dollars to the Aga Khan Foundation.

By the end of the fraud, Damji claimed to have the money, and that it would be split up among investors. Shortly before this was allegedly going to take place, Damji was arrested, and investors were informed of the scam upon arriving to collect their money.

Salim Damji was arrested on May 25, 2005 at approximately 2:00 p.m. for violating terms of his parole. The Canadian Parole Board has not released details on the terms that were violated, but according to the IRG (Investment Recovery Group) [http://www.globalenviro.com/IRG/public_html/article.php?story=20050830140950404&mode=print] , his term has been extended through November 27, 2007.

Impact on the Ismaili community and relatives

Salim Damji had a fairly high level of trust in the Ismaili community. This is partially because investors were told that they were being given priority over others as a result of being members of his community. He also returned investors' money upon request. His donation of 1.5 million also made waves within the community. Some believe that the fraud has broken a great deal of trust that was once present within the community.

Zahra Damji (formerly Zahra Lavji) divorced Salim Damji shortly after the fraud was exposed, and indicated that she did not believe her former husband did not know where the money was when she told CTV that "if you're smart enough to do this, I don't think you're dumb enough to lose it all." [http://www.gambling911.com/Instant-White-Toothpaste-Scam.html]