Three years ago, Attah was encouraged by friendly neighbors to put his savings into a private company promising 17 percent annual returns on his investment.

“I saw my neighbor selling his wife’s and daughter’s jewelry to give the money to Sheikh Abdel Wahed Kamel Abdel Latif. I never thought that my neighbors and I would lose all our money – that the sheikh we trusted was just a swindler,” Attah said.

The imam of Omar Ibn Al Khattab mosque, Latif is owner of the Al Marwa Investment Company.

And Attah is just one of hundreds of Egyptians from Sahel, a neighborhood of the northern Cairo district of Shubra, who in 1998 rushed to put their life’s savings in Al Marwa, even before the company was officially registered.

The company, jointly owned by Latif and a business partner, promised interest rates of 1 percent per month or 17 percent per year, encouraging locals to transfer bank deposits to the company.

“Latif assured us that his company was compliant with Sharia [Islamic law],” said Muhammad Ali, who sold his shop to invest in Al Marwa. “I thought he was a man of religion that we should respect,” he said.

In the event, the promised returns never materialized, and last year Latif told investors that the company was making huge losses and had closed down.

Many investors have filed lawsuits against the sheikh and his partner, alleging that the two are holding some E£1 million of their capital.

But police investigations have failed to find any documentary evidence linking Latif to the company.

“He still preaches at the mosque every Friday, while his partner, who has been accused of hundreds of charges, cannot be found,” said one investor, who invested E£70,000 in Al Marwa.

While Al Marwa may have proved disastrous for many, however, it is not among the worst such cases Egypt has seen.

In early March, a number of Egyptian doctors reported to police that a fellow doctor and his wife had solicited up to E£55 million, claiming the money would be invested in a company based in England. Just as in the Al Marwa case, no one has been able to produce documents linking the doctor to the alleged scam.

Some critics claim the government is concealing the true incidence of such investment scandals, for fear of a public backlash.

“We are now investigating tens of cases like Al Marwa, but few of the people that depositors claim own such companies are charged, because there is not enough evidence against them,” said one officer at Giza police station, who asked not to be named. “We know that many of these depositors are telling the truth, but the government is not making such cases public.”

Experts from the formal banking sector said they were surprised at the ongoing phenomenon of investment scams, following a well-publicized series of such incidents in the 1980s, when several financial firms failed to repay thousands of depositors.

The most notorious example came in the mid-1980s, when the Al Rayan investment company, owned by business tycoon Ahmed Al Rayan, amassed billions of pounds from Egyptians anxious to invest in what was promised to be a successful enterprise.

The company collapsed when the government demanded reforms to Al Rayan’s financial system, to root out alleged corrupt practices. Rayan was subsequently imprisoned for 15 years, while small depositors were due to be partially compensated for their lost investment under a government-backed plan that has yet to be fully implemented.

Hamdi Abdel Azim, professor of economics at the Al Sadat Academy, said depositors were desperate for higher interest on their hard-earned savings than local banks provided, and so were easy targets for scam investment companies.

“To solve the problem, banks have to increase their interest rates in line with the price hikes seen in the rest of the economy,” he said.

But according to economic analyst Heba Handousa, banks are the problem, arguing that people resort to risky investment companies because they do not trust local banks.

Indeed, it is not difficult to find Egyptians convinced that investing in Al Rayan was a good option at the time.

“Rayan was not a swindler. He established very strong and competitive projects,” said Samiyah Mahmoud, a teacher who invested E£5,000 in Al Rayan in the 1980s. “Once the government became convinced that he had too much power, they issued a law banning this type of financial activity and put him in jail,” she said.

Mahmoud has managed to recoup some of the money she invested in Al Rayan through the government-backed repayment plan, after E£472 million was made available earlier this month to repay 40 percent of Al Rayan’s small investors – although critics said the government would fail to meet its promise of repaying all depositors by 2005.

Meanwhile prison authorities have refused to release Rayan after he finished his 15-year sentence in mid-April, claiming that the financier must serve an additional three years for issuing a check for E£69,000 without sufficient credit. Rayan is expected to appeal the verdict next week at a Northern Cairo court.