BEIRUT, Lebanon — When the Lebanese publisher and financier Salah Ezzedine disappeared last month, Hezbollah officials became nervous. They thought the ardent friend and supporter of Hezbollah had been abducted, or worse.

The well respected and religious Ezzedine published books and materials for the Party of God and was close to the party’s senior officials. Hezbollah officials and supporters at all income levels had trusted him for years and with hundreds of millions of dollars of investments.

It was only when many in the party’s Shiite Muslim support base in Beirut’s southern suburbs and in Lebanon’s south began panicking about his disappearance that Hezbollah officials began to suspect that regardless of Ezzedine wellbeing, something was seriously wrong.

Around Aug. 30, Hezbollah found Ezzedine hiding at a home other than his own in the southern suburbs. They detained and questioned him for three days about his business practices, according to a banker familiar with the case who requested anonymity because he’s not authorized to speak with the media.

By the time Ezzedine was handed over to the Lebanese judiciary, the one-time business mogul had declared bankruptcy, shocking tens of thousands of investors who had entrusted the seemingly devout and pious man with their savings.One of those most surprised was the Hezbollah lawmaker Hussein Hajj Hassan, who had recently invested $200,000 with Ezzedine. Ezzedine conducted business rather informally, the banker said, explaining that Ezzedine would often issue a check to his investors as a receipt in the amount of the investment.

When Hezbollah MP Hassan heard Ezzedine had declared bankruptcy, he tried to cash the check Ezzedine had given him as a receipt for the $200,000 investment. The check bounced, the banker said.

Hassan was first to sue Ezzedine, filing a complaint in Lebanese courts on Sept. 3 — a move that clearly distanced Hezbollah from a man the Arab media are now calling the “Lebanese Bernie Madoff.”

Ezzedine was running a Ponzi scheme, and at least $500 million has disappeared in the course of his bankruptcy, according to a Lebanese Central Bank official who asked to remain anonymous because he was not authorized to speak with the media. Ezzedine was charged by the Lebanese financial prosecutor’s office on Sept. 12 with embezzlement, writing bad checks and breaching financial laws.

Some here are calling the fraud the “Financial July War” of 2009, a play on the Lebanese name for the July 2006 war between Israel and Hezbollah that devastated Lebanon’s impoverished southern region and left a billion dollars in damages, and which people are still recovering from.

The scandal is also a major embarrassment for Hezbollah.

“This guy had credibility with people because of his political connections,” the banker familiar with the case said. “He wasn’t a member, but he was very close to [Hezbollah], so this is why you see that all his victims were allies, or members of this political party.”

Hezbollah's leader, Hassan Nasrallah, even felt it necessary to address the scandal in a televised speech in early September, saying less than $4 million was invested by Hezbollah officials. But the losses reportedly reach into the hundreds of millions of dollars among the group’s supporters. In the southern Lebanese village of Toura, residents say up to 60 percent of the town invested with Ezzedine.

“In one year he gave returns from 60 to 80 percent,” said N. Chour, a resident of Toura who invested $100,000 with Ezzedine only three months ago because of the exceptionally high returns, and who asked that only his first initial and last name be used.

Chour said the $100,000 he invested with Ezzedine was saved up over 14 years working various jobs in the Ivory Coast. He is growing less optimistic by the day of ever getting the money back.

“We are waiting to see if there is any solution, it’s very difficult now,” he said. “Until today we don’t know what happened to [Ezzedine] or where the money went. Was he a crooked man or a person hit by the world financial crisis? We are asking this question still and no one is giving us an answer. Not the Lebanese state or any other person.”

It appears that no one was asking questions about Ezzedine’s too-good-to-be-true returns on investments when the money was rolling in from what many assumed was his involvement in gold, oil and international commerce. The rumors of 25 to 60 percent returns on investments were so widespread, and believed, that some Lebanese gave Ezzedine their entire life savings or borrowed money to invest with him. “There are people who sold their gold, mortgaged their house and their land to get money from the bank [to invest with Ezzedine],” Chour said. He says many people invested and trusted Ezzedine because he was “known to be close to Hezbollah.”

Hezbollah gained many supporters based on its reputation for honesty and transparency in a governing system rife with corruption and shady business dealings. Ezzedine was also regarded as a devout Shiite Muslim, running the Bab el-Salam travel agency for the religious pilgrimages to the Muslim holy cities of Mecca and Medina, and the Dar al-Hadi publishing house, which published religious texts and Hezbollah material.

Hezbollah flags adorn several buildings Ezzedine funded and built in this hometown of Marroub, just a mile from Toula, including two new handsome mosques, a new municipal building and a soccer stadium. Here, hundreds more people invested with Ezzedine. Hussein Ezzedine, Marroub’s city administrator and a distant relative of Salah Ezzedine, says people here lost millions of dollars, but most are still reluctant to call him a thief.

“If you ask anyone here in the village they will say he was good,” Hussein Ezzedine said. “He helped everyone: the poor, people with diseases, and people with kids who wanted to put them in school and couldn’t afford it. He was buying tractors for farmers, buying stuff for us without anything in return. Anything the village needed he was able to do or bring.”

Some in Marroub blame Ezzedine’s fall on the financial crisis, or an Israeli and American conspiracy to bring down a rich man close to Hezbollah. But even while people here say they’re reserving judgment or that Ezzedine was a good man, residents seem a bit overly eager to show off their town in a Hezbollah area normally known as being shy at best, and at worst downright hostile to the media.

GlobalPost was given a guided tour of Marroub, and Ezzedine’s neighborhood, by one investor who lost $120,000 with Ezzedine. The investor, Ali Fneish, showed off Ezzedine’s mansion’s massive front gate, the newly paved street and trees that shaded his house. Nearby Fneish showed off two large houses stopped in mid-construction that belong to Ezzedine’s partner, Yussef Faour, who has also been indicted. Talking to anyone in the village sparks wild stories of the big returns and even bigger losses associated with Ezzedine’s venture, and those who lost even more money in other villages.

Losses have been reported by investors in the oil rich Arabian Gulf countries, but the banker, and people in the southern villages, estimate that the majority of the scam’s victims are Lebanese who made their money outside Lebanon, and who have either returned or spend part of their time here.

“In the village of Yaroun, people say the village lost $100 million, because they made their money in the U.S. and France,” Chour said.

The banker says Hezbollah is dong a survey of residents in southern Lebanon who fell victim to the scam, with an aim to give money to the smallest investors who would otherwise be destitute without help.

Hussein Ezzedine, Marroub’s city administrator and distant relative, says he can’t call his town’s benefactor a thief, but he’s keeping an open mind.

“We are going to wait for the investigation,” he said. “From what comes out from the investigation perhaps we will change our view … perhaps we will still say what Salah Ezzedine did was good. But perhaps it will turn out it was not like that. Let’s wait to see what happened.”

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