Mohammed Ramzan's Muslim World Finance company in Bradford, West Yorkshire, closed its doors four weeks ago, leaving more than 150 depositors in debt and in fear of losing their homes.
Local Asian businessmen offered a pounds 15,000 reward for information leading to Mr Ramzan's arrest, but other members of Bradford's Muslim community have vowed to 'cut off his hands', in accordance with Islamic law.
'This is the biggest Muslim fraud ever in Britain. There is a lot of bad feeling. Some people want to kill him because of the insult to our religion. We want to bring him to justice, Muslim justice,' said one leading investors' committee figure.
Muslims invested in Mr Ramzan's company after he persuaded religious leaders he could offer interest-free mortgages if investors deposited an interest-free lump sum for one year. At the end of the year, he would return their money and loan them three times the amount they had deposited.
They were attracted to the scheme because it seemed to solve the problem of interest, which is forbidden by the Holy Koran. Local mosques regarded Mr Ramzan as a 'good Muslim'.
West Yorkshire Fraud Squad is now investigating the company's affairs after scores of complaints.
A Muslim World Finance investors committee meeting last night heard that some investors had deposited more than pounds 50,000. They were told there had been sightings of Mr Ramzan in the Midlands area within the last few days. The committee agreed that members would try to track him down.
David Musa Pidcock, leader of the Islamic Party of Britain, said he had threatened legal action against Mr Ramzan after investors said he had claimed to have the party's backing.
Mr Pidcock said that Mr Ramzan had tried to persuade him to go to Saudi Arabia with him to recruit support for the scheme. He said he refused because he believed the scheme was 'fishy'.
Mohammed Rafi, a Bradford haulage contractor, said he was owed pounds 15,000 and that his brother was owed more. He remortgaged his house to invest in MWF after another brother became an agent for the scheme.
'We trusted him because he was a Muslim. I invested pounds 15,500 in September 1991. I remortgaged my house. My mortgage was pounds 17,000, but it is nearly pounds 50,000 now. He was supposed to give my brother a free mortgage at Christmas, but he disappeared for four months on holiday,' he said.
Mr Ramzan agreed to pay Mr Rafi pounds 225 per month to cover the remortgaging of this house, until the 'free mortgage' began, when Mr Rafi would repay the money. But the cheques failed to arrive and Mr Rafi ran up four months' arrears on his mortgage.
He demanded his money back in July and Mr Ramzan promised he could collect it within two weeks.
But when he arrived to collect on 30 July, the MWF office was closed and a note referred all callers to a local solicitor. The solicitor has told investors he is not acting for Mr Ramzan.
'I asked local people where he was living. The curtains were closed at his house and neighbours said a van had come in the night and taken all the furniture away. Everybody has been looking for him since,' Mr Rafi said.