Questionable kinds of Mudhaarabah
9-4-2007 | IslamWeb
Question:
Salam alk, I am here to enquire about some investing stuff with regards to the interest / profit , A friend of mine is investing in a firm who offers investing schemes like invest the sum of 10,000/- and get returned 4 times double of it after the period of one year from the date of investment, and also many other investment schemes which offers min 2 times of double amount from the total invested funds with out incurring any losses or dues. The proprietor of the firm is also a Muslim bro and states that they invest in various multinational companies which offer him good profit in return which he shares with the investors. Could you please shed some light on this issue as per the Islamic regulations and explain does the taking back of additional / profit amount is HARAM or HALAL. And also please advice is it ideal to stay with such friend or hang around and sometimes uses his money. Your kind consideration and prompt response for the above will really help many Muslim brothers to this part of GLOBE. Jazak allah khair
Answer:
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad 
is His slave and Messenger.
If this brother who takes other people's money engages in real Mudhaarabah (which is an Islamic term that means that a person gives an amount of money to another person in order to trade with it and the second takes a share in the profit, like one-fourth, or half, or a third and the like), then it is permissible to deal with him.
The conditions of real Mudhaarabah are:
a) The person holding the capital money should not guarantee the money [unless he is negligent];
b) The profit between the Mudhaarib and the owner of the capital money should not be a fixed amount, rather it should be a known percentage, like a half, or one-fourth, or a third, and the like;
c) The Mudhaarabah should be in permissible fields- for more benefit, please refer to Fataawa 87688 and 86028.
Therefore, if the person whom you mentioned in the question guarantees the capital money of the owner, or that he fixes a given amount for the profit, then it is not permissible to deal with him in this transaction, and he should be advised to abandon it and repent to Allaah.
However, it is permissible to deal with him in his lawful money or money that is mixed from lawful and unlawful resources, but it is not permissible to deal with him in his money that one knows to be purely forbidden money.
As regards taking him as a friend, then a Muslim should only befriend pious people. One can only be pious if he abandons what is forbidden. The Prophet said: “Do not befriend except a believer.” [At-Tirmithi]
Al-Munaawi 
said: “Befriending a non-pious person weakens one's faith, and makes one fall into doubtful matters and prohibitions.”