What is the ruling on profit received from a person who later turned out to be an intermediary for a swindler, and must it be given as charity or returned to those who were defrauded?

First: If someone takes money to trade with it based on a percentage of the profit (Mudarabah), it is not permissible for him to give it to another worker without the knowledge of the owner of the money. If he does so and the money profits, the profit belongs to the original owner of the money, and the first Mudarib gets nothing. Scholars differ regarding the right of the second worker: whether he is entitled to a percentage of the profit, or the equivalent wage, or nothing at all.

Second: If the second worker is accused of treachery and oppressing people, then the ruling on the profit you received from him depends on your knowledge or strong presumption about the reality of his work:

1. If you know that the profit resulted from lawful trade and work with your money: The profit is permissible for you, because it is not a condition for a partner to be righteous; rather, the condition is that the profits come from permissible trade. This also applies if the second worker had other lawful money (such as from trade or inheritance) and gave you the profits from it.

2. If you strongly presume that these profits were usurped from other oppressed individuals: They are not permissible for you, and you must return them to their original owners. If the person you dealt with is known to earn only through usurpation and oppression, then all that he possesses is unlawful, and it is impermissible to deal with him. The principle in this case is that the money should be returned to all those whom the man deceived, in proportion to their principal investments. If that is not possible, then piety dictates disposing of these profits by handing them over to the oppressed, in order to avoid doubt, acting upon the Hadith: "What is lawful is clear, and what is unlawful is clear, and between them are doubtful matters..." (the rest of the Hadith).