California Resident and His Firm Ordered to Pay $9M in Forex Fraud Case: CFTC

Monday, 15/04/2024 | 20:31 GMT by Jared Kirui

According to the CFTC, the court determined that Eshaq Nawabi and Hyperion Consulting deceived traders by promising profits of up to 25% per month.

Instead, the defendants used the funds for Nawabi's personal gain and to pay other participants.

A US federal court has ordered a Californian individual and his company to pay $9 million in a forex fraud case, granting the commodities regulator victory in the matter. The Commodity Futures Trading Commission (CFTC) announced today (Monday) that the court had ordered Eshaq Nawabi and his company, Hyperion Consulting Inc., to pay the sum of money in restitution and penalties.

Misleading Promises

This ruling marked the culmination of a legal battle initiated by the CFTC, which accused Nawabi and his company of engaging in fraudulent activities by soliciting traders to deposit money for forex trading. The court has directed Nawabi and his firm to pay $4.5 million to victims and $4.5 million as a civil monetary penalty.

According to the CFTC, the court found that from around October 2019 to April 2022, Nawabi and Hyperion Consulting deceived traders by promising substantial profits ranging from 8% to 25% per month with minimal risk. They claimed to trade forex using the deposited funds and assured participants they could withdraw their money within a short timeframe upon request.

The CFTC wrote: "Today’s order follows a prior consent order the court entered on December 6, 2023, which, in addition to finding the defendants liable for fraud, enjoins them from future violations of the Commodity Exchange Act and CFTC regulations, as charged in the complaint, and permanently bans them from registering with the CFTC and trading on any registered entity."

Failure to Return Funds

Instead of fulfilling their promises, the defendants misappropriated the funds for Nawabi's personal gain and to pay other participants, operating in a manner resembling a Ponzi scheme. To cover up their misdeeds, the defendants reportedly distributed false account statements and, despite repeated requests, failed to return the funds to the participants.

"To conceal their misappropriation, the defendants created and issued false account statements that misrepresented trading returns the pool participants supposedly earned. The defendants failed to return funds to the pool participants despite repeated requests," the CFTC added.

The commodities regulator has warned that the recovery of lost funds may not always be possible, as wrongdoers might lack sufficient assets. Thus, the regulator has urged individuals to verify a company's registration with the commission before investing funds.