The Commodity Futures Trading Commission (CFTC) announced on Tuesday the filing of a civil enforcement action against two companies, Nawabi Enterprise and Hyperion Consulting as well as their owner Eshaq Nawabi.
The charges against Nawabi and his two companies include fraud and misappropriation of funds related to an off-exchange foreign currency (forex) trading scheme. According to the regulator, the defendants solicited at least $543,000 from at least seven investors.
The latest enforcement action came after the CFTC obtained a Statutory Restraining Order against the defendants in late April. The court froze all the assets of the two companies and the owner and provided the regulator immediate access to their books and records.
Big Promises
Nawabi with his two companies has been running the allegedly fraudulent scheme since October 2019. They persuaded at least seven investors to participate in the pool trading scheme.
The representatives of the companies made false claims that they have made large profits between 8 and 25 percent per month historically, both for themselves and pool participants.
In addition, they promised the pool participants a monthly return of 8 percent to 25 percent with minimal risks from trading forex. Also, the investors were promised the facility of withdrawing their money at any time upon request.
But, in reality, the investors’ funds were used for Nawabi’s personal benefit. The companies even paid some investors with the funds collected from other investors, making it a classic Ponzi scheme . Nawabi and his companies created and issued false account statements that misrepresented trading returns purportedly earned by pool participants to conceal their misappropriation.
Further, the scheme operators turned down several withdrawal requests by either ignoring them or making bogus promises and excuses. They even tried to delay the withdrawals as long as possible.
The CFTC is now seeking full restitution to the defrauded pool participants and disgorgement of any ill-gotten gains. Furthermore, the regulator wants to slap a civil monetary penalty, along with permanent registration and trading bans as well as a permanent injunction from future violations.
