June 25, 2024

Nawabi fabricated and issued falsified account statements that misrepresented the earnings the pool participants were allegedly making. When customers demanded their investment back, he refused to refund their money.

The case against Eshaq M. Nawabi, along with his firms Nawabi Enterprise and Hyperion Consulting Inc., is nearing completion by the Commodity Futures Trading Commission.

A consent order pending approval in the U.S. District Court for the Eastern District of California will impose a restitution and civil monetary penalty, mandating Nawabi to pay the victims of the fraud $4.5 million in restitution along with a $4.5 million civil monetary penalty.

Eight to 25% monthly returns on their investments with minimal risks.

Responsible for paying $9 million in total, Eshaq Nawabi was accused of soliciting pool participants to invest money, presumably for forex trading. In a scheme akin to a Ponzi operation, the participants’ money was unlawfully appropriated for the personal advantage of Nawabi and also to pay other participants, as per the CFTC’s statement.

Nawabi’s solicitation strategy was also built on a foundation of deception, as per the regulatory body’s claims. He duped pool participants into giving him money through false and materially misleading statements and omissions. These included boasting that defendants had a record of high profitability, claiming 8-25% monthly returns for them and the pool participants as a result of forex trading; asserting minimal risk on their investments; stating that defendants would do forex trading using the funds deposited by the pool participants; and ensuring pool participants could withdraw their funds within three to five business days following a request.

In a bid to mask their misappropriation, Nawabi fabricated and distributed exaggerated account statements falsely reflecting trading returns the pool members were supposedly earning. When the customers demanded their money back, they were met with resistance from Nawabi.

Though Nawabi is ordered to pay a gigantic amount, there’s uncertainty on whether he can satisfy the order. The CFTC warned that mandates requiring repayment to victims do not always translate to recovery of lost money, as the violators might not have adequate funds or assets.

An enforcement case by the CFTC earlier this year saw Erik J. Hass and his company, Simply Gains, Inc., facing a whopping $830,000 civil penalty following a Forex scam incurred losses of at least $2.1 million.

In spite of assurances that depositors could not lose more than 20% of their deposited funds, the defendants lost in excess of $1 million as a result of forex trading and misappropriated at least $415,000 for balancing Hass’s mortgage, credit card debt, and funding a Caribbean cruise.

December 2023 saw the CFTC attaining notable triumphs in two serious retail forex fraud cases, leading to heavy financial penalties and judgements against the culprits, namely Michael DaCorta and Avinash Singh.

Associated with Oasis International Group, Limited, Oasis Management, LLC, and Satellite Holdings Company, Michael DaCorta was found culpable of defrauding about 800 individuals to the tune of over $80 million. The court ordered DaCorta a massive payment of over $61 million in restitution and civil monetary penalties. The deceitful scheme entailed fraudulently soliciting funds under the pretext of forex trading, whereas the money was squandered on personal luxuries.

Court judgments mandated Avinash Singh and his entity, Highrise Advantage, LLC, to cough up over $102 million in penalties and restitution. The fraudulent scheme orchestrated by Singh involved illicitly soliciting nearly $58 million from investors. Of this, less than $2.5 million was utilized for the intended forex trading. Most of the funds were unlawfully acquired or used for Ponzi-like payments, inflicting significant monetary losses on the investors.