(HedgeCo.Net) The Securities and Exchange Commission has filed charges against Ashraf Mufareh of Orlando, Florida, and his company, ONPASSIVE LLC (together, the “defendants”), for orchestrating a fraudulent and unregistered offering.
The SEC’s complaint alleges that, since 2018, the defendants have fraudulently raised over $108 million from over 800,000 investors across the globe, including in the United States. The defendants allegedly claimed to be developing a suite of computer applications using artificial intelligence. According to the complaint, the defendants sold investors positions in a multi-level marketing arrangement for $97 wherein the investors would earn passive income from subscription fees paid by later investors. The passive income payments allegedly were to commence on ONPASSIVE’s commercial rollout of the computer applications, but, as of June 2023, the defendants allegedly had not yet commercially launched any applications or commenced paying commissions. Per the complaint, the ONPASSIVE program is a pyramid scheme.
In furtherance of the pyramid scheme, the defendants allegedly made material misrepresentations about the timing of the commercial product launch, the magnitude of anticipated profits, and the legality of the defendants’ operations. The defendants also allegedly created websites and posted positive reviews of the defendants to counter negative reviews on existing sites that review multi-level marketing programs. The counterfeit sites allegedly mimicked the existing sites’ names and logos to deceive readers into thinking the reviews were generated by third-parties unassociated with the defendants.
The SEC’s complaint, filed in federal court in the Middle District of Florida, charges Mufareh and ONPASSIVE with violating the registration requirements of Sections 5(a) and 5(c) of the Securities Act of 1933 and the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) and Rule 10b-5 thereunder of the Securities Exchange Act of 1934. The complaint seeks injunctive relief, disgorgement of ill-gotten gains plus prejudgment interest thereon on a joint and several basis, civil penalties, and an officer and director bar against Mufareh. The complaint names Mufareh’s spouse, Asmahan Mufareh, as a relief defendant.
