The United States Securities and Exchange Commission (USSEC) has filed a comprehensive legal complaint against Ashraf “Ash” Mufareh, his company ONPASSIVE LLC, and his wife Asmahan Mufareh. This significant legal action exposes a vast scam that has defrauded millions from unsuspecting investors, primarily in India, and raises concerns about its operations extending to Dubai.
The complaint, lodged in the Middle District of Florida, meticulously describes what it terms a “sophisticated multi-level marketing (MLM) scheme” masquerading as an innovative artificial intelligence (AI) technology enterprise. Initiated in July 2018, ONPASSIVE, interchangeably referred to as Gofounders and Ofounders, has been marketed as a highly profitable investment opportunity. The scheme, as per the SEC’s filing, promised “high returns and passive income” through an ecosystem of AI applications, enticing investors with the prospect of being part of a technology revolution akin to “established, well-known multinational technology companies.”
The SEC’s document delves deeply into the deceptive tactics employed by Ash Mufareh, the architect of ONPASSIVE, in ensnaring investors into a pyramid scheme. The complaint reveals that individuals were enticed to pay $97 for a ‘Founder’ position, lured by the promise of preferential placement and enhanced returns within the pyramid structure. “Investors taking advantage of this early bird promotion…were assured a higher placement in the pyramid and higher returns than later investors,” the complaint explicitly states, underscoring the fundamentally misleading premise of the scheme.
As of March 2023, ONPASSIVE had reportedly accumulated in excess of $108 million, a staggering sum garnered from the sale of over 1.12 million ‘Founder’ positions to investors around the globe. However, in a glaring breach of its promises, the company did not initiate the launch of any product nor did it disburse any commissions to its investors, as had been pledged. The complaint lays bare this stark reality, stating, “As of June 30, 2023, ONPASSIVE had not yet launched any product for a fee or paid any commissions to investors.” This statement from the SEC’s complaint not only highlights the unfulfilled promises but also underscores the profound disconnect between the company’s ambitious claims and its actual deliverables, revealing the venture’s true, unproductive nature.
The scope of ONPASSIVE’s fraudulent activities, as detailed in the SEC’s complaint, was not confined to the US and India but also extended its deceptive reach to Dubai. While the document does not explicitly mention the involvement of Dubai authorities, it does shed light on significant transactions that link the scam to the region. Particularly, it focuses on Asmahan Mufareh, the spouse of Ashraf Mufareh, and her alleged role in the misappropriation of funds.
The complaint accuses Ashraf Mufareh of diverting substantial amounts of investor money to his wife, Asmahan. This diversion of funds is not just limited to straightforward transfers but also includes the conversion of these funds into cryptocurrencies for personal use. The document states, “Specifically, Mufareh transferred investors’ funds to his wife Asmahan Mufareh, including transfers into bank account or accounts held jointly by the Mufarehs or held in Asmahan Mufareh’s name only, or over which Asmahan Mufareh exercised authority.” Furthermore, it is alleged that “the Mufarehs converted a considerable portion of investor funds into crypto assets under their exclusive personal control.”
These actions, as outlined in the complaint, represent a blatant misuse of investor trust and funds, implicating Asmahan Mufareh in the broader scheme. The involvement of cryptocurrency and international transactions, particularly those linked to Dubai, underscore the complex and global nature of the ONPASSIVE scam. This international dimension of the fraud not only highlights the far-reaching impact of the scheme but also suggests the potential for a broader investigation that may involve multiple jurisdictions, including Dubai.
Legal Implications and Investor Alert
The SEC’s complaint rigorously charges the defendants with serious legal breaches, specifically targeting the core of their deceptive operations. The document accuses them of violating critical aspects of financial regulation, stating, “Defendants each violated the registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933 [Securities Act, 15 U.S.C. §77e(a) and (c)] and the anti-fraud provisions of Section 17(a) of the Securities Act [15 U.S.C. §77q(a)] and Section 10(b) of the Securities Exchange Act of 1934 [Exchange Act, 15 U.S.C. §78j(b)] and Rule 10b-5 [17 CFR 240.10b-5] thereunder.” In taking decisive legal action against the defendants, the SEC’s move transcends mere punishment for the accused.
It resonates as a clear, cautionary signal to investors across the globe, alerting them to the perils of seemingly lucrative but fraudulent schemes. The complaint, in its detailed accusations, serves as a sobering reminder of the old adage, “If it sounds too good to be true, it probably is.” It emphasizes the critical need for investors to remain alert and conduct thorough research before committing their hard-earned money.
The SEC, in its filing, articulates this sentiment, asserting, “Unless Defendants are restrained and enjoined, they are reasonably likely to continue to engage in the acts, practices, transactions, and courses of business set forth in this Complaint.” This statement not only underscores the urgency of the SEC’s intervention but also highlights the broader implications of such schemes on the financial market’s integrity. By spotlighting the importance of adhering to regulatory standards, the SEC’s complaint reinforces its unwavering commitment to safeguarding investors and upholding the foundational principles of fair and transparent financial practices.
In an alarming development reported by The Eastern Herald, ONPASSIVE’s fraudulent activities, notorious for their multi-level marketing (MLM) scams, have now extended their reach to Bangladesh, following a disturbing pattern of deceit in India and a conspicuous branding effort in Dubai. Headquartered in Hyderabad, ONPASSIVE has been implicated in defrauding thousands in India, luring them with false promises of wealth. This pattern of exploitation and deceit is a consistent theme in ONPASSIVE’s operations, underscoring the company’s unscrupulous business practices across various countries.
The report further unveils that ONPASSIVE, under the leadership of the internationally recognized fraudster Ashraf Mufareh, also known as Ash Mufareh, has been exploiting the digital era to advance its deceptive schemes. The company’s business model, mirroring a Ponzi scheme, fundamentally relies on the continuous recruitment of members, according to Bangladeshi newspaper Blitz. The primary income for members stems not from genuine sales but from enrolling new participants, a practice that is unsustainable and often deemed illegal in many countries.
