CFTC: California Man and His Company Fined $9 Million for Forex Fraud

The U.S. District Court for the Eastern District of California entered a consent order against Eshaq M. Nawabi, d/b/a/ Nawabi Enterprise, and Hyperion Consulting Inc., the U.S. Commodity Futures Trading Commission (CFTC) announced on April 15, 2024. 

The order requires the defendants to pay $4.5 million in restitution to the victims of the fraud and a $4.5 million civil penalty.

Prior to the order, the Court also issued a consent order on December 6, 2023, which, in addition to finding the defendants liable for fraud, enjoined them from future violations of the Commodity Exchange Act and CFTC regulations, as alleged in the Complaint, and permanently barred them from registering with the CFTC and trading on any registered entity. The order fully resolves the action filed on April 26, 2022, by the CFTC.

The order finds that from approximately October 2019 through April 22, 2022, defendants solicited pool participants to deposit funds for forex trading. In order to persuade pool participants to send money, the defendants made fraudulent material misrepresentations and omissions, including:

The defendants had historically earned high profits (between 8-25% per month) for themselves and pool participants from trading forex;

Pool participants would realize profits of 8–25% per month on their funds with minimal risk;

The defendants would trade forex with the funds the pool participants deposited; 

Upon request, pool participants could withdraw their money within three to five business days of any such requests.

Instead of trading pool participants' funds as promised, the defendants misappropriated the pool participants' funds for Nawabi’s personal benefit and paid other pool participants in a manner akin to a Ponzi scheme. 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.