SEC Charges Ashraf Mufareh and ONPASSIVE LLC with $108 Million Fraudulent Multi-Level Marketing Scheme and Unregistered Offering

The Securities and Exchange Commission has filed a lawsuit against Ashraf Mofareh and ONPASSIVE LLC on the grounds of fraud and an unregistered offer. Imagine a stage with curtains drawn to reveal a complex play of deception and manipulation. The SEC says Mufareh’s company has been orchestrating this since 2018.

The Alleged Fraudulent Scheme

According to the SEC Mufareh, and ONPASSIVE defrauded investors around the world out of more than $108 million. Imagine a spider carefully spinning its web and entrapping over 800,000 people in it. The defendants claimed that they were developing a set of computer applications powered by artificial intelligence, and sold investors positions in an multi-level marketing scheme for $97. What was the promise? Income passive from subscription fees paid later by investors.

Nevertheless, as if a mirage in a desert, the promised income passive and commercial rollout for the applications did not materialize. By June 2023, defendants hadn’t launched any applications nor started paying commissions. The SEC complaint compares the ONPASSIVE Program to a Pyramid Scheme.

The Web of Deceit

The plot intensifies as the defendants are accused by the prosecution of falsely stating the expected profit, the date of product launch and the legality their operation. Have you ever seen an imitation bill? It may look real, but is not. The defendants are accused of creating fake websites to post glowing reviews about them in response to negative feedback left on other sites. These fake websites were so convincing they even mimicked names and logos from existing sites to trick readers into believing that the reviews were coming from independent third parties.

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The Legal Consequences

In its complaint filed in Florida’s Middle District Federal Court, the SEC accuses Mufareh, and ONPASSIVE, of violating the Securities Act of 1932, the Securities Act, and Securities Exchange Act of 1934. The SEC wants injunctive measures, disgorgement and prejudgment interest of gains ill-gotten, civil penalties as well as a ban on Mufareh serving as a director or officer. Asmahan Mufareh is listed as a relief plaintiff.

Investigation and Litigation

  • John Crimmins was the SEC investigator, with Benjamin Perlman as a helper. Nina B. Finston supervised the investigation and Carolyn M. Welshhans helped supervise it.
  • David Nasse supervises the case. Gregory Miller, Michael Friedman and David Nasse are the attorneys who will handle the litigation.

Investors, beware!

SEC Office of Investor Education and Advocacy issued a warning to investors about pyramid schemes masquerading as multi-level marketing. The scam is like a wolf wearing sheep’s clothes, a seemingly harmless scheme that hides a potentially dangerous reality. Investors should remain vigilant and educated.

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