A federal court in the US has issued a judgment ordering a resident of California and his company to pay $9 million in a forex fraud case, marking a win for the commodities regulator. The Commodity Futures Trading Commission (CFTC) disclosed on Monday that the court had mandated Eshaq Nawabi and his firm, Hyperion Consulting Inc., to pay the specified amount in restitution and penalties.
This ruling represents the culmination of a legal battle initiated by the CFTC, which alleged Nawabi and his company of participating in fraudulent activities by enticing traders to deposit money for forex trading. The court has directed Nawabi and Hyperion Consulting to disburse $4.5 million to victims and $4.5 million in civil monetary penalties.
Per the CFTC, the court determined that from approximately October 2019 to April 2022, Nawabi and Hyperion Consulting misled traders by promising significant profits ranging from 8% to 25% per month with minimal risk. They purported to engage in forex trading using the deposited funds and assured participants of swift withdrawal capabilities upon request.
The CFTC stated: “Today’s order follows a prior consent order the court entered on December 6, 2023, which, in addition to finding the defendants liable for fraud, enjoins them from future violations of the Commodity Exchange Act and CFTC regulations, as charged in the complaint, and permanently bans them from registering with the CFTC and trading on any registered entity.”
Unreturned Funds
Instead of fulfilling their commitments, the defendants misused the funds for Nawabi’s personal gain and to compensate other participants, resembling a Ponzi scheme. To mask their actions, the defendants allegedly issued false account statements and, despite repeated pleas, neglected to return the funds to the participants.
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“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,” the CFTC elaborated.
The commodities regulator has cautioned that recovering lost funds may not always be feasible, as wrongdoers may lack adequate assets. Consequently, the regulator has advised individuals to verify a company’s registration with the commission before investing funds.
