The U.S. Commodity Futures Trading Commission (CFTC) announced the signing of a consent order in the Eastern District of California federal court, enforcing restitution and civil penalties against Eshaq M. Nawabi, also known as Nawabi Enterprise and Hyperion Consulting Inc. The defendants are required to pay $4.5 million in restitution and $4.5 million in civil penalties to victims of fraud.

The order comes after a consent order was signed before the court on December 6, 2023, following findings of fraudulent activities by the defendants. In addition to prohibiting them from future violations of the Commodity Exchange Act and CFTC regulations, the order permanently bars them from CFTC registration and trading on any registered entity. The order fully resolves the lawsuit filed by the CFTC on April 26, 2022.

The order found that from October 2019 to April 22, 2022, the defendants solicited participants for a fund pool to engage in forex trading. To convince participants to send funds to them, the defendants engaged in fraud and made material false statements and omissions, including: creating historic massive profits (ranging from 8-25% monthly) in forex trading for themselves and the fund pool participants; promising participants monthly profits of 8-25% on their funds with minimal risk; using the funds deposited by participants for forex trading; and allowing participants to withdraw their funds within three to five business days upon request.

Contrary to the promises made, the defendants misappropriated the funds of the pool participants, using them for Nawabi's personal benefit and paying other pool participants in a manner similar to a Ponzi scheme. To conceal their misappropriation, the defendants produced and distributed false account statements that misled participants about the purported trading profits. Despite repeated requests, the defendants failed to return the funds to the pool participants.

The CFTC warns that orders requiring repayment to victims may not always result in the recovery of lost funds, as violators may not have sufficient funds or assets.