The U.S. Commodity Futures Trading Commission (CFTC) has concluded an enforcement action against Eshaq M. Nawabi, operating as Nawabi Enterprise, along with Hyperion Consulting Inc., culminating in a significant legal resolution in the U.S. District Court for the Eastern District of California. This resolution mandates a combined total of $9 million in restitution and civil penalties for the defendants’ fraudulent activities in the forex trading space.
Following a string of investigations and legal proceedings, the consent order issued imposes a dual financial repercussion on the defendants: $4.5 million dedicated to reimbursing defrauded victims and an equal amount as a civil monetary penalty. This ruling not only underscores the gravity of the misconduct but also marks a closure to the CFTC’s pursuit initiated on April 26, 2022.
Detailed Case Review
Spanning from October 2019 to April 22, 2022, Eshaq M. Nawabi and his consulting firm engaged in a deceptive operation targeting forex pool participants. They falsely claimed historical high returns ranging from 8–25% monthly profits, promising similar future gains with minimal risk. Contrary to their assurances of using the funds for forex trading, the money was diverted for Nawabi’s personal use and to sustain payouts in a classic Ponzi scheme fashion.
To maintain the facade, Nawabi and his firm issued counterfeit account statements, showcasing inflated trading success which never actually occurred. Despite repeated requests from investors, the restitution of their funds remained unfulfilled, further entrenching the fraud.
Legal and Regulatory Implications
The recent consent order not only mandates substantial financial redress but also enforces stringent regulatory sanctions. The defendants are now permanently barred from registering with the CFTC or engaging in any trading on registered entities, ensuring they cannot perpetrate further market manipulation. This decision builds on a prior consent order from December 6, 2023, which initially established the defendants’ liability for fraud while prohibiting future violations of the Commodity Exchange Act and associated CFTC regulations.
