CFTC Charges California Residents Hasan Sarwar a/k/a Alexander Sarwar, and Rachida Elfrimi With Operating a $1.19 Million Dollar Ponzi Scheme and Registration Violations
The Commodity Futures Trading Commission (CFTC) on September 28, 2017, filed a civil enforcement action in the U.S. District Court for the Southern District of New York against Defendants Hasan Sarwar a/k/a Alexander Sarwar (d/b/a Profit Management Int) of Rancho Cucamonga, California, and his spouse Rachida Elfrimi (d/b/a Profit Management). The CFTC Complaint charges the Defendants with defrauding commodity pool participants, making Ponzi-style payments to pool participants from other participants’ funds, comingling of pool funds, and failing to register with the CFTC as Commodity Pool Operators, as required.
Specifically, according to the Complaint, from at least October 2012 through at least July 2014, the Defendants operated a Ponzi scheme by which they fraudulently solicited and received at least $1,191,000 from over 40 pool participants for the purpose of trading in commodity interests, including commodity futures contracts, in connection with the commodity pool named Profit Management. Potential pool participants were solicited to invest in the Profit Management pool by false claims of success in futures trading and promises of substantial monthly returns, according to the Complaint.
Defendants allegedly solicited funds using two websites that claimed Profit Management had “over 15 years of successful online futures trading experience … doing exactly what the ‘Big Boys’ and the Billionaires do inside the trading pit to move up or down any given minute.” The Complaint further alleges that the websites claimed that Profit Management generated 5-7% return on the funds it traded “almost Every Single day” and promised potential pool participants they would “Double [their] Money in Less Than 5 months.” However, according to the Complaint, despite the greatly inflated claims, the only account that ever received pool participants’ money (that is, Sarwar’s personal trading account) did not show a successful trading history. Rather, the account showed consistent monthly losses which were not disclosed by the Defendants to the pool participants, including on average of about $19,000 in losses per month during the relevant time period.
Commingling of Pool Funds
As further alleged, the Defendants commingled pool funds with non-pool funds and used pool funds for non-pool purposes. For example, pool participants’ funds were not pooled in any trading or bank account held in the name of Profit Management as a separate legal entity. Instead, pool participants’ funds were deposited into individual bank accounts in the names of and controlled by Sarwar and Elfrimi, according to the Complaint.
In its ongoing litigation, the CFTC seeks restitution to defrauded persons, disgorgement of ill-gotten gains, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the CEA and CFTC Regulations, as charged.
The CFTC Division of Enforcement staff members responsible for this case are David W. Oakland, Michael R. Berlowitz, Christopher Giglio, David Acevedo, Lenel Hickson Jr., and Manal M. Sultan.
Posted on: 28/09/2017