CFTC secures default judgment against operators of Profit Management
Hasan Sarwar and Rachida Elfrimi, operators of Profit Management, are ordered to pay a civil monetary penalty of $2.3 million.
The United States Commodity Futures Trading Commission (CFTC) has secured a final default judgment against Hasan Sarwar and Rachida Elfrimi, operators of Profit Management, a Ponzi scheme purported to be a futures trading business.
According to an Order signed by Judge Alison J Nathan of the New York Southern District Court, the Commission’s Motion for Final Judgment by Default, Permanent Injunction, Civil Monetary Penalties, and Other Statutory and Equitable Relief against the defendants is granted.
The defendants will have to pay restitution in the amount of $763,752, plus post-judgment interest. They will also have to pay a civil monetary penalty in the amount of $2,291,258, plus post-judgment interest.
The CFTC has found that, from at least October 2012 through at least July 2014, Hasan Sarwar and Rachida Elfrimi operated a Ponzi scheme by which they fraudulently solicited and received at least $1,191,000 from over 40 individuals who invested in what was dubbed “futures trading” in a commodity pool named Profit Management.
The scheme operated via two websites: www.profitmanagement.biz and www.lendmeforprofit.com, which both touted the Profit Management pool. These websites claimed that 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 the market up or down any given minute.” The scheme also made false promises about returns: one of the marketing messages said that pool participants would “Double [their] Money in Less Than 5 months.”
In reality, the pool did not engage in any futures trading and Sarwar engaged in unprofitable futures trading for his own account, whereas the pool had not earned any futures trading profits. The pool participant funds were not placed in a Profit Management pool account under the name of a separate legal entity, but were instead deposited into bank accounts held in the names of and controlled by Sarwar and Elfrimi. Sarwar then transferred some of the money received from pool participants to a trading account held under his name. The rest of the money was used either for business or personal expenses, or Ponzi-style payments to pool participants from other participants’ funds.
The defendants were accused of, inter alia, fraud in connection with sale or purchase of futures contracts, failure to operate a commodity pool as a separate legal entity and commingling of pool funds, as well as of failure to register as CPOs.
The case was terminated today, February 1, 2019.