Consumer News

SEC Sues OnPassive Alleging It’s a Pyramid Scheme

Lawsuit claims company defrauded over 800,000 investors of more than $108 million.

Consumer News

SEC Sues OnPassive Alleging It’s a Pyramid Scheme

For years, OnPassive CEO Ash Mufareh assured and reassured consumers who paid $97 to enlist in the company as a “founder” that it would be launching soon and “financial freedom” would follow.

“It’s a done deal,” Mufareh said in a public webinar in 2020, in response to a founder who said he was struggling to pay his bills and feed his family because he hadn’t worked since before the pandemic.

Once its suite of AI-powered apps becomes available to the public, everyone would be using them, OnPassive claimed. The company compared itself to tech giants Google and Meta.

On Friday, the SEC filed a lawsuit against OnPassive and Mufareh alleging the company is a pyramid scheme that has defrauded over 800,000 investors of more than $108 million since 2018. According to the SEC:

[D]efendants sold investors positions in a multi-level marketing arrangement for $97 wherein the investors would earn passive income from subscription fees paid by later investors. The passive income payments allegedly were to commence on ONPASSIVE’s commercial rollout of the computer applications, but, as of June 2023, the defendants allegedly had not yet commercially launched any applications or commenced paying commissions.

The complaint seeks civil penalties, disgorgement of ill-gotten gains plus interest, injunctive relief and an officer and director bar against Mufareh. alerted consumers to OnPassive’s broken promises about its launch dates and other issues in March 2022 after receiving a complaint from a reader who lost money in the alleged pyramid scheme.

“It didn’t sound like a pyramid scheme,” the reader said. “It just sounded like they needed money to get these good ideas off the ground.”

This is a developing story. Check back for updates.

Find more of our coverage on OnPassive here.

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