U.S. Securities and Exchange Commission Litigation Release No. 26374, dated August 15, 2025.
The SEC charged Ashraf Mufareh and ONPASSIVE LLC with running a fraudulent, unregistered multi-level marketing scheme. They allegedly raised over $108 million from 800,000 investors worldwide by promising passive income from a fake suite of AI computer applications. The scheme was structured as a pyramid, with investors promised commissions from later investors.
In Plain English
Imagine someone promises you a way to make money just by signing up for a new online service. They say you'll get paid when new people sign up after you. But, the service they promised doesn't really exist or work, and the money you get paid comes from the new people signing up, not from any real business. This is like a pyramid where the people at the top get paid by the people at the bottom, and it eventually collapses because there aren't enough new people to pay everyone.
Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.
How the Alleged Scheme Worked
- Promise of AI-Powered Passive Income Starting in July 2018, Ashraf Mufareh and ONPASSIVE LLC began pitching an opportunity to investors. They claimed to be developing a suite of artificial intelligence (AI) computer applications designed to work together in an 'ecosystem'.
- The 'Founders' Early Bird Offer To finance this development, Mufareh and ONPASSIVE offered potential investors a chance to buy a position for $97. These early investors, called 'Founders,' were promised a higher placement in the structure and potentially higher returns than later investors.
- Pyramid Structure and Subscription Fees Investors were told they would make a one-time payment for a product package and then pay a monthly subscription fee to use the applications. Those who paid would gain placement in a pyramid structure, with 'Founders' getting preferential placement.
- Commissions from New Investors A key promise was that investors could earn 'commissions' from monthly subscription fees paid by individuals placed below them in the pyramid structure. This was marketed as a 'passive' income opportunity, requiring little effort from the investor.
- Incentivizing Recruitment The scheme incentivized participants to recruit as many new members as possible. It was claimed that these recruits would be placed under the existing participant, directly contributing to their commission earnings.
- Encouraging Multiple Positions Participants were also encouraged to purchase multiple $97 positions within the pyramid. The stated reason for this was to maximize the number of passive income streams an individual could generate.
- Unregistered Securities Offering The ONPASSIVE opportunity was structured as an investment contract and therefore a security. However, these securities were never registered with the SEC, and no exemption from registration was applicable.
- False Claims About Launch and Profitability Defendants allegedly made repeated false and misleading statements about the timing of the product launch, which was crucial for commission payments, and the potential income investors could earn.
- Lack of Product and Payments As of June 2023, ONPASSIVE LLC had allegedly not yet launched any product for a fee, nor had it made any commission payments to any investor, despite raising over $108 million.
- Countering Negative Reviews To combat negative reviews on existing MLM websites, ONPASSIVE personnel, under Mufareh's direction, allegedly created counterfeit websites to post positive or misleading information.
The Enforcement Action
On August 14, 2025, the SEC obtained a final judgment against Ashraf Mufareh and OnPassive LLC. The judgments included permanent injunctive relief, an officer-and-director bar for Mufareh for eight years, and monetary penalties. The SEC also voluntarily dismissed its claims against relief defendant Asmahan Mufareh, concluding the litigation. The SEC's amended complaint alleged that between 2018 and 2023, the defendants fraudulently raised over $108 million from more than 800,000 investors globally through a fraudulent and unregistered offering structured as a pyramid scheme, making misrepresentations about the feasibility and profitability of their business.