Corporate Misconduct Case Study: ONPASSIVE and Its Impact on Global Investors
The Human Story: A Shattered Dream of Digital Gold
For over 800,000 people across the United States and around the world, a company called ONPASSIVE, run from Orlando, Florida, offered a tantalizing promise: “life changing benefits” and “unlimited residual income for life”.
The pitch, orchestrated by CEO Ashraf “Ash” Mufareh, was perfectly tuned to an era of economic anxiety and technological hype. Investors were told they were getting in on the ground floor of a revolutionary suite of artificial intelligence (AI) applications that would soon dominate the market. All they had to do was pay a modest fee—typically $97—to secure a “Founder” position in a system that would generate passive income effortlessly.
But according to the U.S. Securities and Exchange Commission (SEC), this futuristic dream was a mirage, masking a massive, illegal pyramid scheme that collected over $108 million from its naive investors.
The Corporate Playbook: How the Harm Was Done
The SEC alleges that ONPASSIVE’s business was not about developing technology, but about recruitment. The complex AI “ecosystem” Mufareh promised was perpetually just around the corner, with the official “Launch” date—the trigger for commission payments—pushed back time and time again. While investors waited, the company’s real focus was on selling more $97 Founder positions.
According to the complaint, the scheme was built on a series of deceptive tactics:
- Manufacturing Credibility: When legitimate multi-level marketing (MLM) review sites posted negative reviews calling ONPASSIVE a “pyramid scheme launched by a serial scammer,” Mufareh allegedly didn’t just ignore them. He directed his personnel to create counterfeit websites with deceptively similar names and logos. On these fake sites, they posted glowing, self-written reviews, passing them off as objective, third-party analysis to lure in new investors.
- Encouraging Deeper Investment: Investors were incentivized to purchase multiple Founder positions, with the sole purpose of securing more streams of passive income. The SEC notes that nearly 12% of investors, over 93,000 people, bought multiple positions, demonstrating the scheme’s focus on the income opportunity rather than any actual product.
- Personal Enrichment: The SEC alleges the vast sums of money collected from investors were not primarily used to develop the promised technology. Instead, Mufareh and his wife, Asmahan Mufareh, are accused of diverting funds for personal use, including upscale dining, spa visits, TV subscriptions, and converting a considerable portion into personal crypto assets.
A Cascade of Consequences: The Real-World Impact
Economic Ruin
The primary and most devastating impact of the ONPASSIVE scheme is the financial devastation left in its wake.
Hundreds of thousands of individuals invested their savings based on fraudulent claims. The SEC’s complaint paints a disturbing picture of the disparity between what was promised and what was delivered.
| The Promise | The Reality | ||
| Potential to earn over | $2 million per month for life. | As of June 30, 2023, ONPASSIVE had paid | zero commissions to investors. |
| A full suite of over 50 revolutionary AI products would “Launch” imminently. | After years of delays, the company had not commercially launched any product for a fee. | ||
| Investor funds would be used for product development and marketing campaigns. | Funds were allegedly used for personal expenses, luxury goods, and to perpetuate the scheme. |
It was a scheme designed from the outset to enrich its founder by selling a dream that could never be fulfilled, built on an unsustainable pyramid model.
A System Designed for This: Profit, Deregulation, and Power
The ONPASSIVE case is a potent illustration of how modern capitalism, particularly in the tech sector, creates fertile ground for such schemes.
By co-opting the language of innovation—”artificial intelligence,” “ecosystem,” “Software as a Service”—Mufareh and ONPASSIVE were able to lend a veneer of legitimacy to what the SEC describes as a classic pyramid scheme. This is a feature, not a bug, of our neoliberal late-stage capitalistic economic system that prizes disruption and rapid growth, often with regulatory oversight struggling to keep pace.
The promise of “passive income” is a powerful lure in a precarious gig economy, making countless individuals vulnerable to predatory actors who exploit widespread economic desperation and the dream of financial freedom.
Dodging Accountability: How the Powerful Evade Justice
For years, ONPASSIVE allegedly operated and expanded its enterprise without being registered with the SEC, denying investors the legally required disclosures that could have exposed the risks.
The company’s playbook included brazenly misrepresenting its legal status, with internal documents falsely claiming “WE ARE FULLY LEGAL-WORLDWIDE” and “WE WILL NOT be shut down by a government”. This proactive campaign of deception was designed to quell doubt and project an image of invincibility, a common tactic for those seeking to evade regulatory scrutiny.
The SEC’s legal action, which seeks to permanently bar Mufareh from serving as an officer or director of a public company, represents a crucial step toward imposing the accountability that was, for years, actively subverted.
Reclaiming Power: Pathways to Real Change
Preventing future schemes like ONPASSIVE requires a multi-faceted approach that goes beyond a single enforcement action. True change demands systemic reforms:
- Enhanced Digital and Financial Literacy: Education is the first line of defense. The public needs to be equipped to critically assess online investment opportunities, recognize the red flags of pyramid schemes, and understand that promises of guaranteed, high returns are almost always fraudulent.
- Proactive Regulatory Enforcement: Regulators must have the resources to proactively identify and shut down unregistered offerings and pyramid schemes, particularly those that leverage social media and tech buzzwords to spread rapidly.
- Holding Individuals Accountable: It is not enough to penalize a corporate entity. The individuals who orchestrate and profit from these schemes must face severe personal consequences, including disgorgement of all ill-gotten gains and permanent industry bars.
Conclusion: A Story of a System, Not an Exception
The SEC’s complaint against Ashraf Mufareh and ONPASSIVE tells a story that is tragically common. It is the story of how the powerful allure of technology and the promise of easy wealth can be weaponized against the vulnerable.
This case is about an exploitative economic system that creates both the desperation and the opportunity for such predatory schemes to flourish. The $108 million collected by ONPASSIVE represents the shattered hopes of 800,000 people who were sold a lie. As well as being representative of the lost money, of course.
All factual claims in this article were derived from the legal document Case No. 6:23-cv-01539-PGB-RMN, an Amended Complaint filed by the U.S. Securities and Exchange Commission in the United States District Court for the Middle District of Florida on November 6, 2023.
The SEC recently did a press release on this scam stating that the scammers had to pay a fine + disgorgement to help make their victims whole: https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26374
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