The Setup: A Pyramid Dressed in a Silicon Valley Costume

Beginning in July 2018, Mufareh started pitching a vision. ONPASSIVE would build a “suite” of AI-powered software applications that would form an “ecosystem,” something like what Google or Microsoft offers, but built for small business owners who wanted to market themselves online. All you had to do was pay $97 to lock in your “Founder” position before the product launched. Get in early, secure a high spot in the structure, and watch the passive income roll in forever.

The company eventually operated under three interchangeable names: ONPASSIVE, GoFounders, and OFounders. The scheme itself was structured as a classic pyramid: your position in the hierarchy determined how much you earned. People placed above you earned commissions from fees paid by people placed below you, and so on, cascading down through ten tiers. The SEC’s complaint is explicit: ONPASSIVE offered investors income “not primarily for the sale of the product to ultimate users, but rather in return for recruiting other participant-recruiters.”

The $97 fee bought a “Founder” position. Buy multiple positions, buy multiple income streams. Over 93,000 investors did exactly that, purchasing more than one position each. Since a single position was sufficient to access whatever product might eventually exist, the only rational reason to buy multiple positions was the promise of passive income. The SEC says that detail alone confirms what the company really was: a recruitment machine, dressed in the clothes of a tech startup.

The “Passive Income” Fantasy Was Mathematically Impossible

Mufareh told investors in a September 2018 webinar that the pyramid structure could yield over $2 million per month if ten tiers beneath them were fully populated. He then suggested $30 million per month was achievable if the pyramid grew beyond ten rows. An e-Book he personally reviewed and approved, distributed from December 2021 through August 2022, promised investors an “infinite team” of downstream recruits and “unlimited residual income for life.”

The math makes this an impossibility by definition. To populate just ten additional pyramid levels beyond those already shown in their own promotional diagrams, assuming each new level is three times the size of the one above it, would require 5.2 billion positions. That is more than half the population of Earth. The SEC states plainly that “it is not possible to have an infinite team of participants.” The people who got in late were always going to lose. That is the design of a pyramid, and Mufareh, as CEO and sole controller of the company, knew it.

The Numbers Are Staggering

From inception in July 2018 through June 22, 2022, the date ONPASSIVE stopped accepting new Founder registrations, investors poured money into pyramid positions at $97 a slot. Over 93,000 of those investors, nearly 12% of all participants, purchased more than one position. The company reportedly continued accepting $97 payments from holders of “free” positions even after the June 2022 cutoff, netting tens of millions of additional dollars.

The promised software suite began as approximately 30 applications and ballooned to over 50 during the promotional period. By August 2020, after two years of investor funds flowing in, the company had completed exactly two applications: an IP address tracker and a URL shortener. Both were equivalents of tools already available to the public online for free. Development on most of the 30 core applications had not even started by that date.

In November 2022, ONPASSIVE released four applications to the general public, including the IP tracker and URL shortener, all at no charge. Two more free applications followed. As of June 30, 2023, 44 applications remained unreleased, no product had commercially launched, and no commissions had been paid to any investor. Not one. Not ever.

The Non-Financial Ledger

What the settlement numbers will never capture

They Sold Hope to People Who Could Least Afford to Lose It

The promise of “passive income for life” is one of the most psychologically powerful pitches you can make to someone who works a job they hate, or who has been laid off, or who is watching inflation eat their paycheck alive. ONPASSIVE’s marketing said the words every exhausted person wants to hear: you do not have to do anything. Just buy in. Let the system work. Collect your check. The SEC’s complaint documents how Mufareh and ONPASSIVE made this pitch repeatedly, in live webinars broadcast from his Orlando home, in emails to hundreds of thousands of potential investors, and in slick e-Books he personally reviewed and approved.

The “Founder” framing was especially cruel in its design. Early investors were told they were part of a special group: the top 1% of leaders in the company, people who got there first, who understood the opportunity when others did not. That language creates identity. It creates community. It creates social pressure not to question the investment because questioning it means questioning yourself, your judgment, and the other 800,000 people who also believed. When an investor holds a “Founder” position for years and sees no product and no commission, the social architecture of the scheme keeps them from admitting they were deceived. The shame is engineered in from the start.

Then the goalposts moved, and they kept moving. In December 2021, Mufareh changed the rules: the $97 Founder fee would no longer cover the first year of monthly subscription costs after launch, as originally promised. Monthly subscription fees, originally quoted at $25 to $900 per month, were revised upward to “substantially higher although unspecified amounts.” Investors who had been waiting years for a launch that would finally pay them back were told they would now owe more money when it arrived. The SEC’s complaint records this as a modification of the scheme’s participation requirements. For an investor who had already paid and waited, it felt like being told the rules of the game changed after you already bet your savings.

While investors waited, they were being watched and managed. Mufareh ran a “Leadership Council,” a group of his most enthusiastic Founders whom he tasked with promoting the scheme to others. These were ordinary people who believed in the product and recruited their own family members and friends. They spread the pitch on the public internet, in social media, in community groups. They were not paid to do this. They did it because they genuinely believed what Mufareh told them. Every person they recruited became another name in the pyramid beneath them, another source of future commissions they would never see. The Leadership Council members were, unknowingly, the engine of the fraud. They are also its victims.

The Money Went to Spas, Not Software

The SEC’s complaint lists where the money actually went. Mufareh transferred investor funds into accounts held jointly with his wife, Asmahan Mufareh, and into accounts held in her name alone. A portion of investor funds was converted into cryptocurrency and placed under the couple’s exclusive personal control. From those accounts, the Mufarehs spent on: upscale dining, luxury resort stays, car rentals, day spas, hair salons, martial arts lessons, online retail purchases, jewelry purchases, TV subscriptions, groceries, and personal stock investments.

The framing matters here. Hundreds of thousands of people, many of them presumably not wealthy people, paid $97 to fund what they believed was a technology company developing AI software. That money, according to the federal government, funded the Mufarehs’ personal lifestyle. Every spa visit, every upscale dinner reservation, every piece of jewelry was purchased with money that came from someone who was waiting for a passive income stream that Mufareh knew would never arrive. The SEC says Asmahan Mufareh “does not have a legitimate claim to the funds transferred” to her. She is named as a relief defendant and the government is seeking disgorgement of everything she received.

The cruelty is specific. The investors at the bottom of any pyramid scheme are always the most numerous and the least likely to recover anything. Over 800,000 people bought positions. The ones at the very bottom of a pyramid this size were statistically guaranteed to lose, even if the product had launched and been legitimate. The structure itself consumed the people inside it. And while they waited, while they hoped, while some of them recruited their own relatives into the scheme, the man at the top was running webinars from his Orlando home telling them a launch was “a done deal in my mind.”

Legal Receipts: Their Words, Verbatim

Direct from the SEC’s Amended Complaint

Societal Impact: Who Actually Gets Hurt

A Machine Designed to Funnel Wealth Upward

Pyramid schemes are, by mathematical necessity, redistribution engines pointed in the wrong direction. Money flows from the bottom to the top, and the people at the bottom are always the majority. In ONPASSIVE’s case, that majority is over 800,000 people. The SEC’s complaint acknowledges that “most ONPASSIVE investors are bound to lose money.” The scheme did not accidentally harm ordinary people; it was structured to harvest them.

The promise of passive income is especially predatory in an economy where wages have stagnated, cost of living has exploded, and the concept of financial security feels increasingly out of reach for younger and working-class people. The $97 entry fee was designed to feel accessible, low-risk, a lottery ticket for a better life. But over 93,000 investors bought multiple positions, meaning many of them stacked their bets and compounded their losses. The complaint notes there was “no reason an individual would purchase multiple positions other than to increase the individual’s potential for income,” which means every multi-position investor was someone who wanted more than one shot at escaping financial precarity.

The investor base was global. The SEC complaint specifies investors “in the United States and abroad.” This means the scheme extracted money from communities across economic contexts worldwide, with no evidence of any attempt by ONPASSIVE to screen for investor suitability or financial literacy. The reach of the fraud across international borders is a feature of the internet era of pyramid schemes: geography no longer protects communities from predatory financial instruments, and regulatory enforcement struggles to keep pace with online recruitment at scale.

Financial Fraud Causes Real, Measurable Psychological Harm

The source material unfortunately doesn’t detail physical health outcomes. What it does document in extensive detail is the structure of a betrayal: years of promises, repeated false launch dates, changing rules, and ultimately zero return on investment for hundreds of thousands of people. Research consistently links significant financial loss to depression, anxiety, relationship breakdown, and physical health deterioration. The SEC’s complaint details a scheme that operated for five years before formal charges were filed. That is five years of investors carrying false hope, making financial decisions based on a promised future income stream, and waiting for a commission payment that the CEO already knew could never be delivered at scale.

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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