The operators of an alleged Ponzi scheme involving an unregistered investment firm have been fined and permanently banned by Ontario’s Capital Markets Tribunal.

In November 2023, the regulatory hearing panel found that Usman Asif and his companies — Mughal Asset Management Corp. and Lendle Corp. — perpetrated a fraud on investors in connection with a sham investment.

Specifically, they found that Mughal and Asif raised at least $2.76 million and US$264,000 from investors, primarily targeting the Pakistani community. Mughal and Asif allegedly promised the investors’ money would be pooled and invested, earning 2% to 5% in monthly returns.

“Mughal investors’ funds were never used to purchase securities and were instead primarily used to pay other Mughal investors as simulated returns or to satisfy withdrawal requests,” the tribunal said.

Approximately $1.8 million and US$19,000 was paid back to investors, and Asif transferred over $80,000 from his personal accounts to Mughal investors, the tribunal noted.

The tribunal also found that Asif took more than $650,000 of investors’ money for his own use.

“Mughal investors never received any real return and some investors lost all of their invested funds,” the tribunal said.

Another company founded by Asif, Lendle, also took $70,000 from investors, ostensibly to fund its business. However, the tribunal found most of the money was used for Asif’s personal expenses — which amounted to a separate fraud, the panel found.

The tribunal also concluded that Asif misled the Ontario Securities Commission during its investigation of the scheme, and that he disclosed a confidential investigation order and summons, and violated the public interest.

The tribunal ruled Monday that Mughal, Asif and Lendle be prohibited from the industry. They were also jointly fined $800,000, ordered to disgorge $661,077 and US$245,000, and ordered to pay $295,413 in costs.

The tribunal also ordered a $350,000 penalty against Asif for his other regulatory violations. Lendle and Asif were jointly ordered to disgorge another $70,000.

In handing down sanctions, the panel said, “Mughal was a sham investment corporation solely owned, operated and controlled by Asif that did not conduct any legitimate investment business.”

The panel added that Asif’s conduct was “deliberate” and “was aggravated by his attempts over years to conceal his activities from the commission and deliberately obstruct the investigation.”