CFTC Charges Commodity Pool Operators and a Florida Company with Fraudulently Solicitating Over $41.6 Million in a Commodity Pool Scheme
Washington, D.C. — The Commodity Futures Trading Commission today announced it has filed a civil enforcement action in the U.S. District Court for the Southern District of Florida against Emerson Pires and Flavio Goncalves, both Brazilian citizens who previously resided in Port Saint Lucie, Florida; Joshua Nicholas of Stuart, Florida; and Empires Consulting Corp., a Florida corporation. The complaint alleges the defendants fraudulently solicited, accepted, and pooled at least $41.6 million, including more than $14.3 million from individuals in the U.S., through commodity interest pools under the name EmpiresX. The complaint further alleges that Pires, Goncalves, and Empires Consulting misappropriated at least $5 million in pool participant funds.
In continuing litigation, the CFTC seeks full restitution to defrauded pool participants, disgorgement of any ill-gotten gains, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA), as charged.
Case Background
The complaint alleges that beginning in approximately September 2020, the defendants solicited individuals to invest with EmpiresX through the EmpiresX website and in online videos posted on social media platforms. They offered individuals the ability to participate either through a “private investment” pool account directly managed by Nicholas or through a pool account purportedly traded by an automated “EX Bot” based on Nicholas’ trading. As alleged, the defendants advertised EmpiresX as a means for participants to gain “financial independence” and “[b]ecome involved in financial markets such as futures, options, stock exchange and cryptocurrency” and “receive their profits daily.”
According to the complaint, Pires, Goncalves, and Nicholas knowingly made false claims regarding the investments made by the pools, the size of the pools, and participant returns. They also showed screen shots of what they identified as EmpiresX’s profitable account with a large, well-known electronic trading platform. The complaint further alleges that in fact, EmpiresX had no account with that platform, and the defendants had created a fake website designed to mislead participants into thinking that EmpiresX was actually trading their funds.
As charged, only $1 million of participant funds was sent to a futures trading account in the name of Empires Consulting, while the majority of participant funds were misappropriated or lost.
By November 2021, the defendants stopped honoring participant withdrawal requests. According to the complaint, there is no indication that EmpiresX actually returned a significant amount of requested funds to any pool participants.
The complaint also charges the defendants with misrepresenting EmpiresX’s registration status to pool participants. It also alleges that Empires Consulting acted as a commodity pool operator, and Pires, Goncalves, and Nicholas acted as associated persons of a commodity pool operator without registering as required.
Parallel Criminal and Civil Actions
Today, in separate actions, the Department of Justice and the Securities and Exchange Commission (SEC) announced the filing of parallel matters for related conduct, also in the U.S. District Court for the Southern District of Florida. [See DOJ and SEC press releases.]
The CFTC thanks the SEC and the National Futures Association for their assistance in this matter.
The Division of Enforcement staff responsible for this matter are Ben Sedrish, Heather N. Dasso, Ray Lavko, Elizabeth N. Pendleton, Scott Williamson, and Robert Howell.
CFTC’s Commodity Pool Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories and Articles, including the Commodity Pool Fraud Advisory, which provides information about a type of fraud involving individuals and firms, often unregistered, offering investments in commodity pools. The CFTC also strongly urges the public to verify a company’s registration with the Commission before committing funds. If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found using NFA BASIC.
Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online or contact the CFTC Whistleblower Office. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the CFTC Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.
Source: CFTC.gov
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