The Commodity Futures Buying and selling Fee has sued EmpiresX and its executives for “not less than $41.6 million” in fraud.
The CFTC’s lawsuit was filed in parallel with an SEC civil fraud lawsuit pertaining to the identical conduct.
Named defendants within the CFTC’s lawsuit are Empires Consulting Corp, Emerson Pires, Flavio Goncalves and Joshua Nicholas.
As alleged by the regulator;
Starting in not less than September 2020 and persevering with by means of the current Emerson Pires, Flavio Goncalves, Joshua Nicholas and Empires Consulting Corp. … have engaged in an ongoing scheme by means of which they fraudulently solicited people in the USA and elsewhere to commerce commodity futures, choices, and digital property, amongst different merchandise, by means of commodity curiosity swimming pools beneath the title EmpiresX.
In reference to this fraudulent scheme, Defendants have accepted and pooled not less than $41.6 million from over 12,500 people, together with not less than $14.3 million from over 2,300 people in the USA.
Simply $1 million of the “not less than” $41.6 million invested into EmpiresX was used for buying and selling… and fully misplaced.
Between them, Pires, Goncalves and Nicholas
misappropriated not less than $5 million in participant funds for improper, non-investment functions, together with luxurious journey, eating, automobile leases, purchasing, and money withdrawals.
Fraud recognized by the CFTC pertains to EmpiresX working a “commodity pool”, in violation of the Commodity Change Act.
Allegations pertaining to EmpiresX’s unlawful conduct largely mirror these already lined in our SEC lawsuit protection – however inside the context of CEA violations, versus the Securities and Change Act.
On April 5, 2021, Pires opened a futures buying and selling account with the Account ID of xxxx5996 within the title of Empires Consulting.
Within the account opening paperwork, Pires represented that Empires Consulting had an estimated liquid web value of between one and 5 million, recognized himself because the “owner-signatory, dealer,” and said that he had over ten years of “in depth” expertise buying and selling choices, commodities, and shares.
In connection the account opening course of, Pires described Empires Consulting as follows:
“We focus on administration consulting the place we support enterprise restructure debt and iMovie money flows to additional scale revenue.”
When requested if Empires Consulting was required to be registered as a CPO or CTA, Pires responded no, and he additional confirmed that the account “won’t be used to handle, custody, or pool shopper funds and the property are solely [the] property of the applicant.”
On April 18, 2021, and in response to a question from the agency carrying the EX Buying and selling Account, Pires represented that he’s the “proprietor of Empires Consulting Corp and I affirm that I don’t settle for or solicit funds from exterior traders.”
In mixture, Defendants triggered $9,477,715 to be deposited into the Financial institution A Account between November 2, 2020 and February 22, 2022, together with not less than $8 million in funds acquired from pool contributors.
Of the roughly $9.4 million deposited into the Financial institution A Account, solely roughly $1 million was transferred to the EX Buying and selling Account.
Throughout the weekly videoconferences, Pires, Goncalves, and Nicholas every repeatedly represented that participant funds have been being traded by means of what they claimed was an EmpiresX account with a well known on-line digital buying and selling platform that supplied buying and selling in futures contracts, shares, exchange-traded funds, and different property.
In truth, EmpiresX didn’t have an account with that digital buying and selling platform.
Goncalves had registered and, on info and perception, designed an internet site that mimicked the buying and selling platform’s web site, together with utilizing the identical format and marks utilized by the platform.
Defendants created and disseminated photographs of this pretend web site to induce contributors to speculate by deceptive them into considering that the EX Bot was really buying and selling their cash.
Defendants additionally misrepresented the EmpiresX swimming pools’ efficiency.
When a participant logged in to their EmpiresX accounts, they have been proven account balances together with constructive funding returns and associates program earnings.
These quantities have been false, and didn’t replicate buying and selling within the participant’s account or earnings really acquired.
Given each the CFTC and SEC have pegged EmpiresX’s Ponzi scheme at about $40 million, it’s attention-grabbing to notice Flavio Goncalves’ withdrawal claims.
In a video made on or round September 2, 2021, Goncalves falsely said that EmpiresX had paid contributors about $57 million of withdrawals and was on the time averaging about $6 million per week in payouts to contributors.
There is no such thing as a indication, apart from Goncalves’s statements, that EmpiresX really paid vital funds to pool contributors.
And because the EmpiresX Defendants lied about registering with the SEC, so too did they lie about having a buying and selling license.
In a video distributed to EmpiresX contributors and potential contributors on or about July 30, 2021, Nicholas represented that he and EmpiresX had the suitable licenses to commerce on behalf of others, saying: “In the event you’re going to symbolize folks, you want your
illustration license. And so, that’s what we have now . . . . It’s very a lot actual.”In truth, neither Nicholas nor anybody else affiliated with EmpiresX had obtained the required registration or license for the EmpiresX commodity swimming pools, Empires Consulting, or themselves.
As lined right here on BehindMLM, EmpiresX started to break down in October 2021.
Unbeknownst to us, EmpiresX’s collapse started with a “regulators!” exit-scam.
Starting in or round October 2021, Defendants directed EmpiresX contributors and promoters to take away from the web and delete any movies selling EmpiresX.
Nicholas known as sure contributors and directed them to delete any promotional movies relating to EmpiresX.
In a discover posted on the EmpiresX web site, Defendants said that promotional supplies “want[ed] to be revised and authorised by regulatory authorities so as to be posted in any web platform or advertising and marketing materials,” and that EmpiresX had “been notified of those
actions that have to be taken to ensure that the corporate to keep away from points with its registrations and processing.”Defendants threatened to dam contributors’ accounts if they didn’t take away or delete the movies.
Defendants had not acquired any discover from the CFTC or the SEC relating to their advertising and marketing supplies, registrations, or processing, nor, upon info and perception, had they been notified by another regulatory company or authority.
When the EmpiresX Defendants have been later subpoenaed by US authorities, Pires and Goncalves fled to Brazil. Joshua Nicholas is believed to have stayed within the US however his present standing is unclear.
The CFTC’s Criticism particulars 5 counts of fraud, all pertaining to violations of the Commodities Act.
The CFTS has requested the court docket to
- affirm the alleged fraud;
- enter a everlasting injunction towards the EmpiresX Defendants;
- order the EmpiresX Defendants to disgorge ill-gotten good points;
- order the EmpiresX Defendants to pay restitution to their victims;
- situation a civil financial penalty; and
- pay the CFTC’s authorized prices and charges.
BehindMLM is monitoring each the SEC’s and CFTC’s EmpiresX fraud instances.
Emerson Pires, Flavio Goncalves and Joshua Nicholas have additionally been indicted on associated felony fees. BehindMLM’s protection of the EmpiresX indictments is pending.