For “at least $41.6 million” in fraud, the Commodity Futures Trading Commission has filed a lawsuit against EmpiresX and its officials.
The SEC civil fraud case involving the same behavior was filed concurrently with the CFTC litigation.
Empires Consulting Corp, Emerson Pires, Flavio Goncalves, and Joshua Nicholas are named defendants in the CFTC’s action.
as the regulator claims;
Emerson Pires, Flavio Goncalves, Joshua Nicholas, and Empires Consulting Corp….have engaged in an ongoing scheme through which they have deceptively solicited individuals in the United States and elsewhere to trade commodity futures, options, and digital assets through commodity interest pools under the name EmpiresX, beginning at least in September 2020 and continuing up until the present.
Defendants have taken and pooled at least $41.6 million in connection with this fraudulent scheme from over 12,500 people, including at least $14.3 million from more than 2,300 people in the United States.
Of the “at least” $41.6 million invested in EmpiresX, just $1 million was used for trading, and it was all lost.
Pires, Goncalves, and Nicholas collectively
stole at least $5 million in participant money for unauthorized, non-investment uses, such as opulent travel, fine meals, auto leasing, shopping, and cash withdrawals.
The CFTC has detected fraud with EmpiresX operating a “commodity pool” in contravention of the Commodity Exchange Act.
The accusations against EmpiresX are substantially identical to those we’ve already reported in our SEC complaint coverage, although they focus on CEA breaches rather than violations of the Securities and Exchange Act.
On April 5, 2021, Pires created a futures trading account in the name of Empires Consulting with the account ID of xxxx5996.
In the account creation forms, Pires described himself as the “owner-signatory, trader,” claimed to have over 10 years of “extensive” expertise trading options, commodities, and stocks, and declared that Empires Consulting had an estimated liquid net worth of between one and five million.
Pires provided the following description of Empires Consulting about the account opening procedure:
Our area of expertise is management consulting, where we help companies restructure their debt and cash flows to increase profits.
Empires Consulting is not needed to be registered as a CPO or CTA, according to Pires, who also affirmed that the assets in the account are purely the applicant’s property and that the account “would not be utilized to manage, hold, or pool client money.”
On April 18, 2021, Pires claimed to be the “owner of Empires Consulting Corp and I affirm that I do not accept or solicit monies from outside investors” in answer to a question from the company holding the EX Trading Account.
Between November 2, 2020, and February 22, 2022, Defendants caused a total of $9,477,715 to be placed into the Bank A Account, including at least $8 million in money received from pool members.
Only about $1 million of the roughly $9.4 million placed into the Bank A Account was moved to the EX Trading Account.
Pires, Goncalves, and Nicholas each repeatedly claimed during the weekly videoconferences that participant funds were traded through what they claimed was an EmpiresX account with a well-known online electronic trading platform that allowed trading in futures contracts, stocks, exchange-traded funds, and other assets.
In actuality, EmpiresX didn’t have a trading account with that online exchange.
Based on knowledge and belief, Goncalves registered and created a website that closely resembled the website of the trading platform, including by copying its trademarks and structure.
To persuade users to participate by tricking them into believing that the EX Bot was truly trading their money, the defendants produced and distributed photographs of this bogus website.
Defendants further exaggerated the effectiveness of the EmpiresX pools.
Participants were presented with account balances that included profitable investment returns and affiliate program income when they signed into their EmpiresX accounts.
These figures were fictitious and did not correspond to real trade or money earned by the participant.
It’s noteworthy to notice Flavio Goncalves’ withdrawal claims because the CFTC and SEC estimate EmpiresX’s Ponzi scheme to have raised around $40 million.
Goncalves fraudulently claimed that EmpiresX had paid participants roughly $57 million in withdrawals and was at the time paying participants an average of about $6 million each week in a video posted on or around September 2, 2021.
Apart from Goncalves’ comments, there is no proof that EmpiresX ever paid substantial sums to pool members.
Along with lying about registering with the SEC, the EmpiresX defendants also misrepresented their possession of a trading license.
Nicholas claimed that EmpiresX and himself possessed the necessary licenses to trade on behalf of others in a video that was delivered to participants and potential participants on or around July 30, 2021. He said: “If you’re going to represent individuals, you need your representation license. Therefore, it is what we have. It’s so genuine.
In reality, neither Nicholas nor anyone else connected to EmpiresX had managed to secure the necessary registration or license for either himself, the EmpiresX commodities pools, or Empires Consulting.
EmpiresX started to fall apart in October 2021, as was reported on BehindMLM.
Unbeknownst to us, a “regulators!” exit scam was the catalyst for EmpiresX’s demise.
Defendants instructed EmpiresX participants and promoters to take down and erase any footage promoting the event starting in or around October 2021.
Some participants received calls from Nicholas telling them to remove any EmpiresX promotional videos.
Defendants informed EmpiresX that promotional materials “need[ed] to be revised and authorized by regulatory authorities to be posted in any internet platform or marketing material” and that the company had “been informed of these actions that need to be taken for the company to avoid issues with its registrations and processing.”
If the participants did not take down or delete the recordings, the defendants threatened to block their accounts.
About their marketing materials, registrations, or processes, the defendants had not been alerted by the CFTC or the SEC, nor, it is believed, by any other regulatory body or authority.
Pires and Goncalves escaped to Brazil when the EmpiresX Defendants were later summoned by US authorities. Joshua Nicholas is thought to have remained in the US, however, it is unknown what his present situation is.
Five allegations of fraud, all involving contraventions of the Commodities Act, are detailed in the CFTC’s complaint.
The CFTS has requested that the court:
Confirm the alleged fraud; impose a permanent injunction on the EmpiresX defendants; compel them to forfeit any earnings obtained illegally; order them to compensate their victims; impose a civil monetary penalty, and pay the CFTC’s legal fees.
empires fraud lawsuits brought by the CFTC and SEC are both being followed by BehindMLM.
Additionally charged with similar crimes are Joshua Nicholas, Flavio Goncalves, and Emerson Pires. The coverage of the EmpiresX charges by BehindMLM is still forthcoming.
Update: The coverage of the EmpiresX indictments by BehindMLM is online as of today, July 1, 2022.