FORT MYERS, Fla. — A Florida court just handed down some big penalties for three individuals involved in the EmpiresX commodity pool scheme. According to the CFTC, Brazilian nationals Emerson Pires and Flavio Goncalves, along with Stuart, Florida resident Joshua Nicholas, are now facing $128 million in fines.
The U.S. District Court for the Southern District of Florida ordered Pires and Goncalves, who have since fled to Brazil, to pay more than $32 million in profits and over $96 million in civil penalties. Nicholas is on the hook for $289,000 in profits and $867,000 in penalties. To top it off, the court is permanently banning them from trading in markets regulated by the Commodity Futures Trading Commission (CFTC).
According to an SEC Complaintthis whole thing started back in September 2020 in Fort Myers. The defendants in the case Empires Consulting Corp, also known as, EmpiresX founded a corporation with it's principle place of business in Fort Myers. The complaint says Pires and Goncalves co-founded EmpiresX, a global cryptocurrency trading platform, but it was never registered with the SEC in any capacity, nor did it register any offerings of securities under the Securities Act.
14. Defendant Emerson Sousa Pires (“Pires”), age 33, formerly of Fort Myers, Florida, is EmpiresX’s co-founder, president, director, and registered agent. Pires now resides in Brazil, where he is a citizen. When Pires registered EmpiresX as a corporation with the State of Florida, he listed his home address in Fort Myers – an address at which Pires no longer resides after relocating to Brazil – as EmpiresX’s principal, registered agent, and mailing address.
The men allegedly scammed over 12,500 investors out of at least $41.6 million. They made false claims about how they were using investor funds and what returns participants could expect. Nicholas even went so far as to display a fake trading account to deceive investors. By November 2021, they stopped honoring requests for withdrawals altogether.
But they were spending lavishly.
82. For instance, Pires diverted investor funds for personal expenditures including the following: $300,000 in travel expenses, $250,000 in home renovations, $125,000 for a down payment on another home, $70,000 for the lease down payment for a Lamborghini Urus, $47,000 in apparel, $33,000 in meals and groceries, $19,000 in mortgage payments, and $15,000 in home décor. Pires also paid nearly $358,000 to another company he manages, and transferred over $250,000 to himself, relatives, and associates.
The court foundthat Pires, Goncalves, and Nicholas were operating without the necessary registrations and had mixed up pool funds, violating the Commodity Exchange Act (CEA). In September 2022, Nicholas even pleaded guilty to conspiracy to commit securities fraud related to this scheme.
“This judgment sends a strong message that fraudsters won’t get away with their shady practices,” said the CFTC, thanking the SEC and National Futures Association for their help throughout the investigation.
This case has shaken up the crypto word and shed light on the importance of transparency.
