Court Orders Over $128 Million in Penalties Against Operators of EmpiresX Commodity Pool Scheme

The U.S. District Court for the Southern District of Florida has entered an order of default judgment against Brazilian nationals Emerson Pires and Flavio Goncalves, as well as Florida resident Joshua Nicholas, for operating a fraudulent commodity pool scheme known as EmpiresX. The court order requires Pires and Goncalves to pay, jointly and severally, more than $32 million in disgorgement alongside more than $96 million in civil monetary penalties. Nicholas was ordered to pay $289,000 in disgorgement and an $867,000 civil penalty. In addition to the monetary sanctions, the court imposed permanent injunctions and permanently banned all three individuals from registering with the Commodity Futures Trading Commission (CFTC) and trading in CFTC-regulated markets. The judgment resolves a CFTC enforcement action initiated in June 2022. The court had previously ordered Empires Consulting Corp., the Florida entity that operated the scheme, to pay $64 million in sanctions. According to the findings, beginning around September 2020, the defendants solicited individuals through the EmpiresX website and social media videos to invest in commodity interest pools trading futures and options. The scheme pooled at least $41.6 million from more than 12,500 participants, with Pires and Goncalves retaining over $32 million in ill-gotten gains. The defendants misled investors regarding returns, pool size, and how funds were utilized. Nicholas presented fake account records purportedly demonstrating profitable trading on a major electronic trading platform where EmpiresX held no account. The defendants also built a clone website designed to mimic the platform to deceive participants. By November 2021, EmpiresX ceased honoring participant withdrawal requests. The court determined that the defendants acted as unregistered associated persons of a commodity pool operator and illegally commingled participant funds. The civil judgment follows parallel actions by federal authorities, including a guilty plea by Nicholas to conspiracy to commit securities fraud brought by the Department of Justice in September 2022, and a default judgment secured by the Securities and Exchange Commission against Pires and Goncalves in June 2023.