SEC Obtains Final Judgments Against Operators of Fake Trading Scheme Known as “EmpiresX”

The Securities and Exchange Commission (SEC) has obtained final judgments against Empires Consulting Corp. (EmpiresX) and its founders, Emerson Sousa Pires and Flavio Mendes Goncalves, following charges related to a fraudulent trading scheme.

As per the SEC’s complaint, filed on June 30, 2022, Pires and Goncalves operated EmpiresX, presenting it as a hedge fund that promised daily profits of one percent through trading activities conducted by a trading “bot” or manual trading. However, the complaint alleges that the bot was fictitious, the manual trading resulted in substantial losses, and the defendants only transferred a small portion of investors’ funds to EmpiresX’s brokerage account. Instead, Pires and Goncalves allegedly misappropriated a significant amount of investors’ money to finance personal expenditures such as leasing a Lamborghini, shopping at Tiffany & Co., and making payments towards a second home.

Pires and Goncalves are also facing criminal charges in a parallel criminal proceeding, United States v. Emerson Sousa Pires, et al., 22-CR-20296-JEM (S.D. Fla.). Presently, they are fugitives.

The U.S. District Court for the Southern District of Florida entered a judgment against Pires and Goncalves on June 21, 2023, based on their default. The judgment permanently enjoins them from violating Sections 5 and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5. They are also permanently prohibited from directly or indirectly soliciting new investors or accepting additional funds from existing investors, as well as issuing, purchasing, offering, or selling any security. However, they are allowed to buy or sell securities for their personal accounts. Additionally, Pires and Goncalves are barred from acting as officers or directors of a public company. The judgment orders them to jointly and severally pay disgorgement of $32,179,070, along with prejudgment interest of $2,661,610. Moreover, civil penalties of $6,000,000 are imposed on Pires, and $5,000,000 on Goncalves.

EmpiresX, separately, consented to a final judgment entered on May 22, 2023. The judgment includes similar injunctive relief and mandates EmpiresX to jointly and severally pay disgorgement of $32,178,397, along with prejudgment interest of $2,661,554. The obligation to pay is considered satisfied by the amounts collected by a state-court-appointed receiver.

The SEC acknowledges the cooperation and assistance provided by the U.S. Department of Justice and the Commodity Futures Trading Commission in this matter.