On June 30, 2022, the US Department of Justice, the US Securities Exchange Commission, and the US Commodity Futures Trading Commission filed parallel criminal and civil charges against Emerson Sousa Pires and Flavio Mendes Goncalves, both Brazilian nationals, Le Anh Tuan, of Vietnam, and Joshua David Nicholas, Michael Alan Stollery, and David Saffron, US citizens residing in Florida, California and Nevada respectively. The CFTC complaint also names Empires Consulting Corp., a Florida corporation.
There are four separate criminal complaints. In the first, Le Anh Tuan is charged in US District Court for the Central District of California with conspiracy to commit wire fraud and conspiracy to commit international money laundering. According to the complaint, Tuan played a role in the “Baller Ape Club,” a Non-Fungible Token investment project in which Tuan and co-conspirators set up a website for the sale of cartoon figure NFTs, solicited and received at least $2.6 million from investors, and then deleted the website and stole the invested funds. Tuan and his co-conspirators then allegedly laundered the investors’ funds through “chain-hopping,” converting one type of cryptocurrency into others in a series of transactions.
The second criminal action, filed in US District court for the Central District of California, charges Stollery with one count of securities fraud, for his participation in a cryptocurrency fraud scheme involving Titanium Blockchain Infrastructure Services, Inc. (“TBIS”), a cryptocurrency investment platform founded by Stollery in 2017. The information alleges that Stollery raised $21 million from investors for an initial coin offering by falsifying the explanation of how the technology behind the cryptocurrency functions, planting fake testimonials and making unsupported claims about TBIS’ relationship with prominent companies and the US Federal Reserve Board. In an earlier action by the SEC, judgment were entered against Stollery, permanently enjoining him from violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and ordering disgorgement and civil penalties.
In the third criminal action, the United States alleges that Saffron used his cryptocurrency investment platform, Circle Society, to solicit investments in an unregistered commodity pool, falsely promising 500% returns and making false claims about the capabilities of a trading bot. The indictment, filed in US District Court for the Central District of California, alleges that Saffron raised $12 million from investors, and charges him with conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud, and obstruction of justice.
The fourth criminal action, against Pires, Goncalves and Nicholas, was filed in US District Court for the Southern District of Florida. The indictment charges the three defendants with conspiracy to commit wire fraud, and conspiracy to commit securities fraud stemming from their involvement in a cryptocurrency-based Ponzi scheme. Pires, Goncalves and Nicholas allegedly promoted EmpiresX, a cryptocurrency investment platform, by misrepresenting the ownership and capabilities of an automated trading program called “EX Bot,” and by falsely guaranteeing returns to investors. The indictment further alleges that, after fraudulently soliciting individuals in the US and abroad to invest in commodity interest pools, Pires and Goncalves laundered the funds through a foreign cryptocurrency exchange.
The CFTC’s civil enforcement action was filed simultaneously with the criminal complaint against Pires, Goncalves and Nicholas in the US District Court for the Southern District of Florida. Based on the same transactions as the DOJ indictment, the CFTC complaint alleges that the three men, along with Empires Consulting Corp., a Florida corporation, fraudulently solicited individuals in the US and abroad to invest $46.6 million in commodity interest pools, using fake screen shots and a fake website to trick investors. As alleged, only $1 million of the invested funds were sent to a futures trading account in the name of Empires Consulting, and most of the funds were dissipated through loss or misappropriation.
Finally, the SEC’s complaint charges Empires Consulting, Pires, Goncalves and Nicholas with fraud based on the same facts, including allegations that the defendants falsely claimed that Nicholas was a licensed trader when in fact he had been suspended by the National Futures Association, and that Empires Consulting had filed paperwork with the SEC to register as a hedge fund. The complaint charges the defendants with violating the Securities Exchange Act of 1934 and the anti-fraud provisions of the Securities Act of 1933; it seeks injunctive relief, disgorgement, and civil penalties.