SEC Gets Final Judgment Against Head Trader In “Fake Trade” Scheme In Florida
On May 12th, 2023, the Securities and Exchange Commission (SEC) officially confirmed that the agency has obtained a final judgment in its case against Joshua David Nicholas, et al. Mr. Nicholas was the head at a Florida-based hedge fund called EmpiresX, which defrauded investors through “fake trades.” Here, our Miami investor losses attorney provides an overview of the allegations and the enforcement action taken by federal officials.
Allegations: Investors Lured in With False Promises of Safe, Above-Market Returns
The SEC alleges that Mr. Nicholas and two co-conspirators—Emerson Sousa Pires and Flavio Mendes Goncalves—established a purported hedge fund called EmpiresX in South Florida in late 2020. In total, they amassed around $40 million from global investors, by promising 1 percent daily returns on unregistered securities. The company marketed itself as a prospective SEC-registered hedge fund and enticed investors with two investment propositions:
- An automated trading bot ‘Exbot’;
- Private investments involving collective funds used for diverse trading.
SEC: Trades Were Faked to Show Gains
According to the SEC, EmpiresX allegedly falsified trades to show profits that were never actually made. Indeed, they purportedly manipulated the system to demonstrate gains. The dishonest conduct was aimed at maintaining the illusion of consistent returns, thus ensuring investor retention and attracting more individuals to invest. In reality, few trades were ever actually made at all. Instead, the investor funds were siphoned off to fund the lavish lifestyles of the conspirators.
A Final Judgment Has Been Obtained in the EmpiresX Investment Fraud Case
As stated previously, the SEC obtained a final judgment against EmpiresX’s head trader, Joshua David Nicholas, who was implicated in a fraudulent trading scheme. Mr. Nicholas and his co-defendants have been found responsible for the misuse of investors’ funds for personal luxuries. Nicholas pled guilty in a parallel criminal case, receiving a 51-month prison sentence and a restitution order of over $3 million. However, co-defendants Mr. Pires and Mr. Goncalves remain at large. They are believed to be outside of the United States.
Investors Should Beware of Promises of Safe, High Rates of Return
Investors should exercise caution when faced with offers of guaranteed, high-rate returns, as they often signal potential fraud. No investment is entirely safe and high returns usually involve higher risks. Any proposition that suggests otherwise is likely deceptive. Legitimate investments offer a balance between risk and return, and often require comprehensive due diligence. Investors should also consider the credibility and registration status of investment entities. If it sounds too good to be true, it probably is. Always remember: informed decision-making is a safeguard against falling prey to unscrupulous schemes promising safe, high rates of return. If you were defrauded by a representative selling unregistered securities, it is imperative that you consult with a lawyer.
We Advocate for the Rights and Interests of Investors in Florida
At Carlson & Associates, P.A., our Miami securities fraud attorneys have the professional experience that investors can trust. If you sustained financial losses due to misconduct happening at a brokerage firm, we are ready to pursue justice. Contact our firm today to arrange your initial case assessment. Our attorneys advocate for compensation for wronged investors throughout Florida.
Source:
sec.gov/litigation/litreleases/2023/lr25722.htm