Feb 24, 2025 The Commodity Futures Trading Commission (CFTC) announced that the U.S. District Court for the Southern District of Florida issued a default judgment against Brazilian nationals Emerson Pires and Flavio Goncalves, as well as Florida resident Joshua Nicholas, for their roles in the fraudulent EmpiresX commodity pool scheme. This ruling resolves a CFTC complaint filed on June 30, 2022. The court’s order requires Pires and Goncalves to pay a combined total of over $128 million in disgorgement and civil monetary penalties. Specifically, they are jointly required to pay more than $32 million in disgorgement and more than $96 million in civil monetary penalties. Nicholas, meanwhile, must pay $289,000 in disgorgement and $867,000 in civil penalties. The order also permanently enjoins all three individuals from engaging in any conduct that violates the Commodity Exchange Act (CEA) and bans them from registering with the CFTC or trading in any CFTC-regulated markets. In a related ruling, the court had previously ordered Empires Consulting Corp., the entity responsible for operating the EmpiresX commodity pools, to pay $64 million in monetary sanctions. Case Background According to the court’s order, beginning in approximately September 2020, the defendants engaged in fraudulent activities by soliciting individuals to invest in commodity futures, options, and other products through the EmpiresX commodity pools. They promoted these pools via the EmpiresX website and social media videos, attracting over 12,500 participants and pooling at least $41.6 million. Despite this substantial amount, the defendants retained over $32 million in ill-gotten gains. The order details the deceptive tactics employed by the defendants, including false claims about the use of participant funds, the size of the pools, and the returns participants could expect. Additionally, Nicholas presented a fake trading account as proof of EmpiresX’s profitability, misrepresenting it as a genuine account on a well-known electronic trading platform when no such account existed. By November 2021, the defendants ceased honoring withdrawal requests, leaving participants with no recourse. The order also found that Pires, Goncalves, and Nicholas acted as associated persons of Empires Consulting Corporation without proper registration and violated the CEA by commingling pool funds. Parallel Criminal and Civil Enforcement Actions The CFTC’s civil enforcement action is part of broader efforts to bring the perpetrators of the EmpiresX scheme to justice. On September 8, 2022, the Department of Justice announced that Joshua Nicholas had pleaded guilty to conspiracy to commit securities fraud. Furthermore, on June 21, 2023, the Securities and Exchange Commission (SEC) obtained a default judgment against Pires and Goncalves for their involvement in the scheme. Fraud Advisory The CFTC continues to prioritize customer protection, issuing several advisories on how to recognize and avoid fraud in the commodity trading space. Among them, the Commodity Pool Fraud Advisory provides guidance on how to detect fraudulent offers of commodity pool investments, emphasizing the importance of verifying a company’s registration with the CFTC through the National Futures Association’s (NFA) BASIC system. The CFTC urges the public to report suspicious activities or potential violations of commodity trading laws to its Division of Enforcement. Whistleblowers may be eligible for financial rewards for providing valuable information leading to enforcement actions.