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EmpiresX – Scam Review Part 6

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In Florida, two EmpiresX victims have launched a civil class-action lawsuit.

This is in addition to the CFTC and SEC’s civil regulatory actions against EmpiresX.What’s intriguing is that an EmpiresX Receiver has been appointed by the Florida state court handling the class-action lawsuit.

The CFTC and SEC EmpiresX lawsuit dockets appeared on BehindMLM’s calendar today.

The CFTC lawsuit docket had no fresh information. However, a filing request for extra time to file a Joint Scheduling Report in the SEC docket piqued my interest, which lead me to this:

Defendant Empires Consulting Corp. is currently in the hands of a Florida state court receiver.

This was the first time I’d heard of a Florida state lawsuit, and definitely the first time I’d heard of an EmpiresX Receivership.

I looked into the matter in Florida and discovered a class-action lawsuit filed on June 10th against EmpiresX.

Eric Villanueva and Francisco Gonzalez, both class-action plaintiffs, live in Florida.

Plaintiff Eric Villanueva began working for EMPIRES-X in August 2021 after meeting with an EMPIRES-X recruiter.

His original commitment was $9,500, and he made further payments totalling $25,000 until April 2022.

He has not received any money from EMPIRES-X DEFENDANTS in connection with his investment.

Plaintiff Francisco Gonzalez began working for EMPIRES-X in October 2021 after meeting with an EMPIRES-X recruiter. His original commitment was $4,200, and he made no subsequent donations.

He has not received any money from EMPIRES-X DEFENDANTS in connection with his investment.

It is unknown who recruited Villanueva and Gonzales for EmpiresX.

Empires X Corp, Empires Consulting Corp, EmpX Management LLC, Emerson S. Pires, Flavio M. Goncalves, and Joshua David Nicholas are named as defendants in the class action.

This is a classic, but tragic, story about how a well-planned bitcoin ponzi scam preyed on vulnerable victims in South Florida.

These skilled crooks, who have just escaped and are on the run with the money of Plaintiffs and Class Members, were only able to steal tens of millions of dollars with the willing aid of other “reputable” accomplices.

CoinBase is mentioned as a linked third-party. The cryptocurrency exchange is accused of aiding EmpiresX in laundering a “significant amount” of investment monies.

Because of the huge number of activity on EMPIRES-and X’s EMPIRES-X DEFENDANTS’ COINBASE accounts, COINBASE should have been notified of the suspicious behavior and should have swiftly examined the accounts.

Regardless of the regulatory obligations that COINBASE faced as a Money Services Business under the FinCEN division of the United States. The Treasury Department and COINBASE ignored the clear red signals.

COINBASE failed to verify that the cryptocurrency assets, including Bitcoin, Ether, and USD Tether, were sourced from genuine sources, which could have been readily checked.

In reality, under the Bank Secrecy Act, COINBASE is required to investigate and/or report any suspicious conduct involving money transmission.

COINBASE was aware of, or should have been aware of, the fact that the assets being liquidated through its exchange did not lawfully belong to EMPIRES-X and/or EMPIRES-X DEFENDANTS.

COINBASE remained silent about the atrocities it sponsored.

The EmpiresX Ponzi scam and its collapse are detailed in Villanueva and Gonzales’ class-action lawsuit, which regularly cites BehindMLM’s reporting.

The EMPIRES-X fraud, perpetrated by EMPIRES-X DEFENDANTS, has injured thousands, if not millions, of individuals across the country and around the world, with many losing their life savings.

According to current sources, there are as many as 1.2 million accounts registered with EMPIRES-X.20 EMPIRES-X DEFENDANTS have taken in an estimated 60 million dollars.

Villanueva and Gonzales are attempting to represent EmpiresX victims through their attorneys.

While the actual number of class members is unclear at this time, there are at least thousands of putative Class members based on facts and supposition.

The precise amount will be found via investigation. In reality, Undersigned Counsel presently represents over 85 EMPIRES-X consumers who have together lost millions of dollars on the EMPIRESX PLATFORM.

A motion for a Temporary Restraining Order, asset freeze, and appointment of a Receiver accompanied the proposed class action.

On June 21st, the court granted the motion for the appointment of a Receiver.

The Court has been informed that, following the filing of the Emergency Motion and the underlying Emergency Complaint in the aforementioned action, and prior to the hearing thereon, the Plaintiffs served copies of the Emergency Complaint, the Emergency Motion, and the Notice of Hearing relating to the Emergency Motion on the Defendants’ last known registered agents.

All assertions of fact in this order are based on the Plaintiffs’ affidavits.

In this lawsuit, Defendants enticed the investor Plaintiffs to invest in Defendants’ alleged investment scam.

Plaintiffs’ attorneys, in addition to Plaintiffs, have given a declaration stating that they represent over 160 additional customers who engaged in the Defendants’ investment scam.

SCOTT DIMOND, Esq. is appointed Receiver (the “Receiver”) of EMPIRES X CORP., EMPIRES CONSULTING CORP., and EMPX MANAGEMENT LLC, as well as all other entities operated, controlled, or otherwise associated with the Defendants’ activities, which entities are deemed to be included in the term “Receivership Entities” and shall serve until further Order of this Court.

In a nutshell, EmpiresX and its assets are now under the control of the EmpiresX Receiver.

The EmpiresX Receiver has so far

TD Bank, CoinBase, and GoDaddy have all been subpoenaed for EmpiresX-related documents (June 24th)
Emerson Pires, Flavio Goncalves, and Joshua David Nicholas have been subpoenaed for Empires X-related data (July 1st)
It’s worth noting that service on Pires, Goncalves, and Nicholas has been carried out at recognized Florida addresses.

This contradicts Nicholas’s reported detention following his indictment. Pires and Goncalves, according to the SEC and CFTC, have fled to Brazil.

On June 30th, the SEC and CFTC filed a lawsuit against the EmpiresX Defendants.

The EmpiresX Receiver filed his first Status Report on July 21st. The Receiver informed the court in his report.

“TD Bank has not discovered documents responsive to the Receiver’s request,” according to the complaint.
Coinbase has identified responsive papers but has offered a confidentiality agreement before providing them up.
GoDaddy has stated that it will assist the Receiver in transferring EmpiresX’s website domain.
On July 1st, Interactive Brokers Corp was subpoenaed but has failed to answer.
The EmpiresX Receivership was in contact with both the SEC and the CFTC about their respective civil suits, with a decision on how both regulators will continue with the Receivership still pending; and
According to the SEC and CFTC, Pires and Goncalves “have vanished and are thought to have gone to another nation.”
The Receiver has yet to gain custody, possession, or control of any of the Receivership Entities.

To far, no significant assets have been discovered in the Receivership Entities’ custody, control, possession, or ownership of banking accounts, brokerage accounts, or cryptocurrency wallets.

The Receiver will continue to make efforts to obtain custody, ownership, or control of the assets of the Receivership Entities.

Following Interactive Brokers Corp’s failure to answer to the Receiver’s subpoena, the EmpiresX Receiver filed a Motion to Compel on August 18th.

While it is not uncommon for banks to respond to subpoenas late, more than five weeks have elapsed after the July 8, 2022 return deadline and IAB has not answered or even contacted the Receiver to discuss the Subpoena.

Based on its failure to attend, this Court should issue an order ordering IAB to deliver the required papers and show cause why IAB should not be sanctioned for failing to comply with the Subpoena.

On August 26th, a hearing on the Receiver’s IAB show cause motion has been scheduled.

The Receiver also filed his Second Status Report with the court on August 18th.

The Receiver informed the court in the report.

He had seized control of EmpiresX’s website domain and deactivated it with the help of GoDaddy.
He had struck a confidentiality agreement with Coinbase, which has subsequently provided the Receiver with the desired output;
He was still in contact with the SEC and the CFTC, neither of which had decided how to handle the Receivership position; and
There has been no change since the prior report in terms of retrieving EmpiresX assets.
The previously planned IAB show cause hearing on August 26th was rescheduled for August 24th on August 22nd (later today). The August 26th hearing is still set in the case docket.

In the near future, an Initial Case Management Conference has been set for September 12th. I’ll post an update below pending the result of today’s planned show cause hearing.

Typically, the pecking order for adversary procedures is DOJ (criminal) -> federal regulators (SEC, DOJ) -> civil lawsuits (typically investors trying to get their money back).

The Department of Justice intervenes and has federal regulatory cases delayed, while federal regulators do the same with civil procedures.

At least, that’s how it usually goes. This is the first MLM fraud case I’ve encountered in which a state-level court has ordered the formation of a Receivership as part of victim civil actions.

I expect the SEC and CFTC (or even the DOJ) will step in at some time, but that hasn’t occurred yet.

Before anyone asks, no, you cannot join the class-action lawsuit if you lost money in EmpiresX.

We will keep you updated if EmpiresX class certification is obtained or the lawsuit is stayed.

Update: On August 25th, 2022, Interactive Brokers Corp was ordered to comply with the EmpiresX Receiver’s production subpoena.

Interactive Brokers Corp has ten days from August 24th to comply or explain to the court why they should not be put in contempt.

Update, September 28th, 2022: According to the EmpiresX Receiver’s Third Status Report, Interactive Brokers Corp has cooperated with the subpoena.

This resulted in the discovery of $198,000 belonging to the Receivership by the Receiver.

The Receiver is in the process of transferring these money to a Receivership account.

Accounts associated with EmpiresX have also been discovered at Bank of America Corporation, Wells Fargo Bank, N.A., JP Morgan Chase, N.A., Suncoast Credit Union, and PNC Bank.

The Receiver has contacted each of these institutions to inquire about the status and amount of each account and to request copies of any account documents.

The Receiver’s conversations with Coinbase, the SEC, and the CFTC are still ongoing.

On September 20th, 2022, the Receiver’s Third Status Report was filed.

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