SEC brings fraud charges against Empirex Capital
The Securities and Exchange Commission (SEC) has brought an action against Empirex Capital LLC, a South Florida-based company and its principal, Rafael Alberto Vargas Gonzalez, a/k/a Rafael Vargas.
The SEC complaint was filed on September 21, 2023 with the Florida Southern District Court.
The Commission alleges that the defendants defrauded investors through the sale of unregistered securities involving investments into Empirex, in violation of the anti-fraud, securities registration, and investment adviser provisions of the federal securities laws.
According to the complaint, from July 2018 through at least March 2023, the defendants raised at least $6.6 million from at least 162 investors, in the United States and abroad, by making repeated material misrepresentations and receiving compensation for making investment advisement decisions for these investors.
The misrepresentations concerned Vargas’s and Empirex’s use of assets obtained from investors, the profitability of Empirex’s trading activities, Empirex’s assets under management, Vargas’s and Empirex’s qualifications to manage investors’ assets and their backgrounds, and the risks of investing with Empirex.
Through Defendants’ fraud Vargas misappropriated approximately $1.8 million, using funds obtained from investors to pay for various personal uses, including jewelry purchases, housing, and luxury automobile payments, and for cash.
Moreover, the defendants misled investors as to the profitability of their investments by making and facilitating Ponzi-like payments to the investors to mask Empirex’s failure to generate sufficient profits in trading investors’ assets in what they termed “traditional” investments, investments in crypto assets, or a combination of both. And, when confronted by investors after they stopped receiving returns, Vargas repeatedly lied to them that he would return the entirety of the funds owed to them.
Through their conduct, the defendants have each violated the anti-fraud, securities registration, and investment adviser provisions of the federal securities laws.
The SEC’s complaint alleges that the defendants have violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§77e(a), 77e(c), and 77q(a)]; Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. §240.10b-5]; and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 (“Advisers Act”) [15 U.S.C. §§80b-6(1) and 80b-6(2)].
The Commission seeks permanent injunctions; specific conduct-based injunctions; civil monetary penalties against the defendants, as well as disgorgement of ill-gotten gains with prejudgment interest against the defendants.