An Offering Fraud Where Nothing Existed
Offering fraud actions are one of the most prevalent types of cases brought by the Commission. There is an almost endless number of variations of fraudulent schemes used to convince investors to pay over their money to people who are friends or perhaps people not really known to them. Just what it is that causes the investor to pay over their money to a fraudster is hard to determine. One common thread in many scams, however, is that the investors frequently conduct no or little due diligence as to either the possible investment or those soliciting it. This is likely the situation in the SEC’s most recent case in this area, SEC v. Karpavicius, Civil Action No. 1:23-cv-2205 (S.D.N.Y. Filed March 15, 2023).
Named as defendants in this action are: Darius Karpavicius; TBO Capital Group; Gary Capital Group; HMC Trading, LLC; and HMC Management, LLC. Mr. Karpavicius is a Lithuanian citizen who conducted business through TBO Capital Group and Gray Capital Group. He also incorporated HMC Trading and HMC Management and is the sole member of each entity.
Beginning in December 2021Defendants raised about $4.1 million from dozens of investors, selling interests in what were claimed to be mutual funds. The scheme was conducted through the websites of TBO Capital Group and Gray Capital Group. Each site claimed its investment funds were operated by a group of experienced professions. Each site displayed the pictures of those professionals. Each site also claimed to have annual returns of 50+% without a single down year.
Each s had another key feature in common — everything was fictitious. Three of the four pictures on each site were of the same people. The description of the funds on each site were near copies. The graphic layout of each was virtually identical. The sites also listed the same company address and telephone number.
In the end, the claimed people supposedly associated with each site did not exist; the investments did not exist. Not a single share of stock was purchased.
What did exist was real was the investor cash. It was transferred to Defendant Karpavicius who moved much of it to his bank account and ultimately to crypto trading platforms. The complaint alleges violations of Securities Act Sections 5(a), 5(c0 and 17(a) and Exchange Act Section 10(b). The case is pending.
An Offering Fraud Where Nothing Existed
Offering fraud actions are one of the most prevalent types of cases brought by the Commission. There is an almost endless number of variations of fraudulent schemes used to convince investors to pay over their money to people who are friends or perhaps people not really known to them. Just what it is that causes the investor to pay over their money to a fraudster is hard to determine. One common thread in many scams, however, is that the investors frequently conduct no or little due diligence as to either the possible investment or those soliciting it. This is likely the situation in the SEC’s most recent case in this area, SEC v. Karpavicius, Civil Action No. 1:23-cv-2205 (S.D.N.Y. Filed March 15, 2023).
Named as defendants in this action are: Darius Karpavicius; TBO Capital Group; Gary Capital Group; HMC Trading, LLC; and HMC Management, LLC. Mr. Karpavicius is a Lithuanian citizen who conducted business through TBO Capital Group and Gray Capital Group. He also incorporated HMC Trading and HMC Management and is the sole member of each entity.
Beginning in December 2021Defendants raised about $4.1 million from dozens of investors, selling interests in what were claimed to be mutual funds. The scheme was conducted through the websites of TBO Capital Group and Gray Capital Group. Each site claimed its investment funds were operated by a group of experienced professions. Each site displayed the pictures of those professionals. Each site also claimed to have annual returns of 50+% without a single down year.
Each s had another key feature in common — everything was fictitious. Three of the four pictures on each site were of the same people. The description of the funds on each site were near copies. The graphic layout of each was virtually identical. The sites also listed the same company address and telephone number.
In the end, the claimed people supposedly associated with each site did not exist; the investments did not exist. Not a single share of stock was purchased.
What did exist was real was the investor cash. It was transferred to Defendant Karpavicius who moved much of it to his bank account and ultimately to crypto trading platforms. The complaint alleges violations of Securities Act Sections 5(a), 5(c0 and 17(a) and Exchange Act Section 10(b). The case is pending.