SEC Charges Darius Karpavicius in $4 Million Offering Fraud for Operating TBO Capital Group and Gray Capital Group
Litigation Release No. 25667 / March 15, 2023
Securities and Exchange Commission v. Darius Karpavicius, HMC Trading, LLC, and HMC Management, LLC, No. 1:23-cv-02205 (S.D.N.Y. filed Mar. 15, 2023)
The Securities and Exchange Commission today charged Darius Karpavicius, of Lithuania, with orchestrating an offering fraud that raised more than $4 million from approximately 64 retail investors, much of which Karpavicius used for personal benefit such as cash withdrawals and investments in crypto assets.
As alleged in the SEC's complaint, in late 2021, Karpavicius, operating two purported investment firms, TBO Capital Group and Gray Capital Group, began offering investors sham mutual funds through websites, a press release, and numerous internet advertisements, all of which made countless materially false and misleading statements. These websites and other materials falsely stated, among other things, that the TBO Capital and Gray Capital mutual funds were managed by industry professionals with decades of experience and achieved years of high-yield investment returns. Investors were instructed to send money to accounts owned by HMC Trading, LLC or HMC Management, LLC, entities incorporated and controlled by Karpavicius. In reality, the managers did not exist, their biographies were fictitious, and TBO Capital Group and Gray Capital Group never made any investments. Rather, as alleged in the complaint, the entire operation was a fraud run by Karpavicius, designed to enrich him and his entities.
The complaint, filed in the United States District Court for the Southern District of New York, charges Karpavicius, HMC Trading LLC, and HMC Management LLC with violating the registration and antifraud provisions of the federal securities laws and names another Karpavicius entity, DK Auto LLC, as a relief defendant. The SEC seeks permanent injunctive relief, disgorgement with prejudgment interest, and civil penalties against each of the defendants. It also seeks disgorgement with interest from the relief defendant.
The SEC's investigation, which is ongoing, is being conducted by Benjamin Vaughn, Katherine Stella, and Andrea Fox with assistance from the Division's Office of Investigative and Market Analysis. It is being supervised by Peter Rosario, George Bagnall, and Stacy L. Bogert. The litigation will be led by Peter Lallas and supervised by James Connor.
The SEC's Office of Investor Education and Advocacy issued an Investor Alert warning investors about scams conducted through websites that promote investment programs promising high returns with little or no risk.