Barred Broker Who Did Merrill Stint Indicted in $100M Crypto Scam

What You Need to Know

A barred broker was one of three people indicted by a federal grand jury in Miami for their alleged roles in a crypto fraud scam.
The ex-broker was employed by Merrill Lynch for seven months in 2020.
The defendants used a crypto platform to deceive investors and misappropriate their money, according to prosecutors.

A barred broker who was employed by Merrill Lynch for seven months in 2020 was one of three people indicted by a federal grand jury in Miami on Thursday for their alleged roles in a global cryptocurrency fraud scam that operated much like a Ponzi scheme.

Joshua David Nicholas, 28, of Stuart, Florida, and Emerson Pires, 33, and Flavio Goncalves, 33, both of Brazil, generated about $100 million in revenue from investors they scammed, according to an indictment filed by the Justice Department in U.S. District Court for the Southern District of Florida.

The indictment charged all three defendants with one count each of conspiracy to commit wire fraud and one count each of conspiracy to commit securities fraud. Pires and Goncalves were also charged with conspiracy to commit international money laundering.

“Given this didn’t involve Merrill, we don’t have a comment,” a Merrill spokesman told ThinkAdvisor on Tuesday.

Nicholas joined Merrill in January 2020 and became a registered broker with the wirehouse one month later, according to his report on the Financial Industry Regulatory Authority’s BrokerCheck website.

Nicholas was allowed to voluntarily resign from Merrill in July 2020 after an allegation that he forged a client document, according to a disclosure on his report.

There were also allegations that he made unsuitable investment recommendations, sold away and omitted material facts in February 2020, according to the report. Merrill settled with the client for $275,000.

The only other firm for which Nicholas was registered as a broker was Midtown Partners, for just one month, in August 2016.

Phony Trading Bot

According to the indictment, Pires and Goncalves founded EmpiresX, a crypto investment platform and unregistered securities offering. They, along with Nicholas, billed as the company’s “head trader,” fraudulently promoted EmpiresX.

In the process, they allegedly misled investors about, among other things, a purported proprietary trading “bot” they claimed could generate guaranteed returns to investors in EmpiresX, according to the indictment.