SEC Charges Darius Karpavicius with $4 Million Fraud

The Securities and Exchange Commission charged Darius Karpavicius, of Lithuania, with orchestrating an offering fraud that raised more than $4 million from approximately 64 retail investors.

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.

Supposedly, 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.

The SEC states that 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 report claims that a significant amount of the profit was used for Karpavicius’ personal benefit, such as cash withdrawals and investments in crypto assets.

The complaint 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 is seeking 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.

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