SEC Charges Justinas Butkus with Orchestrating $4 Million Fraud

The Securities and Exchange Commission today filed charges against Justinas Butkus, of Lithuania, and two companies he owned and controlled, HMC Trading LLC and HMC Management LLC, for fraudulently raising approximately $4.1 million from 64 investors by selling interests in mutual funds that did not exist. As alleged in the SEC’s complaint, in late 2021, Butkus, under the alias Darius Karpavicius, operated fictitious investment firms TBO Capital Group and Gray Capital Group and offered investors shares in sham mutual funds through the firms’ websites, a press release, and internet advertisements, all of which made numerous materially false and misleading statements. According to the complaint, 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. In reality, the complaint alleges, the managers did not exist, their biographies were fake, and TBO Capital Group and Gray Capital Group never made any investments. Rather, as alleged, the entire operation was a fraud run by Butkus to enrich himself. Butkus allegedly used some of the investors' money to operate his fraudulent scheme, but stole most for his personal benefit, such as dining at restaurants, cash withdrawals, and crypto asset purchases. “Butkus’ conduct was egregious: He went to great lengths to defraud unsuspecting investors using sophisticated websites, internet advertisements, and an alias complete with a doctored passport,” said Samuel Waldon, Acting Director of the SEC’s Division of Enforcement. “This case underscores the SEC’s unwavering commitment to hold individuals accountable for engaging in fraud that harms retail investors.” The SEC is refiling this action, which it voluntarily dismissed on January 11, 2024, against Butkus’s alias, “Darius Karpavicius,” through a dismissal without prejudice. The complaint, filed in federal court in Manhattan, charges Butkus, HMC Trading LLC, and HMC Management LLC with violating the registration and antifraud provisions of the federal securities laws and names another Butkus-controlled 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 was conducted by Benjamin Vaughn, Katherine H. Stella, and Andrea Fox with assistance from the Division of Enforcement’s Office of Investigative and Market Analytics. It was 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 appreciates the assistance of Homeland Security Investigations’ New York Field Office and the U.S. Attorney’s Office for the Southern District of New York.

The Securities and Exchange Commission today filed charges against Justinas Butkus, of Lithuania, and two companies he owned and controlled, HMC Trading LLC and HMC Management LLC, for fraudulently raising approximately $4.1 million from 64 investors by selling interests in mutual funds that did not exist. As alleged in the SEC’s complaint, in late 2021, Butkus, under the alias Darius Karpavicius, operated fictitious investment firms TBO Capital Group and Gray Capital Group and offered investors shares in sham mutual funds through the firms’ websites, a press release, and internet advertisements, all of which made numerous materially false and misleading statements. According to the complaint, 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. In reality, the complaint alleges, the managers did not exist, their biographies were fake, and TBO Capital Group and Gray Capital Group never made any investments. Rather, as alleged, the entire operation was a fraud run by Butkus to enrich himself. Butkus allegedly used some of the investors' money to operate his fraudulent scheme, but stole most for his personal benefit, such as dining at restaurants, cash withdrawals, and crypto asset purchases. “Butkus’ conduct was egregious: He went to great lengths to defraud unsuspecting investors using sophisticated websites, internet advertisements, and an alias complete with a doctored passport,” said Samuel Waldon, Acting Director of the SEC’s Division of Enforcement. “This case underscores the SEC’s unwavering commitment to hold individuals accountable for engaging in fraud that harms retail investors.” The SEC is refiling this action, which it voluntarily dismissed on January 11, 2024, against Butkus’s alias, “Darius Karpavicius,” through a dismissal without prejudice. The complaint, filed in federal court in Manhattan, charges Butkus, HMC Trading LLC, and HMC Management LLC with violating the registration and antifraud provisions of the federal securities laws and names another Butkus-controlled 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 was conducted by Benjamin Vaughn, Katherine H. Stella, and Andrea Fox with assistance from the Division of Enforcement’s Office of Investigative and Market Analytics. It was 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 appreciates the assistance of Homeland Security Investigations’ New York Field Office and the U.S. Attorney’s Office for the Southern District of New York.