The Securities and Exchange Commission (SEC) has filed charges against Justinas Butkus, a Lithuanian national, and two of his companies, HMC Trading LLC and HMC Management LLC, for orchestrating a fraudulent investment scheme that defrauded 64 investors out of approximately $4.1 million. Butkus, who operated under the alias “Darius Karpavicius,” is accused of offering shares in non-existent mutual funds to unsuspecting individuals, using sophisticated websites and fake advertisements to lure them in.
The SEC’s complaint alleges that in late 2021, Butkus created the fictitious investment firms TBO Capital Group and Gray Capital Group, marketing shares in their so-called mutual funds through press releases, internet ads, and their websites. The materials promised high yields, and falsely claimed that the mutual funds were managed by seasoned professionals with decades of experience. In reality, no such funds existed, and the managers touted on the sites were fabricated, the SEC said.
Rather than making any legitimate investments, Butkus used the funds raised from investors to finance his lavish lifestyle, which included dining at restaurants, withdrawing cash, and purchasing cryptocurrency assets, according to the SEC’s investigation. In an elaborate effort to cover his tracks, Butkus even went as far as using a doctored passport to maintain his alias.
Samuel Waldon, Acting Director of the SEC’s Division of Enforcement, slammed Butkus’ conduct, calling it “egregious” and emphasizing the lengths to which he went to deceive retail investors. “He used sophisticated websites, internet advertisements, and an alias to defraud unsuspecting investors,” Waldon stated. “This case underscores the SEC’s unwavering commitment to hold individuals accountable for engaging in fraud that harms retail investors.”
The SEC’s complaint, filed in federal court in Manhattan, charges Butkus and his companies with violating the registration and antifraud provisions of federal securities laws. It also names another Butkus-controlled entity, DK Auto LLC, as a relief defendant. The SEC is seeking permanent injunctive relief, disgorgement with prejudgment interest, and civil penalties against Butkus and his companies.
This legal action follows a prior dismissal in January 2024 but has been refiled against Butkus and his alias, “Darius Karpavicius.” The SEC’s investigation was led by Benjamin Vaughn, Katherine H. Stella, and Andrea Fox, with additional support from the Division of Enforcement’s Office of Investigative and Market Analytics. The agency also thanked the U.S. Attorney’s Office for the Southern District of New York and Homeland Security Investigations’ New York Field Office for their assistance.
The case serves as a stark reminder of the risks investors face when they fall prey to fraudulent schemes disguised as legitimate opportunities, highlighting the ongoing efforts of regulators to safeguard retail investors from deceitful practices in the financial world.
