Sham Funds! Lithuanian Man Poses as 'Darius Karpavicius' in $4 Million Rip-Off!

SEC v. Justinas Butkus, HMC Trading, LLC, HMC Management, LLC, et al. — U.S. Securities and Exchange Commission Litigation Release No. 26259, dated February 28, 2025.

The SEC charged Justinas Butkus with orchestrating a $4.1 million fraud by selling interests in non-existent mutual funds. Operating under aliases and fictitious firms like TBO Capital Group and Gray Capital Group, Butkus allegedly misled 64 investors with false claims of high returns and experienced management. The funds raised were largely misappropriated for personal use, including cryptocurrency purchases.

In Plain English

Imagine someone pretends to run a special savings club that promises to make your money grow really fast, like magic. They show fake pictures of 'experts' and claim amazing success. But in reality, the club doesn't exist, and the 'experts' are made up. The person running it takes the money people give them, uses some to keep the fake club going, and spends the rest on themselves, like buying fancy things or digital coins.

Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.

How the Alleged Scheme Worked

1. Create Fake Investment Firms Starting in late 2021, Justinas Butkus created fictitious investment firms named TBO Capital Group and Gray Capital Group. He operated these firms under the alias 'Darius Karpavicius' to conceal his identity.
2. Launch Sham Mutual Funds Through the websites of TBO Capital Group and Gray Capital Group, Butkus offered investors shares in mutual funds that did not actually exist. These websites were used to solicit investments.
3. Fabricate Management and Performance The websites falsely claimed the sham funds were managed by experienced industry professionals with decades of experience. They also boasted about achieving years of high-yield investment returns, stating annual returns of '50+% since inception without a single down year'.
4. Use Deceptive Marketing Butkus utilized the firms' websites, a press release, and internet advertisements, all containing materially false and misleading statements, to attract investors to his non-existent funds.
5. Conceal Identity and Operations Butkus, a Lithuanian citizen, used the alias 'Darius Karpavicius' and incorporated entities like HMC Trading, LLC and HMC Management, LLC to receive investor funds, further obscuring his role.
6. Misdirect Investor Funds Investors were instructed to send or wire money to accounts owned by HMC Trading, LLC or HMC Management, LLC. These funds were then transferred, with approximately 80 percent going to crypto asset trading platforms under 'Karpavicius' and HMC Trading's names.
7. Misappropriate Raised Capital Instead of making investments, Butkus allegedly misappropriated the remaining funds for personal use. This included spending on dining at restaurants, cash withdrawals, and purchasing crypto assets.
8. Perpetuate the Fraud A portion of the investor money was used to operate the fraudulent scheme itself, helping to maintain the illusion of legitimate operations and solicit further investments.

The Enforcement Action

The SEC filed charges against Justinas Butkus, HMC Trading LLC, and HMC Management LLC for fraudulently raising approximately $4.1 million from 64 investors by selling interests in sham mutual funds. The SEC seeks permanent injunctive relief, disgorgement with prejudgment interest, and civil penalties against the defendants, and disgorgement with interest from the relief defendant, DK Auto LLC. The 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 is led by Peter Lallas and supervised by James Connor. The SEC acknowledges the assistance of Homeland Security Investigations’ New York Field Office and the U.S. Attorney’s Office for the Southern District of New York.

Named in this action: Justinas Butkus, HMC Trading, LLC, HMC Management, LLC, DK Auto, LLC.

Original SEC litigation release ↗ · Browse all cases