The Commodity Futures Trading Commission (CFTC) has begun formal international legal proceedings against EmpiresX co-founders Emerson Pires and Flavio Goncalves. The agency initiated Hague Convention service to notify the men, who are now residing in Brazil, of ongoing investigations into their alleged Ponzi scheme.

US authorities face significant hurdles when attempting to serve legal documents on individuals who have relocated outside the country. Pires and Goncalves are believed to be in Brazil, having fled the United States after learning of the investigation into EmpiresX. The CFTC filed a status report on August 9th detailing its efforts to serve the defendants under the Hague Convention. This international treaty governs the service of judicial and extrajudicial documents in civil and commercial matters across borders.

To comply with the Hague Convention, the CFTC obtained certified Portuguese translations of the complaint, civil cover sheet, and summons on August 5th. These documents, along with others required for service, were transmitted to the Brazilian Central Authority, identified as the Department of Assets Recovery and International Legal Cooperation. According to the Central Authority, the process of serving documents through the Hague Convention can take an extended period, estimated between nine and eighteen months.

Two other defendants in the CFTC’s case, Joshua Nicholas and Empires Consulting Corp, have already been served with legal notices. Service on individuals who flee to Brazil has proven particularly challenging for US law enforcement. The CFTC recently revealed similar Hague Convention service procedures were initiated against Johannes Steynberg, the former CEO of Mirror Trading International, a cryptocurrency investment scheme that collapsed with an alleged $1.7 billion loss for investors. Steynberg is not a Brazilian citizen.

Parallel civil fraud actions have been brought against Pires and Goncalves by the Securities and Exchange Commission (SEC). These individuals also face criminal fraud charges stemming from their alleged involvement in the EmpiresX scheme. The SEC confirmed on August 16th that it has also commenced Hague Convention service against Pires and Goncalves, submitting the necessary documents to the Brazilian Ministry of Justice on July 29th. This action by the SEC predates the CFTC’s initiation of Hague Convention service by approximately one week.