I never imagined myself as an undercover reporter, but when I read The Times of Israel’s ongoing series of investigative articles into the plague that is Israel’s widely fraudulent binary options industry, I volunteered to apply for a job in one of the many firms that ply this trade.
I’d seen in the articles that it’s not always easy to get in touch with these businesses if you’re a customer and want your money back, but I quickly discovered that it’s not too hard to get a job with one. Their ads are everywhere and they are constantly hiring. On Facebook, there are many pages where jobs are offered with thinly veiled job descriptions like “Company in the financial field is looking for retention manager to head up our new office in Tel Aviv.”
I sent an email with my resumé to an agency called “Metamorpha Management” that was looking for employees. After a couple of days, I received a call from an anonymous number inviting me to visit the firm’s office in Ramat Gan.
Since my byline had appeared in The Times of Israel, I introduced myself as Paulo Izico (an anagram of my name), and said I was a 27-year-old Italian waiter who had moved to Tel Aviv for love and was desperately seeking a job in order to remain in Israel with his girlfriend. They took the bait.
On my first visit, I realized that Metamorpha Management wasn’t a recruitment office, but the front of a binary options company called “Binary St.” (It also calls itself St Binary.)
After two interviews, and although I had told them I didn’t have a work permit and did not show them any official documentation, the office manager was sufficiently impressed with me to suggest that the CTO give me a chance. What swung it, I think, was the five minutes when I sat face-to-face with the CTO, Joseph, in his bare-walled, almost empty office, and he asked me to try to persuade him to bet on the result of a soccer game. Those five minutes tested my selling skills — the trait these companies most look for, the office manager told me later. The best candidates have excellent English and the gift of persuasion. They need to be able to sell refrigerators to Inuits.
I was invited to come and try out for a day. One morning soon after, I showed up at the office, in a shabby building in Ramat Gan. They sat me in a large room with about 12 people, full of computers and phones, next to some of their best sales agents. Three big television screens were booming Bloomberg TV. When I asked a sales agent named Patrick whether it was possible to lower the volume, he growled: “No, the volume must be high.”
I was given to understand that the background TV noise helps persuade customers on the other end of the phone that they are talking with international experts who work in a big, buzzing trading room in a financial hot spot — not a small room in a nondescript building in Ramat Gan, Israel. For similar reasons, all the employees speak only in English, including to each other, and they all call each other by the fake Anglo Saxon names they use in their calls. Many of the sales agents are not native English speakers; if they lapse into Hebrew, they immediately get yelled at by the office manager.
The people working in the room around me were a diverse bunch. There was a gray-bearded ultra-Orthodox man who had a photo on his desk of his six children with the words “we love you” scribbled on it. There was a shifty blue-eyed guy with a strong Russian accent, a partially disabled army veteran, a guy who looked like he was in his teens, and a hipster with a long beard and tattoos. All different, yet all driven by the desire to earn lots of money, even if it was by allegedly cheating people if necessary.
Of the dozen people in the room, about nine were doing sales — persuading clients on the phone to deposit money in binary options trading, and doing so by lying about their own identities and experience and the likely profits. The other three people were “senior brokers” — managing the clients’ accounts, giving advice on trades that the clients were carrying out on the trading platforms on their computers at home, and encouraging further deposits from clients.
My trial day happened to coincide with what they call the “marathon,” in which the workers stay in the office from 11 a.m. to 1 a.m. to contact as many clients as they can. The sales agents drink a lot of coffee and energy drinks, and the sense of urgent tension is palpable in the room. A whiteboard lists the names of all the employees. Columns detail the deposits each of them has brought in.
Based on my conversations with the sales agents, I learned that at Binary St (which the workers also referred to as Smith and Taylor Options), salespeople are paid a wage of NIS 5,500 ($1,440) per month plus a cut of every deposit they receive from customers: $20 for a starting deposit of $250 (the minimum), $80 for a deposit of $500, and $120 for a deposit of $1,000. Technically there isn’t a limit, and customers can deposit as much as they want. When sales agents receive the customers’ deposits, the agents whoop and ring a bell, to celebrate the event in the office.
“I once got a deposit of $10,000,” Zack, a “senior broker,” told me. Another time, he said, “a client opened an account for $250,000 and that sales agent got a bonus of $25,000.”
The sales agents can make something like 30 calls an hour on average. Using a system that hides the phone number’s country of origin, they pretend they are calling from Zurich. They call clients all over the world: Mexico, Italy, the Netherlands, Finland, Argentina, Australia, Morocco. On the day I was there, most of the calls went to potential clients in the United States.
Watching them work, I felt I was in a sea full of sharks waiting for their next prey. That unease increased many times, in moments such as when the office manager, Michael, shouted out to Patrick, who was seeking to reel in a deposit and had muted a call mid-conversation, “Catch this motherfucker.”
After a couple of hours of me sitting, watching and learning, one of the sales agents asked me to try calling a lead in Italy. Even though I had made my mind up ahead of time that I would not scam anyone, I knew I would have to make calls. I got lucky. The potential client, an Italian man called Mariano, didn’t pick up the phone. I was safe. And so was he, for the moment.
Before and after almost every phone call, the sales agents frenziedly insulted customers, apparently psyching themselves up
The clients we called did not appear to be cold leads, but people who had provided their details after seeing some kind of get rich quick ad or video on the internet. Others may have responded to email pitches. Each sales agent had a long list of clients whose personal information could be seen on their individual computer screens — first name, last name, country of origin, phone number, address, even social security number. The computer systems also often enable the company to see whether existing customers are logged on to its trading platform, trying to trade. They make calls according to the time zone. Asia and Australia in the morning, Europe and America in the afternoon and evening.
“It’s always easier to convince them to trade when they are online, because that means that they are in front of a computer and they are willing to do it. When they are offline, maybe they are busy or they are working; it is always harder,” Patrick explained to me.
After a customer is convinced to make a first deposit, he or she is transferred to one of the senior brokers — who were described to me by the sales agents as experts on world markets and trades who give “suggestions” to clients and guide them through the trading process.
Once clients have made an initial deposit, a senior broker is put in charge of them — to oversee their trading and convince them to put in further funds. The sales agents here preferred not to discuss widespread allegations that, in the binary options business, the goal at the fraudulent firms is to push for more and more until the unfortunate victim doesn’t have anything left.
But Patrick, the agent sitting next to me, explained some of the basic rationale: “I have no interest in making the client win money. My goal is that they deposit.”
In the room where I spent my entire day, nine people had the task of convincing new clients to trade. Only a few people, the senior brokers, manage the clients’ accounts and deposits.
The worst part of watching these sales agents work with clients was seeing and hearing how they persuade people to start trading: their manner is mainly friendly, but insistent — persuasive and promising, but also threatening at times. Sometimes customers just gave in, agreeing to put in money because they were exhausted by the dogged persistence. To me, hearing both sides of the conversation, it seemed like a kind of psychological violence that works especially well with desperate and poor people.
During my time next to the sales agents, I heard something like 70 calls and only a few times did the target hang up without actually depositing funds or at least promising to do so. Almost everyone listened to what the sales agent had to say, probably because it was exactly what they wanted to hear.
In more than one call, when they saw that clients had an account that was blocked for international transactions, they told them to call their bank and unlock the payment. “It’s going to take five minutes,” the sales agent says. “I’ll call you back in 30.”
Before and after almost every phone call, the sales agents frenziedly insulted customers, apparently psyching themselves up. “Bitch,” one of them shouted. “Motherfucker.” “You idiot.” At times, they muted the phone in mid-conversation to shout abuse. “I’m going to steal everything you have,” said one agent, muted, in mid-call.
Some of the things I heard that Wednesday made me believe that these employees would do almost anything to get their customers’ deposits. “This thing will change your life,” they assured customers. “You need to be a winner,” “You have a 70 to 80 percent chance to win here,” “Do you want to remain poor and miserable for the rest of your life?” “You will make a lot of money.”
I went to the restroom several times because I couldn’t take it anymore and needed a break from the frenzy in the room.
Patrick contacted an 18-year-old boy from Macedonia. The teen simply would not agree to put in money. Frustrated by his hesitation, Patrick ultimately screamed, “So, you will starve to death, fuck you!” and slammed down the phone.
When I told Patrick that the boy was only a teenager, he replied, “I don’t give a fuck! If you want to do this job, you can’t think about people; you must not give a shit about anyone.”
The sales agents always reassured their clients and potential clients that Binary St is a regulated company and not a fraudulent firm like others. “We are professionals,” they frequently said. “We make millions for our clients every day.”
“Scam companies usually ask for a deposit of $10-$20. We are a serious company, that’s why we ask $250 for starters,” Zack, the Russian guy, told a client.
The Times of Israel has documented some of the numerous ruses that fraudulent binary options firms use to separate clients from their money: misrepresenting themselves as investment experts, lying about their identities and location, taking more money than a client has agreed to deposit from their credit card, making trades without clients’ permission, refusing to release clients’ funds, manipulating their trades via rigged trading platforms. I personally can testify to the misrepresentation and the lying about identities and location.
During my day, they asked me several times to make calls to leads. Some went unanswered. When I finally got a Mexican client named Gutierrez on the phone, he and I again got lucky. He told me that he didn’t have time to speak and hung up.
I spent hours trying to learn the system, watching the sales agents work, which is the usual way the recruits are trained. I also ate a lot of pizza with my “colleagues,” who were perfectly friendly to me. Away from the phones, they appeared to be nice, normal people; they joked and laughed like a group of good mates. You’d not have thought any of them made their livelihoods lying about who they are, where they work, and, apparently, what would become of their customers’ money.
When I heard a woman in the US telling the sales agent that she’d ask her bank for a loan to start trading, I couldn’t take it anymore. With my heart beating hard, while the sales agent was away from his computer, I took down her email. “Don’t trade with them. They are a scam,” I wrote to her later.
At midnight, I asked Michael, the office manager, if I could leave. “That’s fine,” he said. He said they’d call me the next day to tell me when to start.
Unsurprisingly, they didn’t. I’d hardly shown a flair for the job.
The Times of Israel emailed Binary St a series of questions related to this article: 1. Is Binary St a regulated firm? If so, regulated where? 2. What is the nature of the relationship between Binary St and Metamorpha Management? 3. Are the sales agents of Binary St told to lie about their names, professional experience, and location when speaking to clients and potential clients? 4. What are Binary St sales agents told to tell clients about their likely profits? 5. Is it true that Binary St uses a system that fakes the phone number sales agents call from?
We did not receive a response.
The Times of Israel has been exposing Israel’s fraudulent binary options industry in a series of articles since March, beginning with an article entitled “The Wolves of Tel Aviv,” and has estimated that the industry here numbers over 100 companies, most of which are fraudulent and employ a variety of ruses to steal their clients’ money. These firms lure their victims into making what they are duped into believing will be profitable short-term investments, but in the overwhelming majority of cases the clients wind up losing all or almost all of their money. Thousands of Israelis work in the field, which is estimated to have fleeced billions of dollars from victims all over the world in the past decade.
The Prime Minister’s Office in October condemned the industry’s “unscrupulous practices” and called for it to be outlawed worldwide. Israel Securities Authority chairman Shmuel Hauser subsequently told The Times of Israel that consultations had begun on the framing of legislation to bar all Israel-based binary options operations from targeting anybody, anywhere. (Israeli firms are already banned from targeting Israelis.) The consultations have extended to Attorney General Avichai Mandelblit and to the government, he said.
Responding to The Times of Israel’s reporting, the Knesset’s State Control Committee held a hearing in January on the government’s failure to shut down binary options fraud. The committee chair, MK Karin Elharar (Yesh Atid), demanded that the police begin enforcement activity against fraudulent binary options firms in the next month and that the Israel Securities Authority urgently advance legislation to shut down the entire industry. Israel Police ignored Elharar’s invitation to the meeting and did not attend. A follow-up hearing will be held on February 28.
The FBI told The Times of Israel this month that it was investigating binary options fraud worldwide, and invited victims and informants to contact it.