Israeli police last week arrested six alleged investment scammers as part of a proceeding to extradite them to the United States.
Ori Maymon 36, Nissim Alfasi, 37, Afik Tori, 30, Oron Montgomery, 41, Dave Barzilay, 44 and Gilad Mazugi, 39, were arrested on Tuesday and are being held in custody as their lawyers battle the US government’s request for their extradition.
All six men were managers or sales agents at Yukom Communications in Caesarea, a call center that operated the fraudulent websites Bigoption.com and Binarybook.com. They were indicted by a US grand jury in February 2019 and charged with wire fraud and conspiracy to commit wire fraud.
The men are alleged to have participated in the theft of $148 million from thousands of investors around the world in 2014-2017. They allegedly did this through the fraudulent sale of binary options, a financial instrument at the heart of a massive Israeli scam industry. They conspired to obtain the maximum deposits from investors and made sure the investors lost the money in their accounts or could not withdraw it, according to the allegations in the indictment against them.
They induced investors to deposit money by misrepresenting the conflict of interest between investors and sales reps, the returns investors could make on binary options, their own names, locations and biographies, and investors’ chances of withdrawing their money, the indictment further alleges.
Israeli prosecutor Avi Kronenberg said in court on Wednesday that the defendants are a flight risk, despite the fact that the charges against them have been public knowledge for over three years.
“There is a fear that they will flee now that they know that the United States wants to get its hands on them,” Kronenberg said in Jerusalem District Court at the defendants’ remand hearing. Kronenberg also said that the US justice system hands down much harsher punishments than the Israeli one.
“Proceedings in the US are different from proceedings in Israel. They know they can expect heavy punishments and they know what happened to one of the other defendants,” he said, referring to Yukom Communications CEO Lee Elbaz, who was sentenced to 22 years in prison by a Maryland court in December 2019.
Despite the fact that a Maryland court issued arrest warrants for the six men in February 2019, they all continued to go about their lives in Israel until their surprise arrests on Tuesday morning.
Some of them have started families and opened new businesses in the intervening years, their lawyers said.
“No one ever contacted them and they were never asked to get in touch,” Maymon and Alfasi’s attorney said at the remand hearing.
Some of their lawyers asked that they be allowed to wait out the extradition process at home, since it could “take months.”
A former US Justice Department official who spoke to The Times of Israel on background said that it is unlikely that US prosecutors forgot about the defendants. He speculated that the delay may have been caused by “a backlog, or diplomatic delay, or waiting to pick them up on a red flag, or a continuing investigation.”
A seventh defendant in the case, call center manager Elad Bigelman, had earlier flown to the United States and turned himself in, Kronenberg told the court. He pled guilty and was sentenced to three years in prison, Kronenberg said.
In late 2019 Bigelman had complained to Israeli police that an alleged organized crime figure was trying to extort money from him after learning how much money Yukom Communications had taken in.
Israeli prosecutors did not include the US extradition request in their publicly available court filings but said it included July 2021 affidavits from federal prosecutor Jesse Alexander-Hoeppner and FBI agent Jeremy Desor as well as a large number of internal Yukom emails, recorded conversations among the defendants, and the testimony of former employees who testified at the July 2019 trial of Elbaz, who in December 2019 was sentenced to 22 years in prison. The extradition request was submitted in February 2022, the Israeli prosecutor said, three years after the six men were indicted.
The six men’s arrest is the latest development in the US prosecution of 21 individuals who were owners, managers and employees of the Israeli binary options firm Yukom Communications.
Yukom’s BinaryBook and BigOption were two of hundreds of binary options websites run from Israel in recent years. The entire industry was outlawed via Knesset legislation in October 2017, largely as a result of investigative reporting by The Times of Israel that began with a March 2016 article entitled “The wolves of Tel Aviv.”
At the industry’s height, hundreds of companies in Israel were engaged in the widely fraudulent industry, employing thousands of Israelis and allegedly fleecing billions out of victims worldwide. The fraudulent firms would dupe victims into believing that they were successfully investing and earning money, encouraging them to deposit more and more into their accounts, until the company eventually cut off contact with the investor and disappeared with all or almost all of their money.
Many of the fraudulent operatives have since moved their operations abroad, or switched to other scams while continuing to operate from Israel. The vast majority of the perpetrators have enriched themselves at the expense of victims around the world while enjoying impunity and suffering little social stigma.
In September 2017, Yukom’s CEO Elbaz was arrested in New York, where she had traveled for a birthday celebration. In 2018 and 2019, the FBI arrested five additional former employees of Yukom and related companies who flown to the United States, Liora Welles, Shira Uzan, Lissa Mel, Yair Hadar and Austin Smith. All five pleaded guilty and all but Mel testified against Elbaz at her trial in July-August 2019.
Several other indicted call center agents, including Anog Maarek, Yousef Bishara and Nir Erez have since pled guilty, while the owners of Yukom Communications, Yossi Herzog and Yakov Cohen, remain at large.