Israeli lawyer Moshe Strugano, a self-described expert in the “formation of offshore companies,” is under investigation in the UK “for possible money laundering and conspiracy to defraud,” the Financial Times reported on Friday.
“The City of London police is currently conducting a number of enquiries to assist with the Crown Prosecution Service’s decision on charging advice for a number of individuals who are under investigation in this case,” a spokesperson told the British newspaper.
Strugano, 50, was prominently associated with Israel’s largely fraudulent binary options industry. For many would-be binary options brokers, he was the go-to person for incorporating offshore companies, opening bank accounts abroad and connecting call centers with credit card processors, sources told The Times of Israel. He also represented binary options companies, including IvoryOption, BeeOptions and SecuredOptions, vis-à-vis lawyers who tried to recover money on behalf of allegedly defrauded investors, sources told The Times of Israel.
A source close to Strugano denied that Strugano incorporated offshore companies for clients or formally connected call centers with credit card processors, but did acknowledge that Strugano opened bank accounts on behalf of clients.
Strugano was arrested in early 2019 by City of London police and released on bail, the Financial Times reported, citing UK court records.
In response to a query from The Times of Israel, the source close to Strugano denied that the investigation in London has anything to do with binary options, but said it was related to the collapse of an investment company in the UK.
“Last year Mr. Strugano was asked to come to an investigation in London and gave a full statement regarding the collapse of a UK investment house,” the source said. “This case has no relation to binary options, but rather to a UK investment house that Mr. Strugano gave services to for 4-5 months, six years ago. Since then Mr. Strugano was not asked to come again to the UK for further investigations.”
‘Legal opinions’ for binary options firms
Strugano has provided countless “legal opinions” to binary options companies that needed a bank or merchant acquirer to process their credit card payments, claiming that these companies were in compliance with anti-money laundering laws in the countries where they had been incorporated.
Any online merchant that wants to accept credit card payments needs an “acquiring bank” or “merchant acquirer” to accept and underwrite them. The acquiring bank is required by law in many countries to make sure the merchant’s activity is not illegal and to know the true identity of the merchants’ owners and not just the identity of its directors, who may be stooges.
Strugano provided these “legal opinions” as a way of helping payment processors conduct due diligence, despite the fact that the activities of many binary options companies were far from legal.
An October 31, 2016 legal opinion that he provided to a binary options website called StellarFinance.com said that it was legal to operate a binary options company from Bulgaria.
“I, the undersigned Moshe Strugano…hereby confirm that BANKXI LTD (StellarFinance.com) operates in accordance with the laws and regulations in its country of incorporation Bulgaria, where there are no requirements of operating license for entities offering binary options services. I also hereby confirm that BANKXI LTD operates in accordance with the AML and due diligence policies of Bulgaria.”
Strugano claimed that he was not employed by, nor did he hold any position within, any binary options companies.
“Please note,” he wrote at the bottom of many of the legal opinions he issued, “I, the undersigned, am an independent attorney and hold no position and/or am employed by the merchant.”
At various times, Strugano has in fact been a shareholder in the Israeli call centers of the binary options companies he issued opinions for, as documented in Israel’s corporate registry.
Strugano told The Times of Israel that on every occasion he held these shares “in trust” for the real owner.
“As a lawyer, myself and my firm are registered in more than 100 companies on trust, therefore I can’t remember each one. My office is offering for Israeli and foreign companies nominee services. Our clients sign trust agreements and when and if we find out there was illegal activity we resign acting as nominee. We are not involved in any way with the activity of the companies, we only serve as nominee on company documents,” he told The Times of Israel in an October 2019 email.
The source close to Strugano told The Times of Israel on Monday that “until two years ago the law firm represented approximately 300 clients and 100 companies on trust. The firm resigned immediately when it found out that clients are involved with binary options.”
The source insisted that Strugano’s law firm does not open offshore companies but merely introduces clients to third-party companies that do so.
“The firm does not open offshore companies or connect call centers to credit card companies but introduces clients to offshore or onshore brokers, ” he said.
Documents from the Panama Papers, obtained by the German newspaper Süddeutsche Zeitung and shared with the International Consortium of Investigative Journalists, belie this claim, however. The documents describe Strugano as a “client” of the Israeli branch of the infamous corporate service provider Mossack Fonseca and even show Mossack Fonseca invoicing Moshe Strugano in 2014 for maintenance of several Anguilla-based binary options companies, including CIT Investments Ltd., which was associated with the binary options website Citrades.com
In November 2018, the former CEO of Citrades Jason Scharf pleaded guilty in the United States for his role in an $8.3 million binary options fraud scheme and is currently serving a 57-month sentence.
Archived pages of Strugano’s website show that in 2010, he specialized in helping clients buy apartments in Israel, helping terminated employees get their due from employers and helping foreign workers with visas, in addition to setting up forex companies. By late 2013, however, Strugano’s office mainly billed itself [Hebrew link] as an incorporator of offshore companies.
“The office provides services in a variety of areas including trusts, opening companies in tax havens and in planning structures for companies and individuals to open bank accounts in different countries around the world. In addition, the office provides services to the finance sector all over the world,” according to archived pages.
Legal documents from 2010 show that Strugano lived in the Neve Tzedek Tower, one of Tel Aviv’s most luxurious residential buildings, where he met some of his clients at the building’s swimming pool.
The binary options industry flourished in Israel for a decade before it 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 its height, hundreds of companies in Israel employed thousands of Israelis who allegedly fleeced 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.
Israeli prosecutors have yet to indict a single binary options suspect on charges of fraud, while the United States has indicted about two dozen, with seven convictions of Israelis, and taken civil enforcement actions against many others.
Strugano’s law firm sent a statement to The Times of Israel that read: “As one of the leading law firms in the online industry. we will continue to serve our clients with an extremely emphasis about compliance with the provisions of the law.”