Alleged binary options fraudster Lee Elbaz, who is awaiting a trial in Maryland District Court, will receive the notorious distinction of having a Department of Justice website devoted to her case and trial, placing her in a small category that includes disgraced financiers Bernie Madoff and Robert Allen Stanford, whose victims and alleged victims were too numerous for the government to notify individually.
Elbaz, who was arrested September 14, 2017 when she landed at JFK airport in New York for a planned vacation, is set to be tried in January 2019. The Department of Justice filed a motion on October 15 requesting that the government create a Department of Justice website to notify victims about the public court proceedings.
The reason for creating the website, the Department of Justice wrote, is because “the government believes that the alleged conduct may have affected thousands of individuals.”
Such websites are typically created when the number of victims is so large that it is impractical to notify them all personally of the progress of a case that may affect them. There are currently 26 such websites notifying victims. Many of these cases are related to securities fraud, stock manipulation and telemarketing scams.
Elbaz, the former CEO of Israeli binary options company Yukom Communications, was indicted by a US federal grand jury on March 22 for allegedly participating in a scheme to “defraud investors in the United States and across the world.”
Elbaz, 36, has been charged in the District of Maryland with one count of conspiracy to commit wire fraud and three counts of wire fraud, according to a Department of Justice press release. Each of these four charges carries a maximum penalty of 20 years in prison.
According to the indictment, Yukom provided investor “retention” services for the binary options websites BinaryBook and BigOption. The indictment also alleges that Elbaz, together with her co-conspirators and subordinates, misled investors by falsely claiming that the company earned profits when the investor earned profits, when in fact the opposite was true.
Elbaz and her co-conspirators also allegedly misrepresented the return on investment from BinaryBook and BigOption and allegedly used aliases and said they were calling from London when in fact they were calling from Israel. According to the US Justice Department, Elbaz’s co-conspirators are still “at large.”
Yukom was but one of hundreds of such companies operating in Israel over the last decade.
A binary option is an option contract whose payoff depends on the price of another asset, like gold, wheat, or Apple stocks. If the holder of the option guesses correctly about the direction that the price has moved at the time of expiry, he earns a predetermined amount of money, and if not he loses the money “invested” in a particular trade.
In the case of the Israeli binary options industry, however, companies offering these contracts were largely fraudulent. They would dupe victims worldwide 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 investors and disappeared with all or almost all of their money.
At its peak, the Israeli industry featured hundreds of companies, employing thousands of Israelis, duping vast numbers of victims worldwide out of billions of dollars.
The Knesset outlawed the binary options industry in October 2017, in part as a result of enormous pressure experienced by representatives of the Israel Securities Authority at meetings of the International Organization of Securities Commissions (IOSCO). However, since the ban, Israeli law enforcement has failed to indict a single binary options fraudster. Many of the operatives continue to offer related fraudulent investment products both from Israel and overseas.
In its latest motion, the US government has proposed maintaining a public website (the website is not active as of this writing).
According to the motion, “the website would provide a summary of the case, information regarding the case’s status, and other significant case-related documents, such as the charging documents. The website also would contain an e-mail address and telephone number for a Victim Assistance Line through which individual potential crime victims could contact the Department of Justice with questions regarding the case.”
Cases proceeding through Israeli courts
The Times of Israel contacted an Israel Police spokesman and asked him, given the allegation that Lee Elbaz may have had thousands of victims, where the Israeli police were during the time the alleged fraud was taking place?
The police foreign press spokesman would not comment on the subject.
Meanwhile, several cases against binary options companies are making their way through Israeli courts.
Last month, lawyer Nimrod Assif brought a lawsuit for NIS 2.6 million ($710,000) against the people allegedly behind the website Option.fm — an Israeli company called Global App Technologies Ltd. as well as its owner, Oren Shabat. The plaintiffs are a British citizen and an Irish citizen. The defendants have yet to file a writ of defense.
On July 19, 2018, Israeli lawyers Haggai Carmon and Assif filed a lawsuit for NIS 5.4 million ($1.5 million) against the people they believe to be behind the website Beeoptions.com. The lawsuit, filed on behalf of a woman from Minnesota in the United States, is against the Israeli company Tracy P.A.I. and its owner David Israel Cartu.
In their writ of defense, the defendants claim that Tracy P.A.I. merely provided white label services to the website BeeOptions and did not have a direct relationship with the customer. They further claimed that David Israel Cartu only became an owner of Tracy P.A.I. in the middle of June 2016, after many of the events described in the complaint had already occurred. Prior to that, Cartu’s brother, Jonathan Cartu was the owner, according to Israel’s corporate registry.
In June of this year, lawyer Yoram Fay filed a lawsuit against the people he believes to be behind the website CFDStocks.com. The lawsuit, for over NIS 2 million ($550,000), was filed on behalf of eight plaintiffs, two from Australia, two from Holland, and one each from Belgium, Switzerland, Sweden and Chile.
The defendants in the lawsuit are Chen Revizada, Adar Revizada, Eli Darsa and B.A. Information Systems, a company in Tel Aviv. Chen Revizada and his wife Adar are the son and daughter-in-law of Benny Revizada, according to the lawsuit. Benny Revizada is the former “king of the gray market” (the extra-bank loan and money-service sector) who went to jail for four years over the Trade Bank affair, which has been described as “the greatest bank theft in Israel’s history.”
The defendants have not yet filed a defense claim.