The United States has indicted 12 alleged binary options operatives, all of them associated with BinaryBook.com and BigOption.com, bringing the total number of Israelis prosecuted by the US in connection with those two websites to 18.
In a redacted document unsealed last week, the United States Department of Justice revealed the names of three new defendants who allegedly committed financial fraud against American citizens through the BinaryBook.com and BigOption.com.
They are Yosef Herzog (aka Yossi Herzog), who the United States alleges was the owner of a Mauritius-based company called Linkopia as well as an Israel-based company called Yukom Communications; Nissim Alfasi, allegedly an employee of Yukom Communications and brand manager for BinaryBook; and Elad Bigelman, allegedly an employee of Yukom Communications and brand manager for BigOption. The document can be viewed online at Pacer.gov.
The other nine defendants’ names are still under seal and their names and identifying details have been redacted from the indictment. All three named defendants have been charged with conspiracy to commit wire fraud, wire fraud and aiding and abetting.
The indictment against the 12 defendants was issued on February 13, but kept under seal for four months. It was partially unsealed on June 12 because Lee Elbaz, the former CEO of Yukom Communications who is set to stand trial in the United States on July 16, had requested that Herzog, Alfasi and Bigelman provide videotaped depositions in her defense.
The three men are currently in Israel and were scheduled to begin providing videotaped testimony on June 19.
On June 11, US Department of Justice lawyers sent an email to Herzog’s lawyer, Zvi Gabbay (a former head of enforcement at the Israel Securities Authority), notifying him that “your client Yosef Herzog has been charged by indictment in the United States with a number of offenses for his role in a scheme to defraud investors in the United States and elsewhere through purported investments in ‘binary options.’”
The Department of Justice lawyers told Gabbay that Herzog may wish to reconsider providing testimony now that he knows he has been charged.
The prosecutors who contacted Herzog’s lawyer to inform him his client had been indicted were Henry Van Dyck, deputy chief of the Securities and Financial Fraud Unit of the Department of Justice’s Criminal Division, Rush Atkinson and Caitlin Cottingham. Atkinson was most recently a member of Special Prosecutor Robert Mueller’s team investigating Russian interference in US elections.
Herzog’s lawyer said in a statement that his client “has just learned of the charges filed against him in the US a few days ago. He denies the allegations and intends to fight them and any extradition procedure, if commenced. At no point in time was he involved in any fraudulent scheme.”
Prior to June 12, there had been six named defendants from BinaryBook and BigOption prosecuted by the US. These are Austin Smith, Yair Hadar, Liora Welles, Shira Uzan, Lissa Mel and Lee Elbaz. All have pleaded guilty to fraud-related charges, with the exception of Elbaz, whose trial is set to begin in July.
Elbaz is represented by attorney Barry J. Pollack, who is also the attorney for Wikileaks founder Julian Assange.
Welles and Uzan are scheduled to be sentenced on August 16. Mel and Hadar are scheduled to be sentenced on August 23. Smith is scheduled to be sentenced September 3.
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 the 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 reporting by The Times of Israel. However, since the ban, Israeli law enforcement has indicted only three alleged binary options fraudsters.