The US Justice Department has indicted six more employees of the Israeli binary options firm Yukom Communications Ltd., as well as revealed the names of six others that had previously been redacted, in an indictment that was unsealed on Friday.
All of the defendants were owners, managers or retention agents of Yukom Communications in Caesarea, Israel. The company operated the websites BigOption.com and BinaryBook.com. The indictment, which supersedes a previous indictment from February 13, 2019, brings the number of alleged binary options operatives indicted in the Yukom case to 21. The indictment assesses that the amount these operatives and their co-conspirators allegedly stole from investors around the world was $140 million, as opposed to $145 million, as stated in the February indictment.
All fifteen defendants, nine of whom were indicted in February (with six of their names redacted) and six of whom were indicted on September 25, have been charged with one count of conspiracy to commit wire fraud and three counts of wire fraud.
The defendants are Yakov Cohen, 27; Yosef Herzog, 54; Ori Maymon, 33; Nissim Alfasi, 33; Elad Bigelman, 37; Runal Jeebun, 29; Sabrina Elofer, 28; Afik Tori, 27; Anog Maarek, 28; Oron Montgomery, 38; David Barzilay, 41; Gilad Mazugi, 36; Hadas Ben Haim, 34; Yousef Bishara, 32; and Nir Erez, 29.
All of these individuals are current or former residents of Israel. The US Justice Department has not indicated where they are at present or whether they were aware of having been indicted before Friday’s press release issued by the Department of Justice.
The Justice Department press release did indicate that one of the defendants, Anog Maarek, a French-Israeli citizen living in Hungary, was arrested by Hungarian police in September and extradited to the United States. Maarek appeared before US Magistrate Judge Timothy J. Sullivan on Friday.
According to the newly unsealed indictment, Yakov Cohen, a resident of Mauritius, and Yossi Herzog, a resident of Israel, were owners of the binary options organization that included Yukom Communications and the websites BigOption.com and BinaryBook.com.
Ori Maymon, Nissim Alfasi, Elad Bigelman and Runal Singh Jeebun were managers of the firm while Sabrina Elofer, Afik Tori, Anog Maarek, Oron Montgomery, David Barzilay, Gilad Mazugi, Hadas Ben Haim, Yousef Bishara, and Nir Erez were all retention agents whose job was to call investors after they had made an initial deposit and induce them to invest more money.
Ronen Roytman, who was office manager at the Numaris call center in Tel Aviv is named in the indictment as a co-conspirator but not as a defendant.
The indictment alleges that between 2014 and 2017 the defendants knowingly conspired to commit wire fraud. The defendants allegedly conspired together to obtain the maximum deposits from binary options investors and make sure investors lost the money in their accounts or could not withdraw it.
They allegedly induced investors to deposit money by misrepresenting the conflict of interest between investors and sales reps, misrepresenting the returns investors could make on binary options, misrepresenting their names, locations and biographies, and misrepresenting investors’ chances of withdrawing their money, according to the indictment.
In addition, the indictment alleges that the defendants did not tell investors that they could manipulate the trading platform to increase or decrease the likelihood that clients would lose trades.
Israel’s culture of impunity
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, 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.
Israeli law enforcement has proven unable or unwilling to effectively tackle the country’s binary options fraud, indicting only a handful of alleged operatives, despite the fact that for several years the scams have operated at an industrial scale.
US authorities are increasingly tackling the fraud, however. Yukom Communications CEO Lee Elbaz was convicted by a Maryland jury on August 6 for her role in a $145 million fraud. Five additional former employees of the firm have pleaded guilty to conspiracy to commit wire fraud.
On October 9, the SEC sued the Israeli owners of the websites LBinary and IvoryOption.
Meanwhile, on September 30, the SEC charged two Israeli men, Gil Berserglik and his son Raz Beserglik, as well as a German man named Kai Peterson, with alleged binary options fraud to the tune of $100 million through the websites Bloombex Options, Morton Finance and Starling Capital.
On September 30, the SEC also charged two US-based affiliate marketers, David Sechovicz and Peter Szatmari, with selling binary options through false and misleading videos, websites and internet advertising.
On August 12, the CFTC charged several companies and individuals associated with Israel-based Yukom Communications with over $100 million in fraud.
In November 2018, Jason Scharf, the CEO of a binary options company called CiTrades, pleaded guilty in the United States to a criminal charge of conspiracy to commit wire fraud. He admitted to defrauding investors out of more than $8 million.
On November 7, prosecutors filed a document in the Elbaz case calculating how much money BinaryBook and BigOption allegedly stole. Over 1,932 pages, the document details how tens of thousands of investors from all over the world lost money to the two websites. Many investors lost $250 while others lost tens of thousands of dollars. Altogether, the Department of Justice calculated investor losses from the sites before June 30, 2017 to be $140,318, 619, a figure they derived from records that the platform provider SpotOption kept for the two brands.
FBI agents Gregory Fine and Jeremy Desor investigated the latest Yukom case while assistant chiefs L. Rush Atkinson and Caitlin R. Cottingham of the Criminal Division’s Fraud Section are prosecuting it. The February 13 indictment, on which the current indictment is largely based, was prepared by trial attorney Ankush Khardori and assistant chief Tracee Plowell.