Americans Sue Israeli Firms, Individuals over Money Theft
TEHRAN (Tasnim) – Israeli individuals and the financial firms they owned or operated were sued by US securities regulators for using bogus swap and option trades to steal $80 million from investors, including Americans.
The US Commodity Futures Trading Commission filed a complaint Monday in Chicago federal court against Lee Elbaz, Yakov Cohen, Yossi Herzog and Shalom Peretz, along with companies including Yukom Communications Ltd. and Linkopia Mauritius Ltd, Bloomberg reported.
Elbaz, the former chief executive officer of Yukon, was convicted in Maryland last week of conspiracy and wire-fraud charges and remains in custody. Elbaz’s defense attorney couldn’t be reached for comment. The other defendants in the CFTC suit are still in Israel. According to court records, five individuals pleaded guilty to federal charges in Maryland and testified against Elbaz. Nine others, mostly foreigners, have been charged and are awaiting trial.
The scam allegedly centered on binary options, a derivative contract that either pays a fixed amount or nothing, depending on the price of the contract when it expires. From about 2014, the defendants collected about $100 million from investors, including about $17 million from American investors through credit cards, the CFTC said. Only about $20 million was ever returned, according to the lawsuit.
In the criminal case, prosecutors estimated the defendants fraudulently marketed $145 million in options, court records show.
The Yukom enterprise solicited customers on websites it controlled, including BigOption.com, BinaryBook.com and BinaryOnline.com to invest in commodity swaps even though they were not registered with the CFTC to make the trades, and no such trades were actually made, according to the lawsuit. As part of the scheme, the defendants made money only if their investors lost money, the regulator said.
“Defendants do not connect their customers to legitimate binary options exchanges or otherwise match buyers and sellers of binary options,” the CFTC said in the lawsuit. “Instead, defendants are counterparties to each transaction, acting in a manner similar to that of a casino or sports book, take the opposite position on each trade.”
