Yukom Case – US Prosecutors want Lee Elbaz to produce compliance documents for brand operator WSB Investment (for download here)

According to an update on the Yukom court case provided by FinanceFeed, the U.S. prosecutors filed a Motion to Compel on July 2019, asking the Court to order Lee Elbaz to produce to the government:

1. any other legal opinions not previously disclosed that address her former company’s compliance with laws and regulations, including Yukom Communications and WSB Investment Ltd.,
2. any documents that show the factual bases for the opinions, including communications by the defendant and other employees with the attorneys, and
3. any communications about these legal opinions involving the defendant and other employees and affiliates of Yukom.

A Good Faith Defense Line?

The Government submitted the motion after reviewing the legal opinions Elbaz has identified to date. Elbaz argued that “her intent to commit fraud or absence of such intent, and whether she was acting in good faith, will be at issue at trial.”

Lee Elbaz, the former CEO of Yukom Communcations, evidently bets on a “good-faith” defense strategy. She may argue that she relied on the legal opinion of the lawyers involved. These would have confirmed that everything would be operated in accordance with the applicable financial market laws and money laundering directives. So let’s look at some of the legal opinions available to FinTelegram in the Yukom Case.

The Strugano Opinion on WSB Investment

Elbaz intends to rely on a legal opinion authored by the Israeli attorney Moshe Strugano. The attorney confirms that WSB Investment Ltd in St. Vincent and the Grenadines, as well as its subsidiary, WSB Investment Ltd in UK comply with the respective laws:

I […] confirm that WSB Investment Ltd operates in accordance to the laws and regulations in Saint Vincent and the Grenadines where there are no requirements of operating licence for entities offering binary options services. The company WSB INVESTMENT (remark: the UK subsidiary) operates in accordance with the laws and regulations in its country of incorporation United Kingdom and in full regulatory compliance, in accordance with its services provided.

Legal Opinion provided by Moshe Strugano

Furthermore, the attorney confirms in his Legal Opinion that the companies – both operated the binary options websites BinaryBook and BigOption – operate in accordance with Anti-Money-Laundering (AML) and Know-Your-Customer (KYC) rules:

I also hereby confirm that both companies operate in accordance with the AML and due diligence policies of the country of incorporation and respective target markets. WEB INVESTMENT LTD (remark: the UK subsidiary) was created and operates solely for the purpose of accepting processing services, yet all operation are carried out by WSB Investment LTD (remark: St. Vincent and the Grenadines) from WEB Investment Ltd’s office.

Legal Opinion provided by Mosne Strugano

FinTelegram has received dozens of legal opinions from Moshe Strugano for as many different schemes. He was one of the preferred attorneys for issuing compliance confirmations for the Israeli binary options scene. In any case, his responsibility in this respect should be questioned. The various legal opinions have essentially identical wording. Only the company names are different. These are obviously mass-produced legal opinions and therefore literally worthless.

Compliance question: how can WSB acquire funds from retail investors via its binary options platforms such as BinaryBook or BigOption and management of these funds is done by the operators of the boiler rooms and the payment service providers? This is certainly not a process that is KYC/AML compliant under any given jurisdiction.

Given the fact that all those legal opinions look quite the same, it’s questionable whether there are any “factual bases for the opinions, including communications by the defendant and other employees with the attorneys” as requested by the US prosecutors.

The Bulgarian Legal Opinion

In addition to the legal opinion issued by Strugano in January 2016, there is also one issued by the Bulgarian lawyer Galin Georgiev Manolov in July 2016. This relates to the foundation of the Bulgarian TECH SB EOOD (Ltd). This company was also used for the operation of the binary options pages BinaryBook and BigOption.

At this point, it must be noted that the Israeli Binary Options Schemes increasingly operated from Sofia, Bulgaria, from 2015 onwards. This gave them a foothold in the EU to attack victims in the EU member states.

Resources for download

• Legal Opinion for WSB Investment Ltd – download here
• Legal Opinion for TECHSB Ltd – download here