Binary Options Fraud: Israel Prosecutors Finally Start Acting

For many years, Israel has been the home of the binary options fraud industry. With their boiler rooms, online marketing power houses and illegal broker sites, Israeli perpetrators defrauded millions of investors all over the world. While the U.S. authorities chased these binary options scammers all over the world, the Israeli authorities stood at the sideline only. Now the Israeli prosecutors filed their first indictment against three Israeli fraudsters that allegedly defrauded several hundred Israeli investors.

Simona Weinglass – The Binary Options Watchdog

Simona Weinglass, an investigative reporter at the Times of Israel, has been reporting on the gigantic Israeli fraud machine around binary options since 2016. She has been criticizing the relaxed stand of Israeli authorities against the country’s perpetrators. According to Simona Weinglass, the vast Israeli binary options industry employed some 10,000 people which stole dozens of billions of dollars from investors all over the globe. While the U.S. authorities took actions against many of those Israeli fraudsters, the country’s prosecutors until recently have not taken actions against them.

On December 26, 2018, however, the first indictment was eventually filed. Unfortunately, the indictment only addresses crimes allegedly committed against Israeli investors although it is known to the Israeli prosecutors that victims in U.S, UK, France and other countries have been defrauded. No charges were raised on the defendants’ fraudulent activities with these investors outside Israel. Prosecutors from the Tel Aviv district indicted the three alleged binary options fraudsters, Aviv Talmor, Roy Cuzin, and Valerio (Vali) Megai.

The Utrade Network of Fraud

Aviv Talmor was the director and owner of the Israeli FOREX company Utrade Premium Services Ltd. He is facing charges of severe fraud, embezzlement, money laundering, obstruction of justice, and illegal investment portfolio management. Roy Cuzin was the chief analyst for Utrade and Valerio Megai acted as the company’s CTO. Although Utrade was a forex company, Talmor operated several binary options brands as well, and employees who worked for both considered the entire operation to be a single company

According to the indictment, the algo-trading Utrade received $26.5 million from 604 Israeli investors between 2012 and 2015. This was done in a way that “deceived investors through misrepresentation, falsifications, and manipulative and aggressive sales practices.” The investors were misled regarding the usage of their funds. Instead of actually trading with investors’ funds, as it had promised to do, Utrade used more than half of investors’ money to expand the growing forex and binary options business and target investors abroad, the indictment alleges. At least $5 million of the investors’ money was transferred to the bank account of an Israeli company called Binary Call Center Ltd, the indictment alleges.

UTrade acquired clients from Israel and around the globe. Allegedly, they targeted English speaking clients from the UK and the US as well as French-speaking clients and clients from Jordan, Lebanon, and the Gulf countries. The Middle Eastern operation was allegedly conducted through the illegal broker site Option Now and the CySEC-regulated Capital Option.

Insolvency and Arrest

Utrade ran out of money in 2015 and became insolvent when some of its investors wanted to have their money back. An Israeli court ordered the suspension of Utrade’s activities in December 2015. “We suspect UTrade Premium investors’ funds were transferred from company’s account for other proposes then agreed upon,” a report of the Israeli Security Authority (ISA) noted. Eventually, the firm was dissolved by a court decision. Talmor left Israel in September 2015 and did not show up for interrogation for some months. Eventually returned to Israel early 2016 and was immediately arrested, as the Finance Magnates reported.

The U.S. versus Lee ELBAZ

While the Israeli prosecutors filed their first indictment dealing with a binary option fraud case, the U.S. prosecutors already indicted some Israeli perpetrators such aus Lee Elbaz, the former CEO of the binary options marketer Yukom Communication. Along with Elbaz, three other Yukom employees are charged with binary option fraud by the U.S. prosecutors (read here).

Until the ban in 2017, the Israeli binary options industry was estimated to bring in between $5 billion and $10 billion a year, to number well over 100 companies, and to employ between 5,000 and many tens of thousands of employees.

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