Update May 30, 2019: the respective U.S. Court has agreed with the regulator and has approved the request for a preliminary injunction.
According to the findings of U.S. CFTC William Thomas Caniff, 50, Arie Bos, 59, and their vehicles Berkley Capital Management, BBOT 1, and Berkley II, have engaged in a binary options scheme and fraudulently solicited $4.8 million from US investors. On May 1, 2019, the regulator filed a lawsuit against the perpetrators and their entities. The CFTC alleges that Caniff and Bos committed options fraud.
As this case shows, the CFTC continues its commitment to rooting out fraud in our markets. As alleged here, the defendants perpetrated their fraud by lying to the exchange, lying to customers, and pocketing millions of dollars in customer funds, instead of trading them for customers as promised.”
James McDonald, CFTC Director of Enforcement (Press release, May 3, 2019)
The Court Case and arrest
On May 1, 2019, the respective Court entered a Statutory Restraining Order freezing the assets of Caniff, Bos, BCM and two investment pools, BBOT and Berkley II, and prohibiting the destruction of their books and records.
On May 2, 2019, Thomas Caniff (LinkedIn profile) was arrested in connection with a related case pending in the Northern District of Illinois (See Case No. 1:19-
A hearing on the CFTC’s Motion for a Preliminary Injunction has been set for May 22, 2019.
CFTC filed the relevant motion at the Court on Tuesday, May 28, 2019, noting that none of the defendants appeared at the court hearing on May 22, 2019, with the exception of the already arrested Caniff with whom the CFTC has entered into a Consent Preliminary Injunction. The preliminary injunction is meant to preserve the status quo, prevent the withdrawal, transfer, removal, dissipation, or disposal of assets; prevent the destruction, alteration, or disposal of books and records and other documents; protect members of the public from loss and damage; and enable the CFTC to fulfill its statutory duties.
The scheme
According to a report in FinanceFeed, in January 2016, Caniff and Bos offered individual investors the opportunity to trade binary options with pools of other participants. They used various companies to fake successful binary options trading. Therefore, the pool participants also had the impression that trading was actually happening. As a matter of fact, however, the alleged trading companies also belonged to the perpetrators and acted with forged accounts.
The scheme worked with fabricated statements reflecting incredible results of these pools. According to the CFTC, the scheme accepted at least $4.8 million from at least 62 investors.
Misappropriation of funds
Most of the investors’ money was not used to trade binary options but was paid out to the fraudsters. The CFTC Complaint alleges that Caniff and Bos misappropriated a substantial portion of the participants’ funds, paying themselves some $2.3 million as “fees” based on non-existent profits. Overall, the defrauded participants have experienced a loss of approximately $2.5 million.
