March 25, 2018 / 7:59 AM / 5 months ago

U.S. indicts Israeli for alleged role in binary options fraud

TEL AVIV (Reuters) - The former CEO of Israel-based Yukom Communications was charged in an indictment for her alleged participation in a binary options scheme to defraud investors in the United States and across the world, the U.S. Department of Justice said.

Lee Elbaz, 36, from Israel, was charged in the District of Maryland with one count of conspiracy to commit wire fraud and three counts of wire fraud, the Department said in a statement.

In a detention hearing in September, Elbaz’s lawyer Jonathan Lopez defended his client, arguing that Yukom is a legitimate business, the Times of Israel reported.

Lopez could not immediately be reached for comment outside normal business hours.

Binary options involve placing a bet on whether the value of a financial asset - a currency, commodity or stock - will rise or fall in a fixed time, sometimes as short as a minute.

The indictment alleges that Yukom provided investor retention services for two websites, BinaryBook and BigOption, that were used to promote and market binary options and that those binary options were fraudulently sold and marketed.

The indictment also alleges that as CEO of Yukom, Elbaz, along with her co-conspirators and subordinates, misled investors by falsely claiming to represent the interests of investors but that, in fact, the owners of BinaryBook and BigOption profited when investors lost money.

Elbaz and her co-conspirators also allegedly misrepresented the expected return on investments through BinaryBook and BigOption, allegedly provided investors with false names and qualifications and falsely claiming to be working from London, and misrepresented how investors could withdraw funds from their accounts, the statement said.

Representatives of BinaryBook and BigOption, working under Elbaz’s supervision, misrepresented the terms of “bonuses,” “risk free trades” and “insured trades,” and deceptively used these supposed benefits in a manner that in fact harmed investors, according to the indictment.

Elbaz was arrested by the FBI in September when she arrived at New York’s JFK airport from Tel Aviv.

Israel’s parliament in October approved a ban on local firms selling binary options overseas by online trading, giving regulators the authority to begin cracking down.

A Reuters special report in 2016 shed light on the rapid rise of the industry in Israel. London-based lawyers said hundreds of their clients were duped out of vast sums of money by some Israeli firms.

Reporting by Tova Cohen; Editing by Steven Scheer and Jane Merriman

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