More than six months after she was arrested and placed under house arrest after disembarking a plane from Tel Aviv to New York at JFK airport, former Binary Options executive Lee Elbaz is now formally facing an indictment.
The U.S. Department of Justice has announced that Ms. Elbaz, the former CEO of Israel-based company Yukom Communications, was charged in an indictment filed on March 22, for her alleged participation in a scheme to defraud investors in the United States and across the world in Binary Options.
The announcement was made jointly by the DoJ, represented by acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, and by the FBI which led the investigation against Ms. Elbaz, represented by Assistant Director in Charge Andrew W. Vale of the FBI’s Washington Field Office.
According to the joint DoJ-FBI announcement, Lee Elbaz, age 36, of Israel, was charged in the District of Maryland with one count of conspiracy to commit wire fraud and three counts of wire fraud.
The FBI had been investigating Ms. Elbaz for the past six months, trying to expand the DoJ’s case against her from one of (just) illegally targeting US based customers, to one of defrauding those customers, a much more serious charge carrying much more serious penalties, including (potentially) up to 20 years in jail. Their investigation included at least one FBI visit to Israel earlier this year, which apparently included an interview with Ms. Elbaz’s former boss, Yukom controlling shareholder Yossi Herzog. At the time, Mr. Herzog was also busy leading an appeal against Israel’s law to ban all Binary Options activity, an appeal which was eventually rejected by Israel’s Supreme Court. The Israel Binary Options ban bill became law effective in late January.
The indictment against Ms. Elbaz alleges that under her watch Yukom provided investor retention services for two Binary Options websites, known as BinaryBook and BigOption, where binary options were fraudulently sold and marketed.
The indictment further alleges that in her role as CEO of Yukom, Ms. Elbaz, along with her co-conspirators and subordinates, misled investors using BinaryBook and BigOption by:
- falsely claiming to represent the interests of investors but that, in fact, the owners of BinaryBook and BigOption profited when investors lost money,
- misrepresenting the suitability of and expected return on investments through BinaryBook and BigOption,
- providing investors with false names and qualifications and falsely claiming to be working from London, and
- misrepresenting whether and how investors could withdraw funds from their accounts.
The indictment also alleges that representatives of BinaryBook and BigOption, working under Ms. Elbaz’s supervision, misrepresented the terms of so-called “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.
The DoJ noted that an indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The case was investigated by the FBI’s Washington Field Office. Trial Attorneys Ankush Khardori and Tracee Plowell of the Criminal Division’s Fraud Section are prosecuting the case.
The formal DoJ announcement can be seen here.