Amount recovered in binary options fraud case reaches $9.3m

Maria Nikolova

The majority of the recovered funds come from the accounts of binary options marketers rather than binary options brokers.

Kenneth Dante Murena, the court-appointed Permanent Receiver in an enforcement action brought by the United States Commodity Futures Trading Commission (CFTC) against a number of binary options companies and their marketing affiliates, has submitted his fourth report. The document, related to Mr Murena’s activities for the time period of April 1, 2018 through June 30, 2018, was submitted on August 10, 2018, at the Florida Middle District Court.

The case targets Jason B. Scharf, doing business as and, his companies CIT Investments LLC, a Nevada limited liability corporation; Brevspand EOOD, a Bulgarian business entity; CIT Investments Ltd., a Marshall Islands business entity; CIT Investments Ltd., an Anguillan business entity; and A & J Media Partners, Inc., a California corporation. The case also names their affiliate marketers Zilmil and its owner Michael Shah among the defendants.

Specifically, during this Reporting Period, the Receiver recovered an additional $9,191.60, and received written confirmation of the existence of more than $1.4 million in accounts at three banks in India, Therefore, to date, the Receiver has frozen and/or recovered more than $9.3 million of the defendants’ funds, of which more than $6 million was transferred to the Receiver’s fiduciary accounts and approximately $3.3 million remains frozen at various financial institutions.

After payment of the Court-approved administrative expenses of the Estate for the first and second reporting periods, the total amount in the Receiver’s fiduciary accounts for all Defendants, including interest earned, was $5,674,984.33 as of the end of the Reporting Period.

The Receiver notes that CIT Investments LLC, Brevspand EOOD, and CIT Investments Ltd. have not responded to the CFTC’s Complaint, retained counsel and made an appearance in the enforcement action, or provided any accounting, information or records to the Receiver. Scharf and A&J Media Partners, Inc. still have not provided the required accountings or agreed to meet with or be interviewed by the Receiver, indicating that they intend to assert their Fifth Amendment privilege in response to virtually any formal or informal questions from the Receiver.

Regarding the Zilmil Defendants, that is, the marketing affiliates of the binary options brokers, they have not provided and continue to decline to provide the detailed accounting required under the Court’s Orders, invoking their Fifth Amendment right against self-incrimination.

Let’s recall that in July this year, the Commodity Futures Trading Commission (CFTC) filed a Motion for a Summary Judgement against Shah and Zilmil, with the Florida Middle District Court. The document requests that the Court orders the defendants to pay disgorgement in the amount of $18.67 million, as well as a civil monetary penalty of $56 million.

The CFTC Complaint alleges that Michael Shah, acting through his company Zilmil, Inc., is the mastermind of an internet scam involving binary options. Between July 2012 and the present, Shah and Zilmil made more than $18.6 million in proceeds from their fraudulent scheme.

Using fraudulent misrepresentations, the defendants induced people to deposit money with illegal binary options trading websites that purported to offer customers the ability to trade so-called binary options contracts online. The defendants acted as marketers for the following binary options websites: LBinary, Global Trader 365, Vault Options, TraderXP, Trade Rush, Banc de Binary, Citrades, OptionMint, OptionRally, RBOptions, Bloombex Options, Redwood Options, BeeOptions, Amber Options, OptionsXO, and SpotFN. None of these websites or their operators are or ever have been registered to offer binary options contracts to the public.

The marketers convinced customers to deposit money with the binary options websites by offering miracle software “trading systems” with names like 2014 Millionaire, Binary Genetic, and Millionaire Money Machine. For each person who deposited money with one of these trading websites, the marketers received a commission of as much as $450.

The case is captioned Commodity Futures Trading Commission v. Scharf et al (3:17-cv-00774).

Read this next

Executive Moves

Crculus taps Michael Idzkowski as head of sales

Michael Idzkowski has joined Crculus, a UK-based startup that describes itself as a multi-custody middleware infrastructure for financial institutions, in the post of its head of sales.

Retail FX

ActivTrades jumps on fractional stock trading bandwagon

CFDs and FX broker, ActivTrades has updated its trading offering to provide its clients with the opportunity to trade fractions of stocks.

Digital Assets

BitMEX to list its native token by end of 2023

BitMEX CEO Alexander Hoeptner said the crypto exchange is planning to list its native token, called BMEX, on the spot market by the end of the year.

Market News

Forex investments take over popular sentiment as a worthy global trend

Quite the confusion is afoot in the financial markets. Tighter regulation, rising inflation, energy sector disruptions, social unrest and wars have taken a toll on the world’s economies. How come Forex, as a means of investment, has come up on top as a global trend in 2022? Against the backdrop of current events, the international broker’s expert team at OctaFX has gathered some answers.

Crypto Insider, Metaverse Gaming NFT

How Hiding Crypto’s Influence Will Be Key To Unlocking Its Success

In past years, cryptocurrency has advanced well beyond the technophiles responsible for its initial success to reach widespread name recognition. Crypto has found its way into news, music, culture, and other relevant facets of daily life. 

Digital Assets

SCRYPT Digital taps Enclave Markets to mirror dark pool trading in crypto

“A service like this has been sorely lacking in the crypto space. There hasn’t been a solution that provides the security or privacy that institutions require with these kinds of trades.”

Institutional FX

FXSpotStream reports record monthly volume at $1.613 trillion

Trading volumes on institutional FX platforms surged in September after fears over the impact of recent developments around Russia’s military invasion of Ukraine sent speculative asset classes reeling.

Industry News

OKX adds four-time Olympian snowboarder Scotty James as brand ambassador

‘What is OKX?’ is the name of the new multi-milion dollar brand campaign launched by crypto exchange OKX as part of its efforts toward world expansion.

Industry News

Circle buys Elements and announces beta version of Crypto Payments API

“Lowering barriers of entry for payments and financial services and establishing dollar payments utility are core to Circle’s mission.”