Binary options fraudster Leonel Valerio Santana to remain in detention, co-conspirator gets bail

Maria Nikolova

Massachusetts District Court issues different orders to two fast-food restaurant workers that pretended to be SEC employees and offered investors to recover their losses from Banc de Binary.

A follow-up to FinanceFeeds’ earlier article about the US authorities going after a couple of fast-food chain workers who have perpetrated a binary options fraud on investors…

Let’s recall that Frank Gregory Cedeno and Leonel Alexis Valerio Santana purported to be SEC employees seeking money in connection with the investments the investors had made with Banc de Binary. In one common version of the scam, victims received e-mails that used official-seeming documentation and the SEC seal to support a false claim that the targeted investor must pay a fee in order to receive a portion of the settlement of the SEC’s lawsuit against Banc de Binary.

From June 2015 through June 2017 there have been at least 95 victims targeted by this fraud scheme, with solicitations exceeding $1.3 million. Since June 2015, at least 25 of those targeted have sent money to the fraudsters, totaling more than $235,000.

As per the Affidavit of Ryan Lane, a special agent for the FBI, Cedeno and Valerio Santana committed wire fraud. In particular, the FBI agent said there is evidence that Cedeno established an internet-based phone number used to communicate with victims of the fraud scheme, and that he received victim funds into his bank accounts, withdrew them, and distributed the money to other members of the conspiracy. For his part, there is evidence that Leonel Valerio Santana communicated instructions to members of the conspiracy and that he was paid portions of the proceeds of the fraud.

During the period relevant to the complaint affidavit, Cedeno resided in or near Orlando, Florida, whereas Valerio Santana resided in the Dominican Republic, although he is believed to now reside in Boston, Massachusetts.

FinanceFeeds has examined the most recent filings in this case at the Massachusetts District Court. The documents show that Frank Gregory Cedeno was released on a $5,000 cash bond.

The Court, however, has found that detention is warranted with regard to Leonel Alexis Valerio Santana pending trial. The Government has proved that that no condition of release will reasonably assure the defendant’s appearance.

In addition, the reasons for detention include:

  • Weight of evidence against the defendant is strong;
  • Prior criminal history;
  • History of alcohol or substance abuse; Lack of stable employment;
  • Lack of stable residence;
  • Lack of significant community or family ties to this district;
  • Significant family or other ties outside the United States;
  • Use of alias(es) or false documents.

Although Leonel Valerio Santana is a Legal Permanent Resident, he is charged with crimes involving fraud and moral turpitude, and thus almost certainly will face immigration proceedings if convicted. To that extent, there is strong evidence that the defendant committed the acts alleged and played a major role in the offense, the Court’s Order states.

Moreover the defendant has strong ties to the Dominican Republic, where he resided for approximately ten years until around April 2017, and in contrast has no meaningful ties to this community. He has no stable residence and has only been employed for six months – by someone who is unaware of the nature of charges against him. To be sure, the defendant does have family present in Massachusetts but some family members are alleged to be co-conspirators so they would not be able to provide an acceptable residence or be a suitable custodian. Taken together, the defendant has a strong incentive to avoid prosecution and flee to the Dominican Republic.

The case is captioned USA v. Cedeno et al (1:18-mj-07073).

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