Binary options scam participant posing as SEC employee pleads not guilty

Maria Nikolova

Frank Gregory Cedeno has pleaded not guilty as to conspiracy to commit wire fraud and conspiracy to commit money laundering.

Frank Gregory Cedeno, one of the participants in a fraudulent scheme involving fake pledges for binary options losses recovery and impersonation of employees of the United States Securities and Exchange Commission (SEC) does not admit his guilt.

During proceedings held before Magistrate Judge Donald L. Cabell at the Massachusetts District Court earlier this week, the defendant pleaded not guilty as to both counts: conspiracy to commit wire fraud and conspiracy to commit money laundering.

In January 2018, Cedeno was charged by criminal complaint and arrested.

The indictment alleges that, from at least April 2016 through November 2017, Cedeno conspired with others to defraud victims by pretending to be employees of the SEC. Cedeno and his co-conspirators demanded money from victims, most often – victims of binary options brokers and Banc de Binary, in particular. The victims were directed to send the money to members of the conspiracy, including Cedeno. The conspirators who received the money generally withdrew it from bank accounts quickly, then forwarded much of it to individuals in the Dominican Republic.

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.

Co-conspirator Leonel Alexis Valerio Santana was previously charged by criminal complaint in connection with the scheme and remains detained pending trial. That complaint alleged that, between June 2015 and June 2017, there were at least 95 victims targeted by the scam, with fraudulent solicitations exceeding $1.3 million and actual losses exceeding.

The charge of conspiracy to commit wire fraud carries a sentence no greater than 20 years in prison, three years of supervised release, a fine of up to $250,000, or twice the gross gain or loss in the offense, and restitution. The charge of money laundering conspiracy carries a maximum sentence of 20 years in prison, three years of supervised release and a fine of $500,000 or twice the gross gain or loss, whichever is greater.

Magistrate Judge Donald L. Cabell also entered and order of excludable delay as to Frank Gregory Cedeno – for the time period until May 1, 2018.

The Court has found that the interests of justice in this case, i.e., to provide the parties additional time to develop their respective discovery plans, to produce discovery under the automatic discovery process, to evaluate the discovery and to seek additional discovery, and for the defendant to consider the need for pre-trial motions, outweigh the best interests of the public and defendant for a trial within seventy days of the filing date (and making public) of the indictment. The Judge further finds that not granting this continuance would deny counsel for both the government and the defendant a reasonable time necessary for effective preparation, taking into account the exercise of due diligence.

The case is captioned USA v. Cedeno (1:18-cr-10053).

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