CFTC action against alleged binary options scammer Yehuda Belsky gets stayed

The civil case proceedings launched by the United States Commodity Futures Trading Commission (CFTC) against Yehuda L. Belsky and Y Trading, LLC have been stayed by Judge Nina Gershon of the New York Eastern District Court.

In an order issued earlier this week, the Judge said that, pending resolution of the criminal matter targeting Belsky, the Civil Case proceedings are stayed and the Commodity Futures Trading Commission and Yehuda L. Belsky and Y Trading, LLC will not seek discovery in the Civil Case from one another or from third parties.

The stay has been requested by the US Government. It has explained that the stay of proceedings is appropriate because the same alleged fraudulent schemes are at issue in both the Civil and Criminal Cases. Moreover, a stay is necessary as the defendant should not be permitted to use discovery in the Civil Case to avoid the restrictions on discovery that would otherwise pertain to him in the Criminal Case. A stay is also necessary to promote judicial economy, the Government said.

Let’s recall that, in September this year, a federal grand jury in the Eastern District of New York returned an indictment criminally charging Yehuda Belsky with mail fraud, failure to register as a commodities trading advisor, and misappropriation of customer funds. Specifically, the indictment alleges that Belsky, the sole member of Y Trading, LLC, engaged in an embezzlement scheme to defraud customers and potential customers. Despite being permanently banned from trading in commodities futures transactions and options by the CFTC in December 2008, between approximately March 2014 and June 2018, Belsky made fraudulent representations to customers to induce them to invest with him, including by using fraudulent documents.

Belsky, using the alias “Jay Bell,” portrayed himself as someone with expertise in commodities trading, particularly binary options trading. When customers gave Belsky money to invest on their behalf, he used the funds for his own personal expenses or to repay other investors he previously had defrauded.

On September 26, 2018, the CFTC filed a complaint in the Civil Case charging the defendant with five counts, all of which were premised on the same conduct as that alleged in the indictment:

1. fraud in connection with binary options;

2. violation of a Commission order;

3. failure to register as a commodities trading advisor;

4. fraud by a commodity trading advisor; and

5. false statements to the Commission.

The Government has consulted with the counsel for the defendants and the CFTC, and none of the parties opposed the entry of the requested order to stay the Civil Case.