Court allows alternative service on binary options fraudster Yossi Herzog

Maria Nikolova

The CFTC is granted leave to serve Yukom Communications, Yakov Cohen, Yossi Herzog, and Shalom Peretz by alternative means.

Several months after the Illinois Northern District Court took under advisement the motion by the Commodity Futures Trading Commission (CFTC) for alternative service on a number of defendants linked to fraudulent binary options scheme evolving around Yukom Communications, the Honorable Andrea R. Wood has signed an order granting the motion.

Let’s recall that the CFTC brought this action against Yukom Communications Ltd., Linkopia Mauritius Ltd., Wirestech Limited, WSB Investment Ltd., Zolarex Ltd., Yakov Cohen, Yossi Herzog, Lee Elbaz, and Shalom Peretz, alleging various violations of the Commodity Exchange Act, 7 U.S.C. §§ 1–26 and accompanying regulations, 17 C.F.R. §§ 1–190. According to the CFTC, all but one of those defendants are located outside of the United States.

So far, the CFTC has served five of the nine defendants, and it has asked the Court to permit alternative service upon Yukom, an Israeli entity, and Cohen, Herzog, and Peretz, all Israeli citizens, pursuant to Federal Rule of Civil Procedure 4(f)(3).

On April 20, 2020, the Honorable Andrea R. Wood signed an order granting the CFTC’s motion for an order directing service upon certain Defendants by alternate means and extending the time to serve. The CFTC is granted leave to serve Yukom, Cohen, Herzog, and Peretz by alternative service by: (1) sending the Summons and Complaint by ordinary mail to their last known addresses; (2) sending the Summons and Complaint to email addresses that they have used in the past; and (3) publishing notice of the Summons and Complaint in the Times of Israel, with the notice appearing online on the publication’s homepage for a week and continuing to be available in its back pages for at least six months.

The CFTC’s request for additional time to serve Yukom, Cohen, Herzog, and Peretz is granted, but rather than setting a definitive deadline, the Court will allow Plaintiff sufficient time to serve those defendants exercising appropriate diligence.

On August 12, 2019, the Commission filed its five-count Complaint charging Yukom, Linkopia Mauritius Ltd., Wirestech Limited d/b/a BigOption, WSB Investment Ltd d/b/a BinaryBook, Zolarex Ltd. d/b/a BinaryOnline, Cohen, Lee Elbaz, Herzog and Peretz with fraudulently soliciting individuals throughout the United States and other countries to enter into illegal, off-exchange transactions in binary options through fictitious entities using the trade names “BigOption,” “BinaryBook,” and “BinaryOnline”.

The Complaint alleges that the Yukom defendants operated a global retail binary options enterprise whose employees and agents made material misrepresentations and omissions to induce customers to trade, including by misrepresenting the profit potential and fundamental nature of the binary options offered and failing to disclose that Yukom was on the opposite side of all customer trades, and that the defendants fraudulently accepted at least $103 million in customer funds.

On August 14, 2019, and after confirming Herzog’s registered address with the ISA, the CFTC sent the Summons and Complaint to Herzog’s residence via Registered Mail. As of January 13, 2020, those documents cannot be traced and are therefore likely undelivered.

According to the CFTC, Herzog is not currently in Israel. CFTC counsel has communicated with representatives of various foreign financial regulatory agencies in an ultimately unsuccessful attempt to determine Herzog’s current geographic location and identify alternative addresses for service. Despite the Commission’s efforts, Herzog’s whereabouts are currently unknown.

Herzog is also among the defendants indicted in a criminal case in the District of Maryland. According to the DOJ, no representative of Herzog has contacted the US authorities.

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