Court orders binary options fraudster Lee Elbaz to pay $28m in restitution
The estimated loss attributable to transactions involving Yukom, Numaris, or Linkopia agents is over $106 million but the US Government has sought only a conservative restitution amount of $28 million.
Judge Theodore D. Chuang of the Maryland District Court has determined that binary options fraudster Lee Elbaz, a/k/a Lena Green, will have to pay restitution of $28 million to victims of the scam. The order, seen by FinanceFeeds, was issued on August 7, 2020.
A year ago, Lee Elbaz was convicted of one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349, and three counts of wire fraud, in violation of 18 U.S.C. § 1343. In December 2019, the Court sentenced Elbaz to a total of 264 months of imprisonment to be followed by three years of supervised release.
The wire fraud conspiracy was an extensive international conspiracy involving companies based in Israel and Mauritius engaging in fraudulent telephone and email communications designed to cause individuals to invest under false pretenses in binary options, under the brand names BinaryBook and BigOption. Elbaz was the Chief Executive Officer of one such company, Yukom, based in Caesaria, Israel, and instructed numerous retention agents to lie to potential investors in order to procure such investments.
Elbaz also had a significant role in the work of retention agents at another company, Numaris, located in Tel Aviv, Israel, and with training of personnel at a third company engaged in the fraudulent scheme, Linkopia, based in Mauritius. Accordingly, at sentencing, the Court found that based on the evidence at trial, the loss attributable to Elbaz included the losses to all victims of fraud, from May 2014 to June 2017, based on investing under the brand names BinaryBook or Big Option where the fraud was connected to Yukom, Numaris, or Linkopia, because such losses were attributable to the charged conspiracy and reasonably foreseeable to Elbaz.
In seeking to establish the loss amount for purposes of the United States Sentencing Guidelines, however, the Government relied almost exclusively on the Spot Option database, a data set that generally provided information on fraudulent transactions involving the BinaryBook and Big Option brands, and broadly argued that all transactions in the Spot Option database were part of the fraud. Because the Court found insufficient evidence to conclude that all of the listed transactions were connected to Yukom, Numaris, or Linkopia, it declined to accept the Government’s position and instead, based on the available evidence, calculated the loss amount for purposes of the Guidelines as over $28 million.
At that time, the Court did not impose an order of restitution but instead granted the Government leave to submit evidence to establish the appropriate restitution amount.
Although at sentencing the Court concluded that the Government had not established that the entire $140 million of loss reflected in the Spot Option database was attributable to Elbaz, it has now received supplemental information linking a substantial portion of those transactions to Elbaz and the charged conspiracy. The Government has now submitted, in addition to the Spot Option database, the third declaration of Michael J. Petron, a Certified Public Accountant and Certified Fraud Examiner, who undertook a manual review of the individual transactions from May 1, 2014 to June 30, 2017, the period of Elbaz’s participation in the conspiracy, and isolated those which contained a reference to an agent identification number that, based on monthly sales reports, was assigned to an agent at Yukom, Numaris, or Linkopia.
Petron calculated an estimated loss attributable to transactions involving Yukom, Numaris, or Linkopia agents of over $106 million. Out of an abundance of caution, and consistent with the information made available to the Court at sentencing, the Government seeks only a conservative restitution amount of $28 million.
As per the order issued on August 7, 2020, the Court finds that this methodology was sound and yields a reasonable estimate of the loss to victims attributable to Elbaz.
Where the Government has met its burden, Elbaz offers no contrary evidence and provides no persuasive argument to undermine the Government’s calculation, the Judge says.
The Court orders that Elbaz’s Judgment of Conviction will be amended to include a restitution amount of $28 million and a finding that Elbaz is jointly and severally liable for the amounts contained in the prior restitution orders against employees of the binary options firms involved in the fraud – Lissa Mel, Shira Uzan, Yair Hadar, Leora Welles, and Austin Smith.
