Florida Court extends restraining order against “Millionaire Money Machine” binary options fraudsters

Last week, the US Commodity Futures Trading Commission (CFTC) posted a brief press release on the case it filed against a number of binary options fraudsters. The regulator was able to publish the release only after key documents in the case, captioned Commodity Futures Trading Commission v. Scharf et al (3:17-cv-00774), were unsealed at the Florida Middle District Court.

FinanceFeeds has examined the latest court filings in this case. There are a couple of updates to what the CFTC has announced, including a rescheduling of a hearing on a preliminary injunction and the asset freeze, as well as extension to the terms of the statutory restraining order (SRO) granted by the judge assigned to the case.

The defendants in the case include Jason B. Scharf, doing business as Citrades.com and AutoTradingBinary.com, as well as a number of companies he controlled, including CIT Investments LLC, a Nevada limited liability corporation; Brevspand EOOD, a Bulgarian business entity; CIT Investments Ltd., a Marshall Islands business entity; CIT Investments Ltd., an Anguillan business entity; and A & J Media Partners, Inc., a California corporation. The other defendants are affiliate marketers Michael Shah and his company Zilmil, Inc.

The CFTC Complaint, seen by FinanceFeeds, charges Scharf, Shah, and Zilmil with acting as Futures Commission Merchants (FCM) and Commodity Trading Advisors (CTA) without registration, as well as with soliciting more than $16 million in connection with illegal binary options contracts.

The Complaint details the fraudulent practices of the above-mentioned binary options firms, including promises of artificially high returns, bonuses and happy life, followed by halt of any communication once money was deposited.

Particularly startling are the findings concerning Zilmil, which directed customers to binary options websites. Zilmil sent more than 60 million fraudulent emails to more than 1.4 million unique email addresses in a seven-month period. One of the emails concerning the “Millionaire Money Machine” started with the question: “Have you made your first $100,000 yet?”

The operator of one of the websites to which Zilmil drives traffic writes to Shah that:

“the autotrader attached to this is doing its job and is doing it great, crushing people like immediately”

Zilmil used more than 20 autotrading systems to funnel customers to Citrades. The CFTC alleges that during the relevant period (from at least January 2014 to present), binary options website paid more than $3.6 million in commissions to Zilmil. At least $500,000 of these commissions come from Citrades. On top of that of that, Zilmil made $5 million from the sale of its “autotrading systems”.

In response to the Complaint, the Court has issued a statutory restraining order, after finding that:

• There is good reason for the Court to freeze assets owned, controlled, managed or held by or on behalf of, or for the benefit of the Defendants.
• There is good cause for entry of an order prohibiting the Defendants, their agents, employees, etc from destroying records and/or denying agents of the Commission access to inspect and copy records.
• There is good cause for the appointment of a Temporary Receiver to take control of all assets owned, controlled, managed or held by or on behalf of, or for the benefit of the Defendants.

Let’s mention some of the latest updates.

Kenneth Dante Murena, Esq. was appointed as Temporary Receiver.

The hearing previously set for July 26, 2017, is now RESCHEDULED for August 10, 2017. The goal of the hearing is to determine whether the court should enter an order for preliminary injunction against the Defendants and also to determine, among other things, whether the court should continue the freeze on Defendants’ assets.

The Court ruled that the terms of the restraining order should be extended until the hearing takes place or until further order.