US court-appointed receiver recovers further $2m in funds in binary options fraud case

Proceedings in a binary options fraud case, captioned Commodity Futures Trading Commission v. Scharf et al (3:17-cv-00774), continue at the Florida Middle District Court.

The enforcement action targets Jason B. Scharf, doing business as Citrades.com and AutoTradingBinary.com, his companies 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 Anguilla business entity; and A & J Media Partners, Inc., a California corporation. The case also names their affiliate marketers Zilmil and its owner Michael Shah among the defendants.

According to the CFTC allegations, from June 2013 through the present the Citrades Defendants operated a massive scam in which they fraudulently solicited customers to enter into illegal, off-exchange investments in binary options. The firms is alleged to have received at least $16 million in customer funds.

Similarly, the Court found that there is good cause to believe that during the same time period, the Zilmil Defendants acted as third-party affiliate marketers who drove internet traffic to the Citrades Defendants by fraudulently soliciting customers to sign up for or purchase binary options autotrading systems. They instructed the customers to send money to the Citrades Defendants.

As a result of the legal proceedings against the defendants, Kenneth Dante Murena has been named Permanent Receiver in the enforcement action. According to his latest submission with the Court, dated December 1, 2017, his work on the case is progressing.

Mr Murena reports that since filing his Initial Status Report, he has managed to recover more than $2 million additional funds from the Zilmil Defendants (bringing the Estate’s total cash on hand to more than $5.5 million). We expect explanation of these numbers from the Receiver in his Second Status Report covering his activities and efforts during the Fourth Quarter of 2017.

As reported in the Initial Status Report, as of September 25, 2017, the total amount of funds that the Receiver recovered from the Citrades Defendants was $98,492.05 and the total amount of funds that the Receiver recovered from the Zilmil Defendants was $3,353,558.93. At that point, the Receiver has received confirmation that $7,381,366.29 in funds held in accounts at multiple financial institutions have been frozen pursuant to the Statutory Restraining Order and Preliminary Injunctions.

The Statutory Restraining Order requires the defendants to provide the Receiver with a detailed accounting of all their funds, assets, and documents, to transfer all assets to the control of the Receiver, and to provide the Receiver with access to records of all their accounts or assets. At the moment of publication of the Initial Status report, none of the Defendants have submitted their financial disclosures, or provided the Receiver with financial records other than certain bank statements, and they have not satisfied the production requirement in the Court’s orders, invoking their Fifth Amendment right against self-incrimination.