US Court denies request for release of binary options fraudster Lee Elbaz

Judge Theodore D. Chuang of the Maryland District Court has dashed the hopes of binary options fraudster Lee Elbaz for a release pending sentencing.

Let’s recall that, on August 7, 2019, after a three-week trial, the jury returned a verdict of guilty on all counts against Elbaz, who is the former CEO of Yukom Communications. Back in August, the Court ordered Elbaz, who had been on pretrial release prior to trial, detained pending sentencing. Elbaz has tried to get released pending sentencing, with the US Government opposing her attempt.

As per the Order dated October 4, 2019, Judge Theodore D. Chuang has sided with the Government and has denied the defendant’s motion.

In his Order, the Judge noted that the wire fraud conspiracy evolving around Israeli-based Yukom 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 in purportedly legitimate financial instruments under false pretenses. Elbaz, as the CEO of Yukom, instructed numerous retention agents to lie to potential investors in order to procure such investments. Elbaz also had a role in the work of retention agents working for another company, Numaris, located in Tel Aviv, Israel, and with another company, Linkopia, based in Mauritius. Although the precise loss amount has yet to be calculated, exhibits introduced at trial provide evidence that the fraud may have involved over $100 million, with over $36 million from the United States.

The Court notes that even if the loss amount proved to be significantly lower, such as a conservative loss amount calculation of more than $9.5 million, the offense level would still be approximately 31, factoring in the same enhancements for number of victims and the international nature of the scheme that were applied for other defendants in this same scheme. Even with a conservative two-level upward role adjustment, the total offense level would be 33, resulting in a guideline range of approximately 11 to 14 years of imprisonment.

This significant potential sentence is a substantial factor in illustrating the significant risk of flight, the Judge said.

Also relevant from the nature and circumstances of the offense are the fact that Elbaz has significant ties to foreign countries and international travel experience, that Yukom, Linkopia, and owners of those companies who have derived significant financial resources from the criminal scheme remain beyond the reach of the American justice system in foreign countries, and that despite the testimony of character witnesses who had no insight into the criminal scheme, Elbaz has a history of using lies and deception to achieve her goals, the Judge says.

All of these facts support a finding that Elbaz presents a significant risk of flight if released, the Judge said.

Elbaz’s pretrial compliance, although a factor weighing in favor of release, is of limited value. Now that she has been convicted, the incentive to appear in court has significantly diminished, particularly in light of the very significant sentence that would likely be suggested by the Sentencing Guidelines.

More compelling is her almost complete lack of family or community ties to the United States and her fully established life in Israel, her native country. She has no personal incentive to appear for sentencing in order to maintain the ability to reside in the United States in the future, the Judge stressed.

In the face of all of these factors weighing against release, Elbaz argues that her proposed conditions of release are sufficient to assure her appearance at sentencing. Specifically, Elbaz’s aunt has already posted assets valued at approximately $1.8 million if she does not appear for sentencing, and Elbaz offers to have relatives in Israel pledge real property in Israel. Although the possible loss of her aunt’s property would appear to be a significant disincentive to flee, the Court notes that the proceeds of the fraudulent scheme dwarf the value of that security, those proceeds have not been fully accounted for, and Elbaz has acknowledged in court filings that she remains aligned with those with control over Yukom and Linkopia, who likely continue to have access to the proceeds of the crime.

Under these circumstances, and when considered in light of the likely length of sentence, Elbaz has not demonstrated by clear and convincing evidence that the proffered security is sufficient to reasonably assure her appearance at trial.

Accordingly, the Court concluded that Elbaz had not demonstrated by clear and convincing evidence that there are conditions of release that will reasonably assure her appearance at sentencing.