US Court wants to know about Israeli “call center industry” as binary options fraud case continues
Lee Elbaz, the former CEO of Israel-based Yukom Communications, will have to provide disclosure on what “consistent with common and accepted industry practices” means.
The trial of Lee Elbaz, aka Lena Green, the former CEO of Israel-based Yukom Communications, who stands accused of binary options fraud in the United States, continues at the Maryland District Court. Despite the prevailing number of sealed documents in this case, some information has been made available to FinanceFeeds.
On Monday, July 22, 2019, Judge Theodore D. Chuang granted in part a motion to compel by the US Government. The motion by the Government concerned the “expert” testimony by Bruce Lebowitz, whom Elbaz wants to call as a witness.
The Government had moved the Court for an order to compel Lee Elbaz to comply with the requirements of Fed. R. Crim. Pro. 16(b)(1)(C) (“Rule 16”), and order her to disclose to the government additional information about the defendant’s proposed expert witness testimony.
On June 21, 2019, defendant sent a letter to the Government, stating her intent to call Bruce Lebowitz as an expert witness. The defendant claimed that Mr. Lebowitz’s expert knowledge would allow him to testify that employees working for Elbaz at Yukom behaved in a manner “consistent with common and accepted industry practices.”
The letter did not specify Mr. Lebowitz’s basis for his conclusion that Yukom purportedly complied with industry standards, nor did it disclose how Mr. Lebowitz gathered his knowledge of Yukom’s business practices, or whether he relied on any evidence or other information about Yukom in forming his opinion.
The government then requested that the Court order the defendant to disclose (1) the basis for Mr. Lebowitz’s opinion about Yukom’s business practices, i.e. what evidence or other information Mr. Lebowitz relied on in forming his opinion, and (2) Mr. Lebowitz’s definition of what constitutes the “call center industry.”
On July 22, 2019, the Court ordered that the Government’s Motion to Compel Expert Disclosure is granted as to the disclosure regarding the expert’s definition of “call center industry.” Lee Elbaz is directed to provide the disclosure to the Government by Tuesday, July 23, 2019.
The Government alleges that, from in or around May 2014 through in or around June 2017, the defendant, Lee Elbaz, aka Lena Green, directed a scheme to defraud binary options investors by lying to investors and misleading them about the nature of binary options trading and the defendant’s business. Among other things, she lied to clients about the gains victims should expect to receive; historical rates of return binary options investors received; the alignment of financial interests between the defendant’s company and clients; the education, credentials, and experience of the defendant and her employees; and even their names and location.
Elbaz is alleged to have directed the scheme and exercised significant oversight of the scheme, both on a strategic and day-to-day level by hiring and training employees to tell the same lies to clients over and over, in order to induce clients to send money. The defendant also trained her employees to engage in fraudulent tactics to prevent clients from withdrawing funds from their accounts. Through this scheme, the defendant and her co-conspirators defrauded tens of thousands of victims worldwide, including thousands here in the United States, and caused tens of millions of dollars in victim losses.
Yukom’s operations were focused exclusively on “retention” work and operated primarily under two different client-facing brands: BigOption and BinaryBook. By late 2017 victim-clients had deposited approximately $185,000,000 into BinaryBook and BigOption accounts but had withdrawn less than $50,000,000, amounting to net deposits of just under $150,000,000. These BinaryBook and BigOption clients had less than $37 million remaining, meaning that the clients had already recognized losses of over $113,000,000.