US Govt accuses binary options fraudster Lee Elbaz of willful blindness
The government requests a willful blindness instruction, in light of the defendant’s assertions that despite being CEO of Yukom, she was unaware of the fraud taking place around her.
The trial of the former CEO of Israel-based Yukom Communications, Lee Elbaz, aka Lena Green, who is accused of binary options fraud in the United States, continues at the Maryland District Court.
The latest filings in this case, seen by FinanceFeeds, reveal Elbaz’s claims she had no knowledge of the scam going on around her.
On July 29, 2019, the United States Government submitted a trial brief requesting that the Court include a willful blindness instruction in its charge to the jury. The government says that a willful blindness instruction is appropriate in this case, in light of the defendant’s assertions that despite being CEO of Yukom, she was unaware of the fraud taking place around her.
The government notes that it is entitled to argue (and the jury may conclude) that if the defendant, as CEO, did not see what was going on around her, it is because she was deliberately and willfully blind to her surroundings. Put otherwise, it is appropriate to instruct the jury on willful blindness when the defendant claims lack of guilty knowledge in the face of evidence supporting an inference of deliberate ignorance.
The main argument advanced by the defense is that Elbaz was aware of some, but not all, the lies told by her employees and, therefore, was not aware of the fraud perpetrated by her employees. In opening, she conceded that she knew employees were lying about their names and their level of experience. However, Elbaz has claimed not to know that her employees were lying to clients about (1) their success as binary options traders; (2) historic and expected rates of return; (3) whether Yukom had any financial incentive to make clients money; and (4) whether and when clients could withdraw their money.
The government notes that it has introduced ample evidence at trial to establish that Elbaz actually knew her employees were lying to clients about these material facts and she trained many of them to lie to clients in precisely this manner. The government also argues that the defendant lied directly to clients about rates of return, her success and experience as a trader, and whether her interests were aligned with the client’s.
Moreover, the government says, there is substantial evidence in the record that the defendant was a vigilant manager who was frequently at the office – evidence shows she tracked her employees, regular monitored customer deposits and withdrawal attempts, and directly managed customer risk settings. In addition, Elbaz recorded employee calls with clients and later used them for training purposes. Yet, the defendant has suggested that she did not open training scripts containing misrepresentations or actually listen to the client/employee calls that she forwarded as exemplars for training purposes. This argument is precisely why a willful blindness instruction is appropriate in this case, the government says.
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.