US Govt opposes alleged binary options fraudster request to dispose of monitoring software

Maria Nikolova

The Government says electronic monitoring of Yehuda Belsky has shown that he is continuing to engage in the business of providing financial services to investors despite being banned from doing so.

Further to a recent request by alleged binary options fraudster Yehuda Belsky to be allowed to use electronic devices without monitoring software, the United States Government has submitted its arguments in opposition of this request.

On Friday, November 2, 2018, the US Government filed its response to Belsky’s Motion with the New York Eastern District Court.

Let’s recall that Belsky contends that the condition that he not use computers or internet access without monitoring software is not the ‘least restrictive condition’ necessary to reasonably assure the safety of other persons from being defrauded by him in the future. Also, Belsky argues that the condition unduly restricts his right to speech under the First Amendment and is an overbroad deprivation of liberty and privacy interests under the Fourth and Fifth Amendments.

In its response, the Government argues that the combination of conditions, including the monitoring condition challenged by Belsky, are necessary to assure Belsky’s appearance and the financial safety of the community.

As a result of the condition, Pretrial Services has identified text messages and a phone call Belsky placed on October 22, 2018 that show that he has been violating the conditions of his release. On October 22, 2018, Belsky received text messages on his cell phone from an individual identified as “Miguel” regarding transactions to purchase Treasury STRIPS (Separate Trading of Registered Interest and Principal of Securities). Federal agents have approached this individual who reported that he gave Belsky approximately $40,000 in funds from investors to purchase Treasury STRIPS using a brokerage firm. The individual said that they spoke about their financial services business activities, which include involvement in medium term notes (MTN), commercial paper, stocks, bonds, options, as well as Treasury STRIPS.

The activity identified by Pretrial Services as a result of the monitoring condition is in violation of Belsky’s employment condition, the Government says. This violation demonstrates that Belsky is continuing to engage in the business of providing financial services to investors and is not deterred by earlier Court Orders.

Belsky is charged in a three-count indictment with: (1) mail fraud; (2) failure to register as a commodities trading advisor; and (3) misappropriation of customer funds. Between approximately March 2014 and June 2018, Belsky engaged in an embezzlement scheme to defraud customers and potential customers.

In the face of a permanent ban from trading in commodities futures transactions and options by the Commodity Futures Trading Commission (CFTC) in December 2008, Belsky, using the alias “Jay Bell,” portrayed himself as someone with expertise in commodities trading, particularly binary options trading. He made fraudulent representations to customers to induce them to invest with him, including by using fraudulent documents.

The Government notes that the condition of release imposing monitoring software is appropriate and narrowly tailored to address Belsky’s extensive and continuing history of fraud and economic harm. Although Belsky does not have a criminal history, the CFTC’s December 2008 enforcement proceeding demonstrates that his past conduct and character weigh in favor of the conditions imposed.

The US Government requests that Belsky’s request for modifying his release conditions be denied. In addition, in light of Belsky’s October 22, 2018 conduct, the government requests that the Court find that he violated Court orders. The Government seeks Belsky’s detention, notification to the suretors of the violation, and forfeiture of the $500,000 bond or, at the very least, the imposition of additional conditions of release.

The case is captioned USA v. Belsky (1:18-cr-00504).

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