US Govt to refer to SpotOption emails and business records at trial of binary options fraudster Lee Elbaz
According to the records, by late 2017 victim-clients had deposited approximately $185 million into BinaryBook and BigOption accounts.
The United States Government on Monday submitted a trial brief for purposes of summarizing the legal and factual issues it believes will be relevant to the upcoming trial of Lee Elbaz, the former CEO of Yukom Communications who stands accused of binary options fraud.
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.
Videos taken inside Yukom, for example, show the defendant congratulating Yukom employees in December 2014 for collecting around $2.5 million net that month. A March 2016 video shows her encouraging her employees to target $9 to $10 million for that month.
The Government explains that the majority of its case will focus on the operations of a call center located in Caesarea, Israel and operating under the name Yukom Communications. Yukom’s employees were focused exclusively on “retention” work and operated primarily under two different client-facing brands: BigOption and BinaryBook. The government anticipates that multiple cooperating witnesses from Yukom’s Caesarea offices will testify at trial, and each will acknowledge that employees solicited money from victim-clients through a multitude of lies. Each will testify that it was the direction from Yukom management that employees obtain money through false promises.
While the defendant retained management over the Caesarea office, she was also involved in parts of the scheme elsewhere in the world. Testimony and documentary evidence, the Government says, will show that Elbaz traveled to other offices in Mauritius and Ukraine, where she was responsible for ensuring employees there engaged in the same high-pressure and fraudulent sales techniques used in Caesarea. Similarly, jurors will learn that in mid-2015, the defendant helped the scheme expand through a new office in Tel Aviv, Israel, which operated under the brand “Numaris.”
One tactic the defendant used to undermine clients was known as putting a winning client on “high risk.” SpotOption, an entity that hosted the platform (in effect, the software and trading data) on which BinaryBook and BigOption trading accounts operated, also controlled client “risk settings.” If a client was identified inside BinaryBook and BigOption as trading successfully, the defendant would contact SpotOption and arrange for the client’s account settings to be adjusted such that it was less likely future bets would win. By stacking the deck against the client (without informing the client of the changes), Elbaz prevented scenarios where clients would try to withdraw winnings.
The Government also mentions some of Elbaz’s co-conspirators. The list includes Yossi Herzog, Yakov “Kobi” Cohen, Ori Maymon (a/k/a “Patrick Accardo”), Elad Bigelman (a/k/a “Michael Goldberg”), Nissim Alfasi (a/k/a “Nick Onasis”), Ronen Roytman (a/k/a “Alexander Goldman”), Liora Welles (a/k/a “Lindsay Cole,” “Lindsay Taylor,” and “Lindsey Wells”), Yair Hadar (a/k/a “Steven Gold”), Shira Uzan (a/k/a “Emily Laski”), and Austin Smith (a/k/a “John Reid”).
The government notes that this is not an exhaustive list, as the defendant supervised dozens of employees during her time at Yukom, and trained and directed those individuals to lie to clients in furtherance of the scheme to defraud. However, the government has identified a list of the defendant’s co-conspirators (and their “stage names”) that are most likely to appear on emails the government intends to offer as evidence at trial, including the names of the five individuals who have pleaded guilty to conspiracy charges in connection with the defendant’s scheme and the three individuals who have been named as the defendant’s co-conspirators in the partially unsealed Herzog Indictment.
Regarding documents to be presented at trial, the government will offer a subset of emails obtained by the Israel National Police during an authorized search of the Tel Aviv offices of the technology company SpotOption – the search was requested pursuant to the Mutual Legal Assistance Treaty (MLAT) protocols). Among the documents produced through the MLAT were emails between Elbaz, her co-conspirators, and SpotOption employees, in which the defendant and her co-conspirators directed SpotOption to put certain BinaryBook and BigOption accounts on “high risk” setting. In addition to producing these documents to Elbaz, the government has also produced certificates from officers of the Israel National Police responsible for taking custody of the items at SpotOption.
In addition to the emails recovered during SpotOption search, the Israeli government also produced certain business records created and maintained by SpotOption. Some of these documents were financial records that tracked the deposits and withdrawals of certain brands operating on the SpotOption platform. Among these records, the government identified records showing the deposits and withdrawals of customers using BinaryBook and BigOption accounts (i.e., the brands operated by the defendant and her co-conspirators).
These records show loss suffered by victims in this scheme. According to the records, 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. The same records show that the same BinaryBook and BigOption clients had less than $37 million remaining, meaning that the clients had already recognized losses of over $113,000,000.
The trial is set to begin on July 16, 2019.