US Govt seeks more documents from binary options fraudster Lee Elbaz
The raft of documents sought includes any other legal opinions not previously disclosed that address compliance with laws and regulations of Yukom and WSB Investment Ltd.
The proceedings against Lee Elbaz, aka Lena Green, who stands accused of fraud, continue at the Maryland District Court and the start of the trial in this case gets closer.
On July 3, 2019, the US Government filed a Motion to Compel with the Court. The document, seen by FinanceFeeds, says that the US authorities are asking the Court to order Elbaz to produce to the government:
any other legal opinions not previously disclosed that address her former company’s compliance with laws and regulations, including Yukom Communications and WSB Investment Ltd.,
any documents that show the factual bases for the opinions, including communications by the defendant and other employees with the attorneys, and
any communications about these legal opinions involving the defendant and other employees and affiliates of Yukom.
The Government submitted the motion after having had the opportunity to review the legal opinions the defendant has identified to date, and after having also received the defendant’s response to the government’s motion in limine, filed earlier this week, in which the defendant argued that “her intent to commit fraud or absence of such intent, and whether she was acting in good faith, will be at issue at trial.”
On June 21, 2019, Elbaz, the CEO of Yukom Communcations, identified certain legal opinions and communications that she intends to introduce at trial to advance a “good-faith” defense. These opinions and communications generally relate to Yukom’s business operations and purport to opine that Yukom and related entities were in compliance with legal and regulatory requirements. For instance, Elbaz has identified a March 3, 2016 legal opinion authored by an attorney named David Bitton addressing the issue of customer service and retention of non-Israeli end-customers in the financial field for Ucom Communications Ltd. The opinion concludes that “the activities of Ucom are legal according to the laws of the State of Israel,” and that “Ucom may give service and handle end customers from all over the world, including in countries (such as the United States).”
Similarly, Elbaz has indicated that she intends to rely on an April 14, 2016 legal opinion authored by an Israeli attorney, which concludes that Yukom’s parent holding company, WSB Investment Ltd., “operates in accordance with the laws and regulations in its country of incorporation United Kingdom and in full regulatory compliance, in accordance with its services provided.”. The opinion states that WSB Investment Ltd. “operates in accordance with the AML and due diligence policies of the country of incorporation and respective target markets,” including the United States. The defendant has identified additional legal opinions that she intends to rely on at trial that address the use of “stage names” or pseudonyms, and which are addressed to Yukom, and AGM Markets Pty Limited.
With regards to the latter entity, let’s recall that, back in November 2018, the Australian Securities and Investments Commission (ASIC) cancelled the Australian financial services (AFS) licence of the retail OTC derivative issuer AGM Markets. The cancellation followed an ASIC investigation which demonstrated that AGM’s financial services operations involved core elements of unconscionability and unmanaged conflicts of interest and followed a business model that disregarded key conduct requirements.
While the defendant is entitled to advance a “good-faith defense,” she cannot do so by cherry-picking favorable legal opinions about her former company’s operations without disclosing all other legal opinions about the legality of the company’s operations, whether such advice is favorable or not, the Government argues.
Lee Elbaz’s trial is set to commence later this month. The Indictment charges Lee Elbaz with one count of conspiracy to commit wire fraud and three counts of wire fraud. The Indictment alleges that Elbaz participated for over three years (from approximately May 2014 and continuing through approximately June 2017) in a fraudulent scheme involving the sale and marketing of binary options – including as the Chief Executive Officer of Yukom Communications. Yukom was an Israel-based business that provided sales and marketing services, including investor “retention services,” for two internet-based businesses that sold and marketed binary options with the brand names BinaryBook and BigOption.