“Wanna go large, sir?” Burger-flipping SEC impostors pretend to help Banc de Binary fraud victims

Employees of a fast food chain outlet in Orlando Florida have been stealing money from victims of Banc de Binary’s illegal activities in the US which has defrauded customers out of millions of dollars and resulted in SEC action. These individuals posed as SEC officials and are now the subject of an affidavit by an FBI Special Agent supporting their charges for wire fraud. Taking a chip at binary options fraud is something the US officials relish!

If there is one commonality between giving custom to fraudulent OTC binary options schemes whose perpetrators attempted to ride on the coat tails of the genuine electronic trading sector for almost a decade and the large, downmarket fast food chains that permeate every shopping mall and high street in every corner of the world it is that the product provides the uninformed with a massive rush, very quickly, before leaving them hungry again just a minute or two later.

The lack of nutritional value inherent in the hamburger and fries that makes up the much maligned fodder of the in-your-face low-end fast food sector thus emulates the lack of financial value inherent in the quick rush then bust nature of binary options.

Yes, the consumer experience may be similar, however the difference is that with the fast food chains, the customer actually gets what was ordered, whereas with binary options, no real market exists hence the rush that the customer experiences that can be likened to devouring a cheeseburger with extra relish and thousand island sauce is false and the reality is stolen money.

Why the comparison? Well, staff at one particular branch of a very well known global fast food chain have been diverting their attention away from flipping burgers and asking if customers would like fries, aiming much higher in status by impersonating officials from the Securities and Exchange Commission (SEC).

The subject of the impersonators interest this time is controversial Israeli binary options brand Banc de Binary, which is one of SpotOption’s largest brands and operates under a CySec license from Cyprus, the firm having been in serious litigious trouble with the CFTC and SEC in 2013 for illegally approaching and selling fraudulent binary options to customers in the United States, despite the illegality of doing so.

The SEC filed a complaint in 2013 against Banc de Binary Ltd., its founder Oren Shabat Laurent, and three affiliates alleging that they failed to register the offering before soliciting U.S. customers through YouTube videos, spam e-mails, and other Internet advertising. They failed to register as a broker-dealer before communicating directly with U.S. clients by phone, e-mail, and instant messenger chats.

Binary options differ from more conventional options contracts because the payout typically depends entirely on whether the price of a particular asset underlying the option will rise above or fall below a specified amount.

Banc de Binary, Laurent, and the affiliates agreed to jointly pay $7.1 million in disgorgement and $1.95 million in penalties to the SEC as well as $2 million in penalties to the Commodity Futures Trading Commission (CFTC), which filed a parallel action.

The company, however, continued its binary options business on a global scale, only ceasing binary options operations last year, when the long arm of the law finally made the environment far too difficult for even the most arrogant to continue, however it is widely understood that the company and its owners are still operating and will soon move to a different type of product following the State of Israel’s very weak attempt at putting a final stop to these activities due to corruption in the Israeli government in which officials colluded with binary options fraudsters to pander to their interests.

Fraud encourages fraud, however, and according to FBI agent Ryan Lane who is currently assigned to the Massachusetts Field Office within a squad which investigates electronic crimes as well as fraud and other white collar offenses.

FBI Special Agent Lane has a bachelor’s and masters degree in accounting and is a Certified Public Accountant, and as part of his duties has made an Affidavit in support of a criminal complaint which charges an individual named Gregory Cedeno, and another individual named Leonel Alexis Valerio Santana with wire fraud, in violation of 18 U.S.C. § 1343 and conspiracy, in violation of 18 U.S.C. § 371.

The fraud scheme at issue involves the impersonation of employees of the SEC and the misuse of the SEC seal as part of an advanced-fee fraud scam in which the perpetrators trick victims into sending them money by pretending to be SEC officials. The scheme principally targeted purchasers of binary options, especially purchasers who had, at some point, purchased options from entities being sued by the SEC or the Commodity Futures Trading Commission.

Frequently, victims of the scheme were people who had purchased binary options from a company called Banc de Binary, the defendant in SEC v. Banc de Binary, 2:13-cv-00993-RCJ-VCF (Democrat, Nevada) and U.S. Commodity Futures Trading Commission v. Banc de Binary, 2:13-cv-00992-MMD-VCF (Democrat, Nevada).

In those cases, filed on the same day in June 2013, the government plaintiffs alleged that Banc de Binary illegally recruited U.S. investors to its binary options trading platform. Beginning no later than June 2015, former purchasers of Banc de Binary securities began to receive e-mails and telephone calls from people purporting to be SEC employees seeking money in connection with the investments they made with Banc de Binary.

The solicitations to victims took various forms, but had several common elements including the pseudonyms, phone numbers, and e-mail addresses used by the fraudsters; the form of the documents attached to soliciting e-mails; and the nature of the ruses used to swindle victims.

In one common version of the scam, victims received e-mails that used official-seeming documentation and the SEC seal to support a false claim that the targeted investor must pay a fee in order to receive a portion of the settlement of the SEC’s lawsuit against Banc de Binary. In another version, victims received e-mails and official-seeming documents labeling the victim a defendant in a civil suit alleging that the victim owed tens of thousands of dollars in supposed disgorgement, penalties, and fees.

From June 2015 through June 2017 there have been at least 95 victims targeted by this fraud scheme, with solicitations exceeding $1.3 million. Since June 2015, at least 25 of those targeted have sent money to the fraudsters, totaling more than $235,000.

The Targets and Their Co-Conspirators

Each of the individuals described in this section is discussed further below. Special Agent Lane discusses them here to introduce them and orient the reader to the role played by each in the conspiracy described in his affidavit.

Frank Gregory Cedeno and Leonel Alexis Valerio Santana are the targets of this complaint.

Among other evidence—and as detailed further below—there is evidence that Cedeno established an internet-based phone number used to communicate with victims of the fraud scheme, and that he received victim funds into his bank accounts, withdrew them, and distributed the money to other members of the conspiracy. For his part, there is evidence that Valerio communicated instructions to members of the conspiracy and that he was paid portions of the proceeds of the work undertaken.

Special Agent Lane believes that, during the period relevant to this complaint affidavit, CEDENO resided in or near Orlando, Florida, and that VALERIO resided in the Dominican Republic (though Special Agent Lane believe he now resides in Boston, Massachusetts).

As described further below, among other things, there is evidence that Co-Conspirator 1 received victim funds into his bank account, withdrew them, and distributed the money to other conspirators.

Based on Special Agent Lane’s review of bank records, Co-Conspirator 1 appears to have been employed at the same Orlando fast-food restaurant as Cedeno during the period relevant to this affidavit. Bank records also show that Co-Conspirator 1 opened an account at Bank of America on or about May 13, 2016 at the same branch in Orlando, Florida, where Cedeno had opened an account two days before.

According to Co-Conspirator 1’s bank records, on or about August 16, 2016, he received an international wire transfer for $6,500.00 into his account from a person whom Special Agent Lane believes to be a victim of the fraud scheme described in the affidavit written by him.

The bank records show that, on or about August 17, 2016, Co-Conspirator 1 (the only signatory to the account), withdrew $6,200.00 in cash from the account that had received the victim’s money.

Western Union records reflect that, on or about August 17, 2016, Co-Conspirator 1 sent $1,921.00 via Western Union to an individual located in the Dominican Republic and further Western Union records also reflect that, on or about August 17, 2016, both CEDENO and a further co-conspirator also sent $1,921.00 each to individuals located in the Dominican Republic.

Special Agent Lane considers that Co-Conspirator 2 is Valerio’s sister and resides in Boston, Massachusetts. As described further below, among other things, there is evidence.

In general and among other reasons, Special Agent Lane believes that certain funds were victim funds arises from factors including review of e-mail traffic preceding fund transfers; the origins of  the transfers (generally, the fraudulent transfers came from bank accounts outside the United States held in the names of individuals, not business entities); and the handling of the money once transferred to a person identified by Special Agent Lane as a co-conspirator (frequently, transferred funds were withdrawn shortly after they were transferred into the accounts of co-conspirators).

Not all these factors necessarily played a role in each of Special Agent Lane’s determinations that certain money represented victim funds, but frequently more than one factor was present before he made such a determination.

Indeed, this particular racket which operated on the back of the binary options racket that has been termed by City of London Police as ‘the biggest internet fraud ever‘ echoes the same method as many other so-called specialists who promise to return funds stolen by binary options fraudsters to their victims, largely on the notion that victims who handed their money over to firms with loose Cyprus based regulation, false names and no track record and had a predetermined will to steal the money, would also hand it over to fraudsters who could convince them that they would work on their behalf to recover it.

In America, binary options fraudsters, and those seeking to ride on the back of it, have had their chips, so to speak!

(FinanceFeeds has the full and comprehensive affidavit issued by Special Agent Ryan Lane and will retain it on file indefinitely.)

 

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