Amid the failure of Israeli police and prosecutors to effectively investigate and prosecute perpetrators of online fraud, Israeli courts are seeing a slew of civil lawsuits by alleged victims overseas against Israelis they allege have defrauded them through binary options and related schemes.
Israeli court filings show that dozens of lawsuits have been filed against Israeli binary options companies by former clients in the United States, the United Kingdom, Australia, New Zealand, South Africa, Denmark, Sweden, the Netherlands, Switzerland, the Czech Republic, India, Belize and Singapore, as well as numerous alleged victims of investment fraud from Israel itself.
While it is difficult to determine precisely how many such lawsuits have been filed — since Israel’s courts database is not searchable by keyword — The Times of Israel estimates the number to be between 50 and 100 in the last two years.
Some of these lawsuits are ongoing, while others have ended in a settlement.
Despite the slew of civil lawsuits, and an ongoing stream of US Justice Department prosecutions of Israeli binary options fraudsters, there is little indication that Israeli police are actively investigating alleged binary options and related investment fraud. One investigation that was commenced in 2017 resulted in police determining that the owner of a binary options company was not guilty of any wrongdoing, according to a document seen by The Times of Israel.
Whistleblowers who have spoken to Israeli police about investment fraud perpetrated from Israel have described the police reaction as either indifferent or seemingly daunted by the complexity of an investigation that would involve multiple jurisdictions and documents in foreign languages.
Yoram Fay, an attorney who has sued several Israeli binary options companies on behalf of plaintiffs abroad, believes that civil lawsuits can provide some relief to the alleged victims.
“I encourage people to sue in Israel, because none of my lawsuits till today have reached the stage where the judge had to deliver a verdict. At a certain point the defendants understood that it was in their interest to pay up. It’s worthwhile to sue because in the end it is possible to get your money back.”
The binary options industry flourished in Israel for a decade before it was outlawed via Knesset legislation in October 2017, largely as a result of investigative reporting by The Times of Israel that began with a March 2016 article entitled “The wolves of Tel Aviv.”
At the industry’s height, hundreds of companies in Israel were engaged in the widely fraudulent industry, which employed thousands and allegedly fleeced victims worldwide out of billions. The unscrupulous firms would dupe victims into believing that they were investing successfully and earning money, and encourage them to deposit more and more into their accounts, until the company eventually cut off contact with the investor and disappeared with all or almost all of their money.
Many of the fraudulent operatives have since moved their operations abroad, or switched to other scams while continuing to operate from Israel. The vast majority of the perpetrators have enriched themselves at the expense of victims around the world while enjoying impunity and suffering little social stigma.
Below are synopses of several binary options-related lawsuits recently filed in Israeli courts. In almost every case, the plaintiffs traded on a website and spoke to people in a call center that they claim defrauded them. The most difficult task for most of these plaintiffs was to associate an Israeli company or individual with the website that allegedly defrauded them since binary options and forex companies often go to great lengths, using offshore companies, generic IP addresses and fake names, to hide the identities of their operators. Most of the plaintiffs finally decided whom to sue after a huge amount, sometimes months’ worth, of detective work, and in almost every case the defendants’ first line of defense was that the plaintiffs had made a mistake and sued the wrong people.
Case 48800-12-18: A couple from Wisconsin and FMCapitals.com
A couple from Kenosha, Wisconsin, sued an Israeli company called CMT Global Trading (2012) for $568,000 last December. The company, they alleged, operated the binary options websites FMarket.com and FMCapitals.com.
The couple, represented by Israeli lawyers Tom Lifshitz and Avi Aseo, claimed that they started investing in binary options in February 2017 and were promised steady profits of 10 percent a month by their broker “Frank Lee.”
They made two transfers of $250,000 each to a bank account at HSBC in Hong Kong. Some of this money was from the husband’s retirement account, the lawsuit said. All of their money was lost. The couple claimed that as a result of their losses they have suffered financial and psychological distress and owe hundreds of thousands of dollars in taxes that they are unable to cover.
In addition to CMT Global Trading, two Israeli men, Daniel Kibel, Ibrahim Abu Ita, and a British citizen named David Kyte are defendants in the lawsuit. All four defendants deny any connection to binary options and claim that their company merely provided marketing services to forex and other investment companies abroad. They further claimed that their company has a license in South Africa.
The case is currently in the discovery stage and set to go to trial in June 2020.
Case 17978-12-18: A 67-year-old man from Indianapolis and RumeliaCapital.com
Also in December 2018, a 67-year-old man from Indianapolis sued an Israeli company called Tracy P.A.I. and its owner David Israel Cartu for $150,000.
The man, represented by Israeli lawyers Eldar Peretz and Michael Gal, lost that amount, he alleged, to a website called RumeliaCapital.com.
The complaint in the lawsuit alleged that the entire purpose of the defendant’s company “was to trick citizens abroad and obtain their money through fraud.”
The complaint alleged that when the plaintiff tried to withdraw his money he was unable to do so. Eventually, the website was shut down entirely with no recourse for the plaintiff, the lawsuit alleged.
The defendant, David Cartu, claimed that the plaintiff’s lawsuit was without merit and intended to harass him. He claimed that Rumelia Capital was a foreign binary options website for foreigners and has nothing to do with Israel.
He further argued that binary options was not against the law in Israel before legislation was passed to ban it in October 2017.
While he acknowledged that the company he owned, Tracy P.A.I., had given “white label” services to Rumelia Capital, he claimed that Tracy P.A.I. had no agreement with the end customer and merely provided services to the broker.
In July 2019 the plaintiff’s lawyers announced that the two sides were in the midst of intensive negotiations toward an out-of-court settlement. In September 2019 both sides asked the judge to reject the lawsuit with no order as to costs. Peretz, attorney for the plaintiff, told The Times of Israel that he was not at liberty to disclose the conditions of the settlement.
47432-07-18 A woman from Minnesota and Beeoptions.com
Another lawsuit against Tracy P.A.I. and David Israel Cartu was filed in July 2018 and has advanced to the discovery stage.
The plaintiff, a Minnesota woman who is represented by lawyers Nimrod Assif and Haggai Carmon, is suing the defendants for NIS 5.4 million ($1.55 million).
The woman alleged that she lost the $675,000 that was in her trading account at BeeOptions.com when the site suddenly went offline in March 2016. She further alleges that Tracy ran BeeOptions.com.
Her broker, she alleged, a man who went by the name of “Ryan Daniels” and claimed to be calling her from London, had promised her online trading profits of hundreds of percentage points.
The complaint alleged that a company known as Global Transaction Services processed payments for BeeOptions.com. At a later date, processing was carried out by a company called Greymountain Management.
In court protocols, David Cartu’s attorney claimed that BeeOptions was owned by a Bulgarian and Ukrainian man as opposed to Cartu. Documents submitted by Cartu as part of the discovery process listed several companies that had acquired credit card payments for binary options companies through Greymountain Management. These were Credorax, Wirecard, Transact Pro, and Max Pay.
30504-12-18 A citizen of India and Trade12.com
In December 2018, a 48-year-old man from India sued an Israeli company called Pay Trade Service Ltd. and its owner Motti Mor (formerly Miriashvili) for $148,550.
The man claimed to have lost $148,550 to the website Trade12.com.
In his defense, Mor said he does not own Trade12 and that it is owned by Exo Capital Markets Ltd., a company incorporated in the Marshall Islands. Mor acknowledged that in 2016 and 2017 (before the plaintiff allegedly lost his money) his company had provided marketing services and technology services to Trade12 but, Mor insisted, his company was never involved in the website’s trading activity nor had anyone from his company ever spoken to the plaintiff.
Fay told The Times of Israel that the judge ultimately asked him to withdraw the case because there was not enough evidence to prove the plaintiff’s assertion that Mor owned Trade12. The judge had suggested that Fay file the case again in the future should he obtain more evidence. The plaintiff was not ordered to pay the defendant’s costs.
31672-05-18 A 58-year-old woman from Sweden and CentralOption.com
In May 2018, a Swedish woman sued Y.M. Central Ltd. and a man named Maor Azhari for NIS 183,112 ($53,000) over losses she allegedly incurred to the binary options website CentralOption.com.
The woman, represented by lawyers Raouf Najjar and Adam Ashkenazi, claimed that her broker “Adam Louis” had induced her to invest the money under false and fraudulent pretenses.
In court, Maor Azhari claimed that after a rough patch in his life, during which he had been in a rehab program and lost his parents, he had met a French immigrant to Israel named David Yosef who had persuaded him to register the company Y.M. Central Ltd in his name.
In fact, said Azhari, he had not been involved in the company at all and his brief relationship with the French immigrant had “ruined his life.”
The next hearing in the case is scheduled for December 3 at the Tel Aviv Magistrate’s Court.
1346-09-18 A 52-year-old Dutch citizen and Atoslimited.com
In September 2018, a man from Holland sued L.L. Globus Ltd (an Israeli company), Globus Capital Associates Limited (registered in the UK), and Ashdod resident Nir Lankry in Tel Aviv Magistrate’s Court.
The Dutch citizen, represented by lawyers Raouf Najjar and Adam Ashkenazi, sued for NIS 128,000 ($37,000), an amount he alleged he lost to the binary options website atoslimited.com.
In order to trade with AtosLimited.com, the plaintiff allegedly wired money to the bank account of a company called Harty Asia Electronics Co. Ltd at HSBC in Hong Kong.
In court, Lankry’s lawyer denied that Lankry owned the binary options site, and claimed it belonged to a man named Prosper Soussan. Soussan’s lawyer acknowledged that his client’s name appeared on some of the company documents, but insisted that his client was just a straw man.
In an earlier lawsuit (60041-10-17) in which Lankry was sued by his business associate Maor Korem, Lankry claimed that he had in fact owned the atoslimited.com website together with Korem and two other silent partners. Korem said that he and Lankry and two other people had started a telemarketing company together but did not mention its name and said that it had failed due to mismanagement.
The Dutch citizen and Lankry settled the lawsuit, with Lankry agreeing to pay the plaintiff NIS 50,000 ($14,000) in 25 monthly installments.
38215-07-18 A Canadian woman and OptionRally.com
In July 2018, a Canadian woman living in Belize, represented by attorney Eldar Peretz, sued two men allegedly behind the website OptionRally.com for NIS 601,202 ($173,176).
The plaintiff sued the company, E. T. Salestech, one of the Israeli companies that operated a call center for the website, but when she learned that the company was in liquidation, she argued that the company’s owners, Tal Fromchenko and Elad Yitzhak Peled, should be held personally liable.
The woman claimed that her broker, a man who called himself “Samuel Bale,” told her that the trades she made on the online trading platform were “a sure thing, like picking up money from the floor.”
Peled and Fromchenko, a scion of the family that owns the Elite chocolate company, said in their defense that OptionRally had a license from the Belize Financial Services Commission. They also said that the plaintiff had signed a waiver acknowledging that trading binary options is high risk and there was a danger of losing all her money.
The pair further argued that OptionRally was owned by a company called TCM Investments incorporated in Belize, and that therefore Israel is not the right jurisdiction for her lawsuit. Furthermore, she had signed an agreement that any dispute with the company would be resolved by a court in Belize.
The plaintiff’s lawyer contended that TCM Investments was merely a shell company and that the Israeli company’s bankruptcy documents described the Israeli company as a “binary options company” and that its employees are described as having earned commissions on net deposits, suggesting that the Israeli company was the binary options company itself and not just a “service provider.’
The case was ultimately settled out of court and the lawsuit withdrawn with no order as to costs. Attorney Peretz told The Times of Israel he could not disclose the terms of the settlement.
12552-09-17: A Swedish man and IntegraOption.com
In September 2017, a 70-year-old Swedish man sued Israelis Chen Malka, Sharon Malka and their father Gil Malka, as well as a man named Nadav Gover and two Israeli companies called S.O. Marketing and G.M. Media Software.
The plaintiff, represented by lawyers Adam Ashkenazi and Raouf Najjar, sued for 47,390 euros, which he claimed to have lost to the allegedly fraudulent website IntegraOption.com.
The defendants argued that the lawsuit should not have been filed in Israel when the contract was between a foreign citizen and a foreign company. They claimed that the plaintiff had absolutely no evidence that IntegraOption was connected to the defendants.
The lawsuit was ultimately settled out of court with no order as to costs. Attorney Najjar told The Times of Israel he could not disclose the conditions of the settlement.
13095-09-18 An American woman and PorterFinance.com
In September 2018 an American woman sued an Israeli company called JMRB Media, as well as its owners Ron Benharav and Jonathan Jason Maymon, for NIS 642,000 ($185,000).
The plaintiff, through her lawyer Lior Shaby, claimed to have been defrauded by a website called PorterFinance.com.
The defendants Benharav and Maymon denied any connection to Porter Finance and told the plaintiff that she was suing the wrong people. The case is ongoing and the next court hearing will take place on December 22.
31398-08-18 A New Zealand man and BossCapital.com
In August 2018, a New Zealand man sued the now-defunct Israeli company Rushmore Marketing and its owner Jonathan Siennicki for NIS 472,000 ($136,000) over losses he allegedly incurred to the website BossCapital.com.
The man was represented by attorney Lior Shaby. The defendants never mounted a defense and in April 2019 the judge ordered them to pay the plaintiff NIS 472,000 along with NIS 25,324 in legal fees.
30417-12-18 A Dutch man and Tradorax.com
In December 2018, a Dutch man, represented by attorney Yoram Fay, sued Jack Henry Wygodski, Avi Itzkovich and Yael Fuks for 68,150 euros.
The three defendants were allegedly owners and executives of the websites TraderVC.com and Tradorax, which were run by a company called Rax Media OOD in Bulgaria. According to the lawsuit, Rax Media recruited Israelis and encouraged them to relocate to Bulgaria to work in its call center.
A private detective hired by the plaintiff spoke to ex-employees of the company undercover. One of them reportedly told her that employees of the Bulgarian call center sensed that law enforcement authorities had been sniffing around nearby.
The plaintiff and defendants ultimately settled the case out of court and the plaintiff withdrew the lawsuit, without being required to pay the defendants’ legal fees.
16815-12-18 An Australian woman and 365binaryoption.com
A woman from Australia, represented by attorney Edith Millet Bar Oz, sued the Israeli company Paperclick Marketing Ltd. in December 2018 together with its owner Roy Shagan, for NIS 736,560 ($212,000).
The woman, a 59-year-old nurse, also sued her two brokers, who used the names “Tom Voss” and “Daniel Mor.” The woman said she had begun trading binary options after seeing an advertising campaign entitled “Fast Cash” featuring Sir Richard Branson. She said she eventually lost her entire pension and is in danger of losing her home.
Paperclick Marketing claimed in its defense that it merely provided services to Fintech Software, Inc., the British Virgin Islands company that owned 365binaryoption.com.
Paperclick Marketing’s owner, Roy Shagan, comes from a wealthy family and is a cousin of Shaul Elovich, the telecom magnate who is about to be indicted, along with Prime Minister Benjamin Netanyahu, on charges of bribery in the unrelated Case 4000.
On December 1, the plaintiff submitted an amended complaint, which named an additional man, Tommy Agami, as a defendant. The amended complaint alleged that Agami is the true identity of “Tom Voss,” the plaintiff’s broker.
Tommy Agami is an Israeli singer who together with his brother Yan appeared on the Israeli version of the television show “The X-Factor.” The plaintiff’s lawyer claimed to have discovered the identity of “Tom Voss” after obtaining an Excel spreadsheet that allegedly listed the names of Paperclick Marketing’s employees alongside the “stage names” they allegedly used when talking to customers.
In response to the amended complaint, the defendants’ lawyer suggested that the plaintiff may have come into possession of the Excel spreadsheet unlawfully, by somehow gaining access to the company’s internal communications. The defendants’ lawyer further cast doubt on the authenticity of the document and suggested it could have been created by someone wishing to harm the company.
The case is ongoing and the next court hearing is January 5, 2020.
27768-10-18 A Czech woman and UKOptions.com
A 47-year-old Czech woman represented by attorneys Raouf Najjar and Adam Ashkenazi filed an NIS 233,966 ($67,400) lawsuit in Israel in October 2018. The woman sued Israelis Uri Katz and Adi Marom and the Israeli company UKFM Ltd.
The defendants have denied that they had anything to do with the company the woman allegedly lost her money to. The next hearing in the case will be on December 22, 2019.
52822-08-18 A Texas resident and StarlingCapital.com
An American man represented by attorney Yoram Fay has sued Silverpop Media Ltd. and Citrin Technologies Ltd., as well as Alexander Abdayev, Yishai Beserglick, Raz Beserglick, Karen Ronen, Luba Orman, Tali Kadosh, Itai Bar Ilan, Yosef Mizrachi and Amit Sides, for $275,000.
The plaintiff alleges that the defendants are owners and employees of two companies that operated the binary options website StarlingCapital.com.
The plaintiff alleged that Greymountain Management processed payments for Starling Capital. In addition, the plaintiff said he wired $150,000 to a company called Cutter International Limited in Dubai.
The defendants have all categorically denied that they had anything to do with the website StarlingCapital.com.
The case is ongoing and hearings will resume in March 2020.
An Israeli culture of impunity
Israeli law enforcement has proven unable or unwilling to effectively tackle the country’s binary options fraud, indicting only a handful of alleged operatives, despite the fact that for several years the scams operated at an industrial scale.
US authorities are increasingly tackling the fraud, however. Yukom Communications CEO Lee Elbaz was convicted by a Maryland jury on August 6 for her role in a $145 million fraud. Five additional former employees of the firm have pleaded guilty to conspiracy to commit wire fraud while 15 others have been indicted.
On October 9, the SEC sued the Israeli owners of the websites LBinary and IvoryOption.
Meanwhile, on September 30, the SEC charged two Israeli men, Gil Berserglik and his son Raz Beserglik, as well as a German man named Kai Peterson, with alleged binary options fraud to the tune of $100 million through the websites Bloombex Options, Morton Finance and Starling Capital.
On September 30, the SEC also charged two US-based affiliate marketers, David Sechovicz and Peter Szatmari, with selling binary options through false and misleading videos, websites and internet advertising.
On August 12, the CFTC charged several companies and individuals associated with Israel-based Yukom Communications with over $100 million in fraud.
In November 2018, Jason Scharf, the CEO of a binary options company called CiTrades, pleaded guilty in the United States to a criminal charge of conspiracy to commit wire fraud. He admitted to defrauding investors out of more than $8 million.
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