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Old 12-27-2019, 08:08 AM
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Default Israeli jooess rodent binary options fraudster jailed for 22 years in kwa; must repay $28m


Elbaz to appeal both conviction and sentence
US jails Israeli binary options crook Lee Elbaz for 22 years; must repay $28m
Judge says CEO in $140m fraud targeted elderly, vulnerable victims; as she sobs, her lawyers claim she was ‘middle management,’ point finger at her bosses Yossi Herzog, Yakov Cohen

19 December 2019, 7:18 pm

GREENBELT, Maryland — Israeli binary options fraudster Lee Elbaz was sentenced to 22 years in prison by a court here on Thursday.

US District Judge Theodore Chuang told Elbaz, 38, that her actions cost vulnerable investors their life savings, homes and even their marriages. “This was a very significant crime with significant harm to victims,” the judge said.

The judge further ordered Elbaz to pay $28 million in restitution to her victims. The government has 90 days to find more victims, which may raise the restitution amount.

Elbaz, who has been in jail since her conviction in August, was brought to the court in an orange jumpsuit. She sobbed intermittently throughout the hearing, and grasped the arm of one of her attorneys as the judge announced the sentence.

Defense attorney Barry Pollack said his client would appeal her conviction and sentence, which he called “much harsher than it needed to be.”

Elbaz was found guilty by a Maryland jury on August 6 on three counts of wire fraud and one count of conspiracy to commit wire fraud in connection with a vast scheme to defraud investors all over the world out of more than $140 million.

Elbaz was the CEO of Yukom Communications Ltd., one of more than a hundred binary options companies that operated in Israel between the years 2008-2018.

Five former employees of Yukom Communications Ltd. and Numaris Communication Ltd. in Israel — Lissa Mel, Shira Uzan, Liora Welles, Austin Smith and Yair Hadar — signed plea deals with the US government. All but Mel testified at the Elbaz trial on behalf of the prosecution, saying that Elbaz instructed them to lie to investors in order to get them to deposit as much money as possible, and to do everything possible to prevent them from withdrawing their funds.

Fifteen additional defendants were indicted in November.

Ronen Roytman, the head of Numaris Communication, entered a non-prosecution agreement with the US government.

Yukom employees pretended to be from other countries, lied about their professional qualifications and adopted “stage names.” Elbaz used the alias “Lena Green” while interacting with investors, according to prosecutors.

Yukom employees also falsely guaranteed profits, lied about their historical rates of return, and didn’t tell investors that they only made money if their customers lost money, prosecutors said.

An email instructed BinaryBook sales representatives to target retirees, Social Security recipients, pension holders and veterans as clients, according to court filings accompanying guilty pleas by former employees.

Justice Department prosecutor Henry Van Dyck said most of the victims lost everything they invested. “Nobody was looking out for these investors,” he said. “They were rooting against them.”

He said that videos from inside Yukom showed that employees enjoyed their work, and that Elbaz fostered a work environment where it was fun to defraud investors.

“There was a mentality at this company that the defendant fostered, with gongs and bells, to say this is exciting, it’s a good thing to defraud investors. That culture that permeated company is no doubt one of the reasons why this fraud grew from a few hundred thousand dollars and a few employees to hundreds of employees and millions and millions of dollars in losses to investors,” he said.

During the hearing, Judge Chuang read off a long list of victims who had lost their life’s savings as a result of Elbaz’s actions.

“Among such victims was Larry Burton, who lost over $200,000 including $70,000 from his retirement account. He also borrowed 30,000 for his investment and afterwards had to refinance his home. There’s James Freeman, age 67, who lost $304,000, his entire life savings. Terry Pocket lost $247,000 including $94,000 from his 401k fund. He also said he lost his life’s savings and had to borrow money to pay for his mortgage. Mr. Hanow lost $175,000 including large sums from his IRA and retirement funds and had to take a job as a truck driver to help pay off his losses.”

The judge continued to enumerate victims, including a man who “lost so much money he tried to commit suicide.”

The judge said that Elbaz and others specifically targeted vulnerable people, including the elderly, and tried to get people addicted to trading like in a casino. He said that Elbaz would suggest that clients use their retirement funds for investments.

Elbaz’s lawyer tried to persuade the judge that she was “middle management” and that her bosses Yossi Herzog and Kobi Cohen were the heads of the conspiracy. Herzog and Cohen, who have both been indicted, are still at large.

“Yes, there was harm done here,” defense attorney Pollack said. “But not all of that harm can be laid at Ms. Elbaz’s doorstep.”

Pollack had asked for a sentence of five years in prison for his client. Prosecutors recommended a prison sentence of nearly 34 years, the top of the sentencing guideline range for Elbaz’s case.

Binary options fraud flourished in Israel for about a decade before the entire industry 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 its height, hundreds of companies in Israel were engaged in the widely fraudulent industry, employing thousands of Israelis, allegedly fleecing billions out of victims worldwide.

Many of the fraudulent operatives have since moved their operations abroad, or switched to other scams, though Israeli law-enforcement authorities have proved unwilling or unable to prosecute more than a handful of alleged offenders. By contrast, the US government is ratcheting up efforts to bring Israeli offenders to justice.

Nimrod Assif, an Israeli lawyer who has sued several binary options companies on behalf of victims, said in response to Elbaz’s sentencing, “I estimate that hundreds, if not thousands, of Israelis were engaged in pretty much the same conduct for which Elbaz was convicted and sentenced. Their fate is different only because they did not target Americans, or haven’t been caught. If Israeli law enforcement authorities had done their job, we wouldn’t have come to this sad day.”

She is one of 21 indicted defendants who worked for Yukom, which operated the websites BigOption and BinaryBook, and was the first to be tried. Elbaz was arrested by the FBI on September 14, 2017, as she got off a plane at JFK airport in New York. She was indicted by a US federal grand jury in March 2018 for participating in a scheme to “defraud investors in the United States and across the world.”
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