Sources in Israel including leading business news site Globes are reporting that UTrade owner Aviv Talmor has been convicted of defrauding investors of NIS 77 million (USD $22 million), and related charges.

Aviv Talmor was first indicted in 2018. After four year of legal maneuvering and a lengthy trial, the Tel Aviv District Court convicted Mr. Talmor on Tuesday of fraudulently raising investor funds in the amount of NIS 77 million, or $22 million. The amount actually still owed to former UTrade investors currently stands at $12 million. Talmor was convicted of fraud under aggravated circumstances, theft by an authorized person, money laundering, and managing investment portfolios without a license.

The arguments regarding Mr. Talmor’s sentencing will be heard on November 24.

The original indictment against Talmor claimed that his company UTrade, which purportedly offered algo trading services, used more than half of investors’ money to expand and cover operating expenses for Talmor’s growing forex and binary options business at the time, which largely targeted investors abroad. Much of the money was reportedly transferred to the bank account of an Israeli company called Binary Call Center Ltd.

The judge who heard the case, Justice Khaled Kabub – who since has become the first Muslim member of Israel’s Supreme Court – ruled that the investors’ agreement with UTrade did not allow the company to use the customers’ funds as they pleased. It was determined that UTrade regularly used customer funds for its operational expenses, for strategic expansion of its activities (including the acquisition of foreign companies) and payment of debts of old customers, in a pyramid scheme. The judge noted that 169 of the investors testified that they would not have invested their money had they known that their money would be used for the company’s current expenses.

Justice Kabub also ruled that the rates of return presented to customers were false representations. The judge found that UTrade presented to customers rates of return through marketing materials published on a variety of platforms as well as during recruitment talks conducted by UTrade’s salespeople. The judge also added that the defense does not deny that UTrade customers were often presented with substantial annual rates of return ranging from 15% to 20%. However those proposed returns were not backed by actual data of the company’s trading results, and therefore these are false representations.

The judge added that under Talmor’s direction, UTrade acted to recruit new customers, while creating an unsubstantiated representation that the company’s trading algorithm is profitable and successful. This was even at the cost of forming and presenting fabricated trading accounts in order to convince customers to deposit their money with the company.

Ma’ayan Talmor, Aviv Talmor’s sister, admitted in a plea agreement to conspiracy to commit a crime, and was fined NIS 10,000 (USD $2,920) and was given a suspended sentence.

An indictment was also filed against Roy Cuzin, the chief analyst of UTrade. Cuzin left Israel at an early stage before the indictment was filed and has not returned. The proceedings against him were suspended.