Discovery in CFTC case against OptionKing operator gets stayed
The Court has sided with the United States Government and has agreed to stay discovery in a civil lawsuit brought by the Commodity Futures Trading Commission (CFTC) against Jared Davis – the operator of several binary options scams, including OptionKing and OptionMint.
On May 24, 2021, Judge Jack Zouhary of the Ohio Northern District Court ordered a stay of all further discovery in the CFTC case against Davis.
“This Court never expected that all discovery could take place in the civil case alongside the ongoing criminal case. It appears we have now reached the point where further discovery here would be inefficient for the parties, and potentially harmful to the Government and the public’s interest,” the Judge said.
In such cases, it is proper to defer to the criminal proceeding and to stay discovery in the civil action. Therefore, all further discovery in the civil case was stayed pending further Order of the Court, except for those issues counsel mutually agree can continue without interfering with the criminal case.
Both the criminal indictment and the CFTC’s civil complaint describe in some detail an elaborate enterprise designed to defraud investors through sleight of hand and promises of “guaranteed” profits. Both the CFTC’s civil case and the Justice Department’s criminal case focus on alleged misrepresentations and other fraudulent conduct from as early as 2012 through June 2016, and seek to redress investors of more than $10 million.
Ultimately, both cases share a core of operative facts and will involve a determination of whether or not Davis operated, and controlled, a number of domestic and foreign business entities to facilitate a fraudulent binary options scheme.
The government sought to stay the depositions and interrogatories of government witnesses in the civil case because of the pendency of the parallel criminal case. The same underlying facts are at issue in both the civil and the criminal matters. The government is concerned about the unwarranted exposure of government witnesses.
Davis has deposed four individuals, all of whom are possible government witnesses in the Criminal Case. None of those witnesses were advised of any option to consult counsel, warned that they might be testifying under oath to having committed a crime, or told that they could invoke their Fifth Amendment rights. Further, Davis has asked those individuals regarding their earlier contacts with law enforcement and the grand jury.
Davis intends to depose four more named individuals as well as two unnamed individuals whom the defendant claims were customers of his enterprise.
Especially given the extended discovery deadlines in the Civil Case, there is little doubt that the primary benefit to Davis of continuing with his proposed depositions and interrogatories is to receive statements under oath from possible witnesses against him prior to the Criminal Case. That is certainly a benefit of which every defendant in every criminal case would like to take advantage if given the chance, the Government notes, adding that this should not be permitted.