DOJ opposes Lee Elbaz’s bid for rehearing in binary options fraud case
The Department of Justice (DOJ) has opposed a bid by Yukom Communications CEO Lee Elbaz for en banc rehearing in a binary options fraud case.
The relevant documents were submitted by the DOJ on September 13, 2022 at the Fourth Circuit U.S. Court of Appeals.
Lee Elbaz was convicted of conspiracy and substantive wire-fraud offenses for her role in an international fraud scheme that bilked investors out of over $100 million. A unanimous panel affirmed her convictions and sentence. Elbaz petitioned for en banc rehearing on the ground that the panel’s decision conflicts with this Court’s precedent in three different respects. According to the DOJ, Elbaz is incorrect, and the Court should deny the petition.
First, the panel opinion’s application of plain-error review to Elbaz’s challenges to certain supervised-release conditions was correct and consistent with existing circuit precedent. Elbaz never voiced any objection to her supervised-release conditions in the district court, which triggered plain-error review in this Court because Elbaz failed to bring the “claimed error” to the district court’s attention.
Second, the DOJ argues that the panel opinion correctly rejected Elbaz’s challenge to the consideration of her foreign conduct for sentencing purposes. Elbaz’s prosecution constituted a permissible domestic application of the wire-fraud statutes and the panel correctly concluded that statutory and Guidelines provisions do not limit a sentencing court from considering a defendant’s conduct outside the United States.
The DOJ stresses that the district court correctly accounted for losses sustained by foreign victims of Elbaz’s conduct. En banc consideration is also inappropriate because any error would have been harmless given the total amount of loss suffered by domestic victims and the district court’s pronouncement that it would have imposed the same sentence even if it had miscalculated the Guidelines range.
Finally, the panel’s rejection of Elbaz’s claim that she was entitled to a mistrial because a juror overheard negative comments about her does not warrant en banc review, the DOJ argues. After assuming without deciding that Elbaz had triggered a rebuttable presumption of prejudice, the panel concluded that that juror’s dismissal, the district court’s confirmation that no other jurors were aware of the negative comments, and the restarting of deliberations with an untainted jury sufficed to rebut the presumption.
Elbaz rehashes the same arguments that failed to persuade the panel and contends that the panel’s consideration of the factors just described was erroneous because other cases have considered different facts and factors—including, notably, mistrial claims involving improper communications that arise after, not before, the jury’s verdict—in determining whether a reasonable possibility existed that the improper communication influenced the jury’s verdict. The panel opinion’s fact-bound determination that the government rebutted the presumption was correct and does not conflict with any of the Appeals Court’s other decisions.
Let’s recall that, following a jury trial in the District of Maryland, Lee Elbaz was convicted of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349; and three counts of substantive wire fraud, in violation of 18 U.S.C. § 1343. The district court sentenced Elbaz to serve 264 months in prison followed by three years of supervised release and ordered her to pay $28 million in restitution.The Appeals Court affirmed Elbaz’s convictions and sentence but vacated the restitution order.
Elbaz and her confederates orchestrated a multimillion-dollar fraud scheme that targeted financially unsophisticated victims. The scheme centered on binary options. Operating through several companies, the conspirators made fraudulent representations to retain investors by convincing them to deposit more money, then stopping them from withdrawing their funds. The scheme defrauded victims across the world out of more than $100 million in deposits, including millions from Americans.