Stay of CFTC action against binary options firm Yukom Communications remains in place
The stay of the action launched by the Commodity Futures Trading Commission (CFTC) against fraudulent binary options firm Yukom Communications and several businesses and individuals linked to it remains in place. This becomes clear from documents filed with the Illinois Northern District Court.
The CFTC and Yakov Cohen, one of the defendants in this lawsuit, have submitted Joint Status Report regarding: (1) the status of the related criminal case, (2) any request to modify or lift the stay of this matter, and (3) any activity in the criminal case that may impact the status of the defaulted defendants.
The criminal case against Cohen remains pending. Cohen’s undersigned counsel in this matter represents that, to the best of his knowledge, Cohen remains outside of the United States.
On October 27, 2021, this Court granted defendant Cohen’s Unopposed Motion to Stay and entered an order staying this case and holding Cohen’s obligation to file an answer in abeyance while the case is stayed.
The Court has entered default pursuant to Fed. R. Civ. P. 55(a) as to all eight of remaining defendants. Specifically, default has been entered against five entities: Yukom Communications Ltd, Linkopia Mauritius Ltd., Wirestech Limited, WSB Investment Limited, and Zolarex Ltd; and three individuals: Yossi Herzog, Lee Elbaz, and Shalom Peretz. The Commission has not yet sought default judgment under Fed. R. Civ. P. 55(b) against the Defaulted Defendants.
The Commission’s Complaint charges Cohen and the Defaulted Defendants with acting in concert in operating an illegal and fraudulent binary options trading scheme, and further alleges that Cohen, along with defaulted defendant Herzog, ultimately owned and controlled the Yukom Entities and masterminded the scheme.
The Complaint alleges that all defendants (i.e. Cohen and the Defaulted Defendants) are jointly and severally liable for the charged violations and seeks an order requiring defendants, as well as any successors thereof, to make full restitution to every person who has sustained losses proximately caused by the violations described in the Complaint and to disgorge all benefits received in connection with the charged violations, among other relief.
During the October 27, 2021 hearing, undersigned counsel for the Commission advised the Court that, as to the Defaulted Defendants, the Commission anticipates seeking findings of liability concurrently with, or shortly following, any determination as to Cohen’s liability for the same charged conduct. The CFTC also anticipates seeking additional evidence through discovery in this action that will further support the charged violations, identify additional benefits received by Cohen and the Defaulted Defendants, and/or identify additional sources of funds that should be used for restitution.
The Commission has not yet placed evidence before the Court concerning the appropriate amount of disgorgement, restitution, or other monetary penalty. Following the determination of liability as to all defendants, the CFTC anticipates seeking an appropriate order imposing monetary and equitable relief.
There are no updates in the criminal cases that impact the status of the Defaulted Defendants. On December 19, 2019, defendant Elbaz was sentenced to a term of imprisonment of 264 months and, she remains a federal prisoner at the Federal Correctional Institution Dublin in Dublin, California. The CFTC believes that Herzog remains outside of the United States.
The Honorable Andrea R. Wood has reviewed the parties’ joint status report. The parties are directed to file an updated joint status report by November 4, 2022.