US Govt seeks to stay CFTC case against OptionKing operator
The United States Government is seeking to intervene into and stay an action brought by the Commodity Futures Trading Commission (CFTC) against binary options fraudster Jared Davis. This becomes clear from documents filed with the Ohio Northern District Court on October 28, 2020.
The government seeks to stay the civil proceedings because of the pendency of a parallel criminal case.
Let’s recall that, on August 22, 2018, a federal grand jury in the Northern District of Ohio returned an indictment criminally charging Jared Davis with conspiracy to commit wire fraud, conspiracy to launder money, wire fraud, money laundering, international money laundering, obstruction of justice, and tax evasion.
Specifically, the Indictment alleges that Davis ran a fraudulent binary options investment scheme in the Northern District of Ohio, Western Division and elsewhere using various trade names, including OptionMint, OptionKing, and OptionQueen. In all, Davis defrauded victims of more than $10 million.
On September 17, 2019, the CFTC launched a civil case charging Davis with one count of commodity options fraud, which was premised on the same conduct as alleged in the Indictment.
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.
Notably, the United States seeks only a stay of the proceedings, and its intervention is not set to alter the parties’ respective positions. The criminal proceedings, in fact, may benefit the civil parties, by bringing out facts relevant to the CFTC case and streamlining the ensuing litigation.
The United States Government warns that the parallel criminal and civil proceedings present a significant opportunity for the defendant to exploit the advantages of civil discovery because the two cases will involve many of the same witnesses and operative facts. The civil proceeding, if not deferred, will:
- expand the rights of criminal discovery beyond the limits of Federal Rule of Criminal Procedure 16(b);
- reveal the identity of prospective government witnesses which may lead to intimidation; and
- allow the defendant to unfairly surprise the prosecution at trial with information gained through discovery.
The CFTC does not oppose the Government’s motion, whereas Davis opposes it.