US Govt seeks to stop depositions in CFTC case against binary options fraudster
Jared Davis, the operator of fraudulent binary options schemes OptionKing and OptionMint, should stop deposing witnesses, according to the United States Government.
Davis is a defendant in criminal proceedings brought by the Department of Justice (DOJ), as well as in a civil case brought by the Commodity Futures Trading Commission (CFTC). Jared Davis has been deposing government witnesses as a part of the discovery in the CFTC case, a practice that the Government disapproves of.
In a motion filed with the Ohio Northern District Court on May 12, 2021, the U.S. Government seeks to stop Davis from deposing government witnesses in the CFTC case.
The government seeks 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.
Here, the continued depositions of and interrogatories to potential government witnesses present a significant opportunity for Davis to exploit the advantages of civil discovery. This is especially problematic where a defendant might learn, not in the regular course of disclosure in a criminal case, who may have cooperated against him. Further, those individuals, many of whom are unindicted coconspirators of Davis, are not represented and are not informed of their Fifth Amendment rights.
In sum, the interests of the public, the government, the parties, and the Court strongly weigh in favor of granting the instant motion for a stay of depositions and interrogatories of government witnesses, the Government says.
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.