US requests extradition of 6 additional Yukom binary options fraud suspects
Israel financial news source The Marker is reporting that the International Department of the U.S. Attorney General’s Office has requested the extradition of six Israeli citizens wanted for fraud, as part of the Yukom Communications binary options scandal.
If extradited (and convicted), they could join Yukom CEO Lee Elbaz in jail – Elbaz is currently serving a 22 year sentence in the US (and was required to pay $28 million in restitution) following a 2019 conviction. Ms. Elbaz was not extradited to the US, but rather was arrested at JFK airport in September 2017 after stepping off a commercial flight, not realizing that she was on the FBI’s Wanted list.
The current group who were arrested in Israel and face extradition were named as Uri Maimon, Nissim Alfasi, Afik Tori, Oron Montgomery, Dave Barzilai and Gilad Mazogi. Part of the extradition agreement is that they would be returned to serve their sentences in Israel, if convicted. They each face 20 year jail sentences if convicted.
According to the extradition request, the group (along with others including Elbaz) operated as part of a large-scale fraudulent enterprise, under a company called Yukom, which defrauded American citizens and others of more than $100 million through websites which were supposed to be trading platforms for binary options investments. The trading arenas were not conducted within the framework of regulated exchanges in the USA. Yukom operated an array of call centers, in Caesarea and Tel Aviv, in which sales representatives were employed, including those arrested, who contacted the victims and offered them an investment in binary options, using false names and various misrepresentations about profits and high returns.
The sales representatives falsely presented themselves as capital market experts, using fake names and background information and presenting false information in order to convince potential customers to invest their money in an apparently safe and profitable venture. In cases where the investment generated a random profit for the customer, the sales representatives acted in different ways to prevent the customer from withdrawing his profits, and even his original investment, all while apparently using public trading data, for the purpose of establishing false representations.
Yukom had no real intention to make customers a profit. In order to achieve the goals of the fraud, the trading systems were built from the beginning as a “closed stock exchange system” by external companies in a model similar to the business that operates a casino.
In practice, the victims’ money was transferred to the accounts of the project managers and was not invested at all. The heads of Yukom transferred customer funds into their pockets and used them for the ongoing operation of the project and to finance the commissions of the sales representatives and project managers. This is at a time when customers were presented with false representations that all their money is invested in binary options and that the trading platforms do not charge a fee for the investment itself but profit from another source.
According to the extradition request, two of the wanted persons, Maimon and Alfasi, also acted as managers in the venture, and trained the sales representatives to defraud the victims. The fraud was conducted over three and a half years, from 2014 to 2017.