UPDATE: US court convicted Lee Elbaz on four counts relating to $145m fraud on August 7 2019. She has been taken into custody and will be sentenced on December 9. US authorities now going after 100 other binary options firms.
Lee Elbaz, the former chief executive of a major binary options company, goes on trial today in the US charged with defrauding clients of nearly $150m.
Her role in the fraud was first exposed by the Bureau, with the help of a whistleblower, in November 2016, and some of the evidence presented by that insider has been used to prepare the case against Ms Elbaz.
The binary options scandal was a high-tech variant of boiler room scams. The fraudsters would cold call potential investors in other countries and persuade them to put money on whether a share or commodity price would go up or down. Initially the investor would see their money growing in an account held by the company and be encouraged to invest more — sometimes hundreds of thousands of pounds. However, when they tried to withdraw the money the binary options companies would prevaricate and then stop taking their calls.
Billions of dollars was stolen from consumers all over the world, including the UK and US. Originally the fraudsters operated out of Israel but soon spread to Cyprus, Romania and even Mauritius.
The Bureau co-published investigations about the fraud with The Daily Mail in late 2016 and The Times of Israel also investigated the companies.
Ms Elbaz, also known as Lena Green, was the chief executive of Yukom, a company that operated binary options trading platforms under trade names such as BigOption and BinaryBook. Her team modelled themselves on Jordan Belfort — the New York stockbroker and scammer who inspired the film The Wolf of Wall Street. Ms Elbaz even took the team to see Belfort when he visited Israel.
The US government alleges that from around May 2014 through to around June 2017, Ms Elbaz directed a scheme to defraud binary options investors by lying to them and misleading them about the nature of binary options trading. Ms Elbaz, an Israeli citizen, was arrested when she flew to New York in September 2017.
Before the Bureau’s exposure of the fraud, binary options companies were allowed to openly advertise in the UK. One, Banc de Binary, sponsored Liverpool and Southampton football clubs. It was later forced to pay up $11 million in fines in the US before being wound up. The Israeli government banned such companies operating from Israel in October 2017 and in 2018 European governments barred the operators from selling to their citizens.
Header image from The Wolf of Wall Street via Paramount Pictures