In the sentencing the US Judge Theodore Chuang says Lee Elbaz, the former CEO of the Israeli binary options scheme operator Yukom Communications Ltd, was responsible for the targeting of elderly, vulnerable victims in the $140 million fraud. Yukom operated the boiler rooms behind the binary options scheme BinaryBook and BigOption. Elbaz, in turn, pointed her finger at her former principals, the Israeli Yossi Herzog and Kobi Cohen. Elbaz’s defense line worked at least to a certain degree.
The Fraud Culture – Fucking Money-Making Machine
The former boiler room CEO Lee Elbaz, 38, did not receive the 34-year prison sentence that the prosecutors had demanded. The judge sentenced Elbaz to 22 years in prison and to pay at least $28 million in restitution to the injured parties. The US prosecutors have got additional 90 days to find more victims, which may raise the restitution amount. The judge pointed out that many retail investors had lost their savings and livelihoods with the Yukom binary options scam under Elbaz management.
Defense attorney Barry Pollack called the sentence “much harsher than it needed to be” and said that he would appeal. As a matter of fact, however, the US trial against Lee Elbaz uncovered the shameless, brutal, and disgusting fraud culture of the Israeli binary options era. Under Elbaz’s management, successful fraud actions executed by boiler room agents have been celebrated. Boiler room agents knowingly and wilfully stole money from their client-victims and we’re proud of it. And earned commissions, rewards, and recognition. They have been trained and supervised by Elbaz and other management to be highly efficient liars and perpetrators. They have been equipped with psychologically optimized scripts to get retail investors’ money.
Elbaz called herself a “fucking money-making machine” we learned in the trial. It was all about stealing as much money as possible from client-victims. In any boiler room not just in Yukoms’.
There was a mentality at this company that the defendant fostered, with gongs and bells, to say this is exciting, it’s a good thing to defraud investors. That culture that permeated company is no doubt one of the reasons why this fraud grew from a few hundred thousand dollars and a few employees to hundreds of employees and millions and millions of dollars in losses to investors.Henry Van Dyck, US Prosecutor
“Financial criminals like Elbaz and her co-conspirators are interested in one thing: taking money out of the pockets of unsuspecting investors for their own benefit. The FBI is dedicated to identifying and investigating fraud, no matter where the criminals are located, or how long it takes,” said Assistant Director in Charge Timothy R. Slater (Source: FinanceFeeds)
According to Nimrod Assif, an Israeli lawyer who has sued several binary options companies on behalf of victims said to The Times of Israel that there have been “hundreds, if not thousands, of Israelis” engaged in pretty much the same conduct for which Lee Elbaz sentenced. Their fate would only be different only because they did not target Americans, or haven’t been caught yet. Assif quite openly blames the shortcomings of the Israeli law enforcement for the development of the binary options fraud industry.
Given the $140 million loss and the thousands of defrauded retail investors the sentencing is fair under US standards. It’s an important sign and definitely a call for action for the European prosecutors. Unfortunately, there are dozens of similar broker scam schemes that damaged tens of thousands of retail investors in the European Union w. These scams, too, need to be investigated and prosecuted in the very best interest of investors. Yukom is an important precedent.Elfriede Sixt, EFRI principal
The Defense Line
Lee Elbaz‘ line of defense was to reduce her role to a middle manager under the direction of the scheme’s beneficial owners, the Israeli Yossi Herzog and Kobi Cohen. Evidently, it worked to some degree because the judge didn’t follow the prosecutors” demand for a 34-year prison term.
Yossi Herzog and Kobi Cohen are also faced with an indictment but remain at large. They are said to be in Israel. Currently, it’s unclear whether and if so when they will be extradited to the United States.
Preliminary Conclusion – The Israeli Default
The US prosecutors and courts are actually doing the job of their Israeli counterparts:
- Israeli perpetrators,
- who performed their fraud via Israeli companies
- from Israeli offices
have to be investigated and prosecuted in the United States. That’s nothing short of ridiculous, isn’t it? The same is true for the situation in the European Union.
Israel has painstakingly failed to take action against the epidemic spread of the biggest online investment fraud in history – binary options scams. The proud nation’s judicial system failed and continues to do so despite the many public warnings of their journalists like Simona Weinglass of the Times of Israel and Israeli lawyers.
Israeli perpetrators like Lee Elbaz, Yossi Herzog, Kobi Cohan or Guy Galboiz performed their fraud in plain sight without any consequences. Actually, this raises the question of the liability of Israeli authorities and involved lawyers for the damage of investors worldwide.
If Israeli law enforcement authorities would have done their job in the first place, hundreds of thousands of retail investors worldwide would not be ripped off and defrauded. That’s a fact and the Israeli authorities and courts should actually start to do their job properly. Currently, Israel is a safe haven for scammers, investment fraudster and their facilitators.