At least 12 binary options company owners and employees are under police investigation or have been referred to the state prosecutor with a recommendation for indictment.
Among these, the state prosecutor said, are the owner and three senior employees of a group of forex and binary options firms it is currently deciding whether to indict for fraud, breach of trust, money laundering and other charges.
Aviv Talmor and his three former employees, Rafi Bar-Lev, Sagi Stambolsky and Ehud (Udi) Shaham, were the owner and senior staff of Utrade Premium Ltd., a forex company that targeted Israeli clients.
Talmor also operated the forex and binary options sites CapitalOption, SkyFX, Forex TG Pty Ltd (FXTG), Algobank, PlusFN, OneBinary, OptioNow, Zluti Marketing and affiliatekey.com.
Israel Securities Authority Chairman Shmuel Hauser recommended in April that Talmor and his three former employees be indicted, and the state prosecutor is still weighing whether to go ahead with an indictment.
One is that of Eliran Saada, who was arrested on May 16 for aggravated fraud, misrepresentation, false accounting, forgery, extortion and blackmail in connection with his operation of the websites InsideOption, SecuredOptions and OptionChase.
The second case is that of Ido Fishman and six of his former employees, Daniel Swartz, Naor Noah, Jonathan Tourjman, Itzhak Babler, Itam Durab and Maor Jerby, all of whom were arrested last November by the Israeli Securities Authority on suspicions of aggravated fraud and providing investment advice without a license.
These seven men were associated with the Itrader.co.il website, which offered forex and binary options trading to Israelis. Itrader has shared an office and employees with the company that operates the FMTrader.com website, which targets investors globally.
If any of these 12 men is indicted, it would be one of the first instances, after more than 10 years of a metastasizing fraud, that the owner of an allegedly fraudulent forex or binary options firm is put on criminal trial in Israel, not for tax evasion or a crime that is ancillary to their business activity, but for securities fraud.
Talmor, Bar-Lev, Stambolsky and Shaham were the owner and senior employees of Utrade Premium Ltd., a forex company that targeted Israeli clients and promised outsize returns on their investments through the use of a sophisticated “trading robot,” or algorithm that would trade on behalf of clients and supposedly had the power to beat the market.
The company was established in 2007 and operated until late 2015, when, due to mounting complaints from allegedly defrauded Israeli investors, the Israel Securities Authority ordered the company to cease operations.
In an April 18 press release announcing the recommendation for indictment, the Israel Securities Authority stated: “There is a sufficient evidentiary basis that the central suspect and the three additional involved parties committed securities violations and other crimes, including fraud, making false claims in corporate documents, violations of corporate manager and employee law, breach of trust, money laundering, managing investment portfolios without a license, failure to comply with the demands of the Israel Securities Authority and obstruction of judicial proceedings.”
According to the ISA, in 2012-2015 Utrade raised $27 million in investments from 604 Israeli investors. This was done in a way that “deceived investors through misrepresentation, falsifications, and manipulative and aggressive sales practices.”