The widely fraudulent binary options industry generates $5 billion to $10 billion a year and largely emanates from Israel. It has been estimated to number well over 100 companies, and to employ between 5,000 and tens of thousands of employees.
While many within Israel are trying to reign it in, the Knesset’s current watered-down bill would allow binary options fraudsters to re-brand their product and continue to defraud customers abroad with impunity. An analyst writes: “Israel is so corrupt that these borderline criminals actually run the country.”
Below are five articles from the Times of Israel and elsewhere about a criminal industry that has scammed hundreds of thousands of victims worldwide out of billions of dollars with little to no intervention from Israeli law enforcement:
Police: Binary options is run by crime bosses, has grown ‘monstrous’ in size
By Simona Weinglass, Times of Israel
In a bombshell speech, a senior Israel Police officer told a Knesset panel on Wednesday that Israeli crime kingpins are behind the binary options industry and that organized crime in the country has been massively enriched and strengthened as a result of law enforcement’s failure for many years to grasp the vastness of the problem.
“Our eyes have been opened,” said Superintendent Gabi Biton, who investigates financial fraud and money laundering. “What we’re seeing here is a massive organized criminal enterprise. We are talking about criminals at various levels of crime organizations, up to the very top.”
The widely fraudulent binary options industry is estimated to generate between $5 billion and $10 billion a year and to largely emanate from Israel. It has been estimated to number well over 100 companies, and to employ between 5,000 and tens of thousands of employees.
The Times of Israel began exposing the industry in a March 2016 article entitled “The wolves of Tel Aviv: Israel’s vast, amoral binary options scam exposed.” The fraudulent firms ostensibly offer customers worldwide a potentially profitable short-term investment. But in reality — through rigged trading platforms, refusal to pay out, and other ruses — these companies fleece the vast majority of customers of most or all of their money. The fraudulent salespeople routinely conceal where they are located, misrepresent what they are selling and use false identities.
Because binary options is such a lucrative scam, established organized crime groups gravitated toward it, said Biton. “They saw the huge economic potential in binary options,” he added, explaining that these organized crime bosses then hired professionals, foreign language speakers and payments experts to help them carry out their fraud.
“It has grown to monstrous proportions,” he added. “I can say that we are discovering new paths of money laundering through this crime that we were not aware of.”
Biton was speaking at the second of three meetings of the Knesset Reforms Committee devoted to deliberating a proposed law to ban the Israeli binary options industry. At the previous meeting, held Monday, several of those in attendance were shocked to discover that the draft legislation unveiled in February had been substantively weakened. The original text, which was drafted by the Israel Securities Authority together with the Justice Ministry and the attorney general’s office, banned the entire binary options industry, but also, significantly, would have prohibited Israeli forex, CFD (Contracts for Differences) and other online trading companies from offering their wares to customers abroad without a license. The February draft law stipulated that online trading companies operating from Israel and targeting customers abroad must do so with a license from the country where they operate.
But in the ensuing months the text was changed, and in its current version — which was approved by the cabinet last month — the ban on binary options stands but the additional clauses, covering other financial instruments, have been deleted. This new version of the proposed law was formally published by the Knesset on June 20 but not publicized, and many critics of the industry only discovered the change in recent days or at Monday’s session.
During Wednesday’s committee meeting, some of those in attendance argued that the watered-down bill would allow binary options fraudsters to re-brand their product, offering forex or CFDs instead, and continue to defraud customers abroad with impunity.
A source involved in the legislation told The Times of Israel, “The expanded bill would have been ideal but I do not think it would be able to pass a final Knesset vote, even if the committee approved it. You cannot imagine the amount of pressure being exerted on Knesset members to weaken this bill. The industry has vast amounts of money and is exerting massive pressure.”
The committee is set to vote on the bill next Monday. If it passes, it will then go to the Knesset for its second and third (final) readings.
Biton, the police superintendent, assured those in attendance Wednesday that the bill in its current state is sufficient because it allows the finance minister to extend the ban to other financial products in the future in consultation with the Israel Securities Authority and the Knesset Finance Committee. Biton added that police are now aware of the severity of Israel’s fraud problem and are conducting multiple investigations into key figures in the industry.
Staring directly across the room at several lobbyists and representatives of the binary options industry, Biton said pointedly, “We have names: We have names of companies, we have names of people, we have names of crime organizations and we have the names of soldiers in crime organizations.”
He told the panel that binary options fraudsters are part of a sophisticated network of criminals that has been carrying out internet scams over the past decade. Some of these criminals, he said, carried out the carbon-VAT scam, which was dubbed the “crime of the century” in France. Later, some moved on to other types of internet fraud, including the CEO scam, while others made their way into binary options.
“Binary options caused Israel’s crime organizations to become significantly stronger,” said Biton. “We have received reports from various enforcement agencies in Israel outlining the meteoric enrichment of the perpetrators.”
He said Israeli police have begun to follow the binary options money trail and to identify the true owners of the websites registered to shell companies in places like Belize and the British Virgin Islands.
Biton said that as North American and European regulators and law enforcement have caught on to binary options fraud, companies are shifting their activity to Arab countries and the Far East.
At the committee meeting, several representatives from the industry argued against banning binary options technology providers from Israel. Speakers appearing on behalf of platform provider SpotOption, for instance, firmly rejected any notion that the firm was involved in fraudulent behavior and said it ought not to be impacted by the law, as it will be if the current draft is approved.
David Ripstein, the former CEO of SpotOption, told the committee, “At SpotOption I developed a program that was fair and had 50 percent wins/losses.”
But Biton, speaking of binary options trading platforms in general, argued, “I have no problem with companies that merely provide technology. But when you ask for a commission of over 10 percent, that’s weird for a company that merely provides a platform and payment processing systems.” (SpotOption did not specify in the meeting whether it took a commission on each transaction.)
Ordinarily, “when you transfer money you pay a 0.5% commission,” continued Biton. “I know from the money laundering world that when you transfer money of criminal organizations it costs 14%. That gives us an indication that something here is not right.”
Binary options companies make heavy use of high-tech systems for processing payments, he added.
“There is a very robust system of payment processors, secondary payment processors and aggregators whose purpose is to hide the nature of their activity from the acquiring banks.” (The Times of Israel has written in detail about these payment processing systems here.)
Biton said he is currently investigating several cases of binary options fraud and that victims around the world were welcome to submit their complaints.
“We’re focusing on the big cases. But we received a directive from the head of the [police] intelligence and investigations division that every complaint that reaches us will be investigated.”
Former employees of the industry, he added, are increasingly willing to speak to police: “We’ve spoken to programmers of trading platforms, salespeople, even team leaders.”
Still, he said, it is difficult to gather enough evidence to bring indictments against the fraudsters.
“We are talking about companies that are registered in countries where their shareholders are two other companies. The servers are not in Israel. We have to ask other countries for help. It takes time.”
But in the end, Biton vowed to stop the fraud.
“Like drugs, gambling and prostitution, it won’t go away entirely. But we will use all the tools at our disposal to uproot this phenomenon.”
Israel reveals its innate corruption as the Knesset deletes important parts of the proposed ban on binary options at the last minute, allowing the underworld to prevail, much to the damage of the online business globally. We investigate in detail
Governments of highly corrupt nations are often prone to spending an absolute fortune from the public purse to drag out a potential legislation which would, if implemented, put a stop to very damaging and nefarious business practices which are running amok, and then giving up at the last moment due to bowing to the leaders of such businesses.
Israel, which is widely renowned for being a developer of high technology, ranging from advanced medical systems to avionics, and has been credited with the invention of several everyday devices that nobody in the modern world could live without, such as the mobile phone and the Intel microprocessor, fits this exact description, unfortunately.
Israel’s binary options industry rose to prominence very very quickly in the middle of the last decade, and has during the past two years become the bete noire of financial markets regulators, mainstream news entities and consumer protection groups, largely because it is about as far removed from a genuine financial product as is humanly imaginable.
The vast binary options business, which bears absolutely no resemblance to genuine electronic trading whatsoever, is indeed a weighted gambling platform masquerading as a retail trading environment, which the operators, most of whom come from adult entertainment, online poker, lead buying (and stealing in some cases) and affiliate marketing backgrounds rather than financial services, use to pocket the deposits of unsuspecting customers worldwide.
Binary options is reviled on a global scale, with France, Belgium, Germany, Denmark, the United States, and Holland having outlawed it, and Britain making a clear point never to regulate it as a financial product.
Mainstream news sources have made large investigations into the activities of these brands and their respective platform providers which are also market makers, as absolutely no binary options business has any connectivity to a live market.
No doubt, mention the word ‘prime brokerage’ or ‘aggregated price feed’ to any of the owners of brands or binary options platform providers and it is unlikely that they will have any idea what either vital component’s teminology means.
Just as binary options firms are beginning to find that the gravy train is inevitably coming to a halt as the doors are closing around the world and the Israel Securities Authority chief Professor Shmuel Hauser has made extensive efforts to extinguish this fraudulent business that is casting a shadow over the genuine electronic trading sector from existence by requesting powers from the Attorney General to ban all of them from conducting any activity whatsoever from Israel, a loophole has appeared.
Thus far, binary options firms have been able to continue their odious activities by creating layers of different entities with registered companies in offshore jurisdictions and client bases in others, whilst only maintaining a service and marketing entity in Israel, which is structured as a separate company, thus circumventing national regulatory laws of every nation that they attract clients in, as well as the law of the State of Israel which stipulates that binary options is illegal.
Indeed, former US secret agent and Israeli intelligence officer Haggai Carmon, who has so far helped victims recover $2 million from binary options fraudsters, likened the way that binary options firms layer their corporate structure to “structures seen only in espionage organizations or among world-class money launderers or terrorist organizations.”
“A top professional tailored the layering,” he said, referring to the practice among money launderers to distance money from its criminal origins by hiding it behind layers of financial transactions. Binary options companies, 90 percent of which, Mr Carmon estimates, operate from Israel, similarly hide behind layers of false identities.
Now, as the Knesset (Israeli parliament) has concluded its Knesset Committee hearings on the instigation of the new laws against binary options, and some companies are closing down their operations, as well as the general consensus being not at all favorable, it looks as though the end appeared to be nigh.
The thing is, the companies concerned have not been actually closing down their operations at all, but simply sitting tight, whilst operating their lobby groups with the government, until the legislation is passed, at which point they will simply run the same system, doing absolutely the same thing, but call it something else.
Very likely, it will be called something much worse than binary options, and will be ‘simplified FX’ or ‘simplified CFDs’ which makes an even more close – and invalid – comparison with our industry of which they bear absolutely no relation whatsoever.
The sheer arrogance of the operators of these Israeli binary options firms is testimony to their understanding that Israel is so corrupt that these borderline criminals actually run the country.
The vast majority of the owners of binary options brands and the ‘platform’ companies and market makers that empower them are not educated, but are extremely forceful and have a dubious past.
They are as far removed from the leaders of the genuine financial services industry globally as cheese is from thermonuclear fission, however they clearly understand that they live and operate from a region in which pretty much anything goes.
No other OECD nation on the planet has allowed a fraudulent business to mimic the genuine financial services business, employ thousands of people and rise to prominence in this way, and then steal tens of millions from unsuspecting members of the public globally, raising its profile to international news and international government level, with no recourse, and when those who challenge the perpetrators do so, they are met with threats of physical violence.
The Knesset (Israeli parliament) has been making attempts to ban the entire binary options sector from operating anywhere globally in any form, whether it be call centers in Israel or marketing divisions, or layered companies with British Virgin Islands registration targeting overseas leads.
In essence, had this gone ahead properly, it would have put a complete stop to any Israel-based entity doing any binary options business anywhere in the world, from anywhere in the world.
The calmness displayed by the operators of these entities – all of whom are not known for their calmness, quite the opposite in fact – demonstrates that they know exactly how Israel operates as a nation.
The same country that allows cartels to block the import of competing goods to the supermarket sector, allows families to run national banks, and maintains a criminal family which operates the country’s national port authority, taking imported goods, impounding them and then selling them via a network of equally disreputable individuals is the same country that is allowing semi-literate binary options fraudsters to have their cake and eat it.
The Knesset Reforms Committee convened two days ago, on Monday, for the first of three sessions this week intended to finalize legislation to ban Israel’s largely fraudulent binary options industry, several of those in attendance were shocked to discover that the draft legislation, unveiled in February, had already been substantively weakened.
The original proposed legislation, which was drafted by the Israel Securities Authority together with the Justice Ministry and the attorney general’s office, would have, if implemented, banned the entire binary options industry, but also, significantly, would have prohibited Israeli forex, CFD (Contracts for Differences) and other online ‘trading’ companies from offering their wares to customers abroad without a license.
It is FinanceFeeds perspective that this should be the case in all regions and that only licenced firms providing genuine products should be in operation, even in the genuine CFD and FX industry, which these binary firms are not, even though they may plan to rename themselves to give the impression of providing access to retail financial markets trading.
The February 2017 draft law stipulated that online trading companies operating from Israel and targeting customers abroad must do so with a licence from the country where they operate, however in the ensuing months, the text was changed, and in its current version — which was approved by the cabinet last month — the ban on binary options stands, but the additional clauses, covering other financial instruments, have been deleted.
This new version of the proposed law was formally published by the Knesset on June 20, but not publicized, and many critics of the industry only discovered the change in the last few days or at Monday’s session.
Professor Shmuel Hauser, Chairman of the Israel Securities Authority has made some headway in forging a path toward banning the entire business globally, and FinanceFeeds had a conversation with his office six months ago during the forging of the new laws, which, when wrote about, we were forced by the Israeli authorities to remove the article, demonstrating once again what has been clear for many years, that Israel does not have free media and allows into public channels only what has been screened by the government.
It continues to stand that the genuine FX and CFD industry is based in Britain, Australia, North America, Singapore, Hong Kong and Japan, with their respective FCA, ASIC, NFA, MAS and JFSA licenses being cornerstones of the retail and institutional OTC electronic trading business. There are also some good quality firms in Cyprus too.
Whilst this level of government pandering by the Knesset to the odious characters, many of whom have done time for other crimes, whose entire binary options business has been condemned worldwide and is potentially damaging to the genuine FX industry is disappointing to say the least, when looking at Israel’s credentials as a business environment, is perhaps hardly surprising.
Victims of Israel-based investment scammers find relief
In 2015, Steve, a retired Presbyterian minister in Kansas City, sold a small farm and emptied a mutual fund and an investment fund. That left him with about $250,000 to invest elsewhere.
“We pretty much have what we want. We buy a new car now and then and have a nice house and live relatively modestly,” said Steve, 81, who added that he and his wife had started to think about taking a more “flamboyant” vacation.
After the farm sale, Steve — who asked that his real name not be used — discovered Binary Book on the internet. Binary Book is a company promoting significant returns on binary options, in which a person chooses whether or not a certain asset — be it a stock, commodity, currency — will be above or below a set price, in a certain amount of time. Essentially, the person bets on this prediction.
Steve said he now wishes he had invested his money more conservatively. That’s because it’s all gone.
He didn’t know it at the time, but Binary Book was based in Israel, as are many binary-options companies. Many, too, are under criminal investigations and facing increased regulation.
Lawyers such as Tami Hamm and some former binary-options insiders are trying to help people like Steve recover the money they lost. Hamm, who is Jewish and was born in Israel, now splits her time between University City and Beit Shemesh, near Jerusalem.
Having seen reports in American and Israeli media about the scale of the problem, Tamm said she longs “to have a part in clearing (Israel’s) name because it’s such a small percentage of Israel that is involved — yet it makes a lot of news.”
Hamm says she cares deeply about Israel and its reputation. Her clients, meanwhile, care deeply about getting back the hundreds of thousands of dollars they lost.
A high-stakes guessing game
Binary options is a type of contract in which the payout depends entirely on the outcome of a yes or no proposition, according to the Securities and Exchange Commission. It could be “something as straightforward as whether the stock price of XYZ company will be above $9.36 per share at 2:30 p.m. on a particular day, or whether the price of silver will be above $33.40 per ounce at 11:17 a.m. on a particular day,” according to an SEC investor alert.In simplest terms, it’s a guessing game with an all-or-nothing payout.
Binary options companies continually prod clients like Steve to invest greater sums of money on a gamble. Then once clients appear to have “won,” these companies will often either prevent them from accessing their money, or manipulate the terms of the option until it becomes a loss.
Hamm, who is Orthodox and belongs to U. City Shul, said almost all binary options companies are based in Israel. Last month, the U.S. Commodity Futures Trading Commission lodged a civil complaint against an Israeli-American binary-options operator alleging that he stole more than $16 million from at least 8,000 victims, the majority of them in the United States, according to The Times of Israel.
Why are binary-options companies based in Israel?
Hamm said she attended a consumer-fraud convention in Florida and spoke with a former Department of Homeland Security official who worked in Israel and loved it. He told her that in Israel, however, “if no one is getting killed, it’s just not a priority. They deal with real problems, so to speak, like terrorism. And money loss is just not as big an issue until there is a lull in the attacks.” [In reality, it is Israel that almost always initiates the resumption of violence.]
A former binary-options scammer also told the Jewish Light that many of the digital platforms used for trading were created in Israel, a technology hub.
The Israeli government, which has faced increasing international criticism, is trying to push out the binary-options companies. Last month, the Knesset gave initial approval to a bill that would ban trading of the options, in addition to other regulations that have already been approved.
“I think it may be effective in making sure the companies do not operate on Israeli soil,” Hamm said.
A Times of Israel story last month quoted an Israeli state prosecutoras saying that at least 12 options companies and traders were under criminal investigation.
Shmuel Hauser, chairman of the Israel Securities Authority, said on an Israeli news show: “The [overseas] regulators tell us, ‘You have to do something, it’s like you’re turning a blind eye to this.’ I’m telling you, these binary options are a greater cause of anti-Semitism than any other factor. This is stoking anti-Semitism.”
Worse than a casino
Austin Smith made aliyah from New York in 2014 and studied at the Aish HaTorah yeshiva in Jerusalem for a couple of months. But the “yeshivish lifestyle wasn’t so much for me,” he said.
He moved to Tel Aviv and loved life in Israel, he said, but couldn’t find a job, in part because he didn’t speak Hebrew. A binary-options company hired him because he could speak English and would be able to lure customers from other parts of the world. He said people warned him that it was like working in a casino, but he took the job. He said he soon learned that it was worse than working in a gambling hall.
“The money comes in, but it never goes out,” Smith said.
Smith said he worked long hours and was lonely.In an interview with the Light, he said he changed his ways after a trip with a few friends to Tiberias in the northern part of Israel. He said he visited the grave of a 16th century kabbalist. He started crying and got a ride home from a haredi man who Smith said gave him a blessing: “You are going to do something special for the Jewish people.”
“A light bulb goes off, and I decided that I should go and help the people that have been defrauded,” said Smith, 33, the founder of Wealth Recovery International.
He and others at his company gather information about binary-options companies, which they present to lawyers and ask, “Here is what we’re able to provide, do you want to work with a client?”
Wealth Recovery offers attorneys information on clients who has been scammed and then charges the lawyers for its investigative work, Smith said. The attorneys then “work out their own deals with the clients.”
Hamm, who works as an in-house counsel for Wealth Recovery and also has a private practice in U. City,has helped negotiate settlements for 120 clients, said Smith. He first went by the name “Mitch Williams” when he started working in recovery because “we do get threats” from people he suspects are connected to binary-options companies.
Smith said he is now taking a salary of $15,000 a month from his company. As a binary-options trader, he made about $5,000 monthly, he said.
He has heard the accusation that he is a profiteer, but says, “I’m entitled to make a living.” He argues that he fights for clients despite the threats.
Hamm said Wealth Recovery reached out to her because of her Midwest connections and experience in dealing with fraud. In addition, she also speaks Hebrew.
“The [binary-options] companies are Israeli,” Hamm said by phone from Israel. “I walk in and negotiate with opposing counsel, for example, and I have to speak Hebrew to do that.”
Bait and switch
Steve Koel, 52, is a single father of two. He needed extra money two years ago because his son had started to have severe medical problems.
“We didn’t know if he was going to need multiple surgeries or long-term care,” said Koel, who lives in northern California. “I wasn’t necessarily prepared financially to deal with that, so I decided to explore some methods of possibly increasing my capital.”
He said he located Binary Book while surfing the web. After reviewing its site, he thought it looked “very legitimate.”
First, in September 2015, he made a $250 trade on the site. Then he received a call from a Binary Book employee who advised him to invest $2,500. He then learned that he had tripled his money bybuying binary options on stocks.
“I got my accounts credited for that amount,” said Koel, who owns a couple of franchise businesses.
The person Koel initially dealt with told him that he was sending him to more of a “VIP client’s broker.”
“The psychology behind it is, ‘You are now going to run with the big dogs. You are going to be my small fish, but I’m going to help you because of your son, and I’m going to bring you into this network of high rollers,’ ” Koel said.
The $5,000 profit he made became $10,000 and then $17,000. Binary Book told him he should invest an additional $25,000 because the company had “inside information about this, that and the other,” he recalled. “This all seemed very real to me. That’s how it escalates.”
Koel ultimately invested $1.5 million. He said he initially did just want to make extra money for his son’s care but then “greed took over.”
“A rational mind goes, ‘What are you thinking? How did this happen’? But there is no Cinderella story. It’s a process,” he said. “You are seeing results on a web portal that is very thorough and very robust. They are very good at keeping in touch with you, putting you through training classes and talking with their compliance department about when you want to make withdrawals.”
Koel said he believes that none of his money was actually invested. He told a “VIP manager” that at the expiration of trades, he wanted $1 million returned to his bank account.
That never happened. He noticed an irregularity in his Binary Book account and called to find out what had happened with some of the options he had purchased. He was told that “the Chinese were going to buy Yahoo and that was going to send the markets crashing, so we decided to exit your positions.”
Koel said he concluded that it would have been impossible for the markets to crash in such a scenario.
“It finally dawned on me that all the red flags I was seeing before were now real,” he said, noting that he never received a monthly financial statement like you would from a reputable brokerage firm. “I am thinking, ‘Oh my God. What did I just get involved with? What have I done to my family?’”
Koel said he received a call from Wealth Recovery informing him that he had been scammed. (They had a list of Binary Book’s clients, Koel said.)
He first thought Wealth Recovery also was a scam. And, indeed, the Financial Industry Regulatory Authority, a nonprofit organization authorized by Congress to regulate brokerage firms and exchange markets, issued an investor alert in March urging binary-options investors to be wary of fraudulent pitches to help recoup losses.
But he decided to pay $100,000 to outside lawyers connected to him via Wealth Recovery.It turned out that Wealth Recovery was legitimate. After attorney’s fees and money that could not be recovered, he got back $1 million of his $1.5 million.
Earlier this year, Steve, the Kansas City minister, realized he had been part of a scam. He had tried to set up a meeting with a broker who said he was in New York but once Steve stopped sending money, the broker stopped responding.
Steve is now working with Wealth Recovery and lawyers to get his money back but hasn’t recovered any of it yet.
Israeli Watchdog Head: “Binary Options are Like Blood Diamonds”
by Dan Magen, Finance Magnates June 13, 2017
“Binary options in my view are like those blood diamonds, in that the mining process in Africa has exploited and harmed so many people,” Hauser stated. “We must expand our enforcement capabilities in order to eliminate binary options trading. The common belief of tens of countries around the globe is that the Israeli authorities are turning a blind eye towards binary options and are reluctant to solve the problem.”
He then declared that the legislative procedure taking place in the Israeli parliament against binary options brokers “will be moving forward in the near future”. As reported by Finance Magnates, the Israeli parliament’s State Control Committee (government oversight) is working on a new law aimed at banning the marketing of binary options to foreign citizens by Israeli providers.
The latest discussion on the drafted law took place last February. Finance Magnates has sent an inquiry to the Israeli Ministry of Justice, which is responsible for the legislative procedure, regarding the current status of the law, but the office declined to comment.
The ISA declared open war against the binary options industry over a year ago. The first dramatic step it took was to ban the offering of binary options to Israeli citizens back in March 2016. Last year at the same conference, Prof. Hauser made some extreme remarks against binary options, saying that it is a fraudulent industry that “burns the money of orphans, widows and pensioners”.
The moves against the Israeli binary options industry have taken their toll on both brokers and technology providers over the past year. The last six months alone saw the complete closure of Banc De Binary, the closure of the local call centers of 24Options and Anyoption, and dozens of unregulated binary option providers have shut down their businesses.
Fleeced by Israeli binary options firm, Canadian man dies by suicide
By Simona Weinglass, Times of Israel, Jan 19, 2017
A 61-year-old Canadian man has taken his own life after losing over 200,000 Canadian dollars (US$152,000) to an Israeli-run binary options firm, a Canadian law-enforcement official told The Times of Israel.
On December 21, 2016, Frederick Felix Turbide of Edmonton, Alberta, shot himself in the chest after losing his savings and additional money he borrowed, totaling over C$300,000 (US$228,000), to several binary options trading websites. He lost some two-thirds of this sum on the 23Traders.com platform, which operates from Israel.
The largely fraudulent binary options industry has flourished in Israel for the past nine years, scamming hundreds of thousands of victims worldwide out of billions of dollars with little to no intervention from Israeli law enforcement. Fraudulent binary options firms lure their victims into making what they are duped into believing will be profitable short-term investments, encouraging them to “invest” more and more money. But by employing a variety of ruses, the firms ensure that in the overwhelming majority of cases their clients wind up losing all or almost all of their money. Victims frequently lose tens of thousands of dollars or more.
Turbide had been urged by his broker at 23Traders, who went by the name of “Julian Wellington,” to gradually invest his entire life savings as well as credit for his home and business into binary options, with reassurances that he would make significant revenue.
“G-OD is with us,” the purported Julian Wellington messaged him on Skype on December 12, 2016. “I’m taking you to 250k 🙂 When you expand your enterprise, send me a warm post card,” he texted with a handshake emoji.
Wellington told Turbide he was calling from the UK, or Toronto, Turbide’s family believes, as Turbide once referred to him playfully as “my UK boss,” and the phone number he used had a Toronto area code.
Initially Turbide was told he was making profits, and encouraged to put in more and more money.
When Turbide told Wellington he had persuaded his wife to let him use $20,000 in credit from equity on their home, the broker congratulated him. “You are the master of charisma arts!” he wrote on December 12.
Turbide told him that he would be at the end of his rope financially after putting in the last $20,000, but Julian reassured him the same day. “I’m with you, not 100%..,1000% ! and beyond. Plain English = I got you brother. I know how bad you want to amass wealth and cover every expenses.”
Lengthy transcripts of their Skype exchanges, made available by Turbide’s grieving family to The Times of Israel, show that “Julian Wellington” and Turbide began communicating on December 6, 2016. The family believe Turbide had been trading with the company for several months before “Wellington” became his broker.
By December 19, there were signs of trouble. Turbide complained about not being able to get into his account. The next day, December 20, the broker wrote, “Tragic news, disaster in the heart of the EURO, Germany Berlin, We’ve been shorting EUR/USD all day long.”
The following day, December 21, Wellington called Turbide at 8:47 a.m. The conversation lasted over an hour. Apparently Julian informed Turbide in that call that he had “lost” most or all of his money: Shortly after they got off the phone, Turbide texted, “I am at your mercy right now Julian. Never in my life have I undergone such stress as this before. Oh my God, Julian tell me this is not true.”
Wellington replied, “Everything will be ok, dear Fred. Faith will lead us to victory. I want to apply the insurance bonus, and recover losses.”
But Turbide appeared to no longer believe him. At 11:58 a.m. he sent Wellington a copy of a suicide note he planned to leave for his wife, in which he told his family he loved them and blamed 23Traders for pushing him to suicide. “Here is letter that will be on my desk at the end of the day,” Turbide wrote to Wellington.
At 12:02 p.m., Wellington attempted to call. Turbide said he could not answer because his wife was at home. Turbide then asked repeatedly on Skype whether Wellington would return his money, with no response from the broker. At 3:52 p.m., Turbide sent Wellington a final plea:
“I’ve lost my house, my retirement money and my business, damn you. It is now 3:52 PM my time. I am going to take a shower then go to my garage to finish myself off. I am giving you one hour to call me with positive results to put back the money I lost.”
Turbide’s wife of 21 years, Maria Chaves-Turbide, arrived home later that day, followed by her four children, to find him dead in the garage of a self-inflicted gunshot wound.
“I believe when he realized he had been betrayed by the binary options broker, he couldn’t bear the thought of losing what he had built for the future of our family,” Turbide’s son, Tomas Ferreira, told The Times of Israel.
“He most certainly felt a combination of betrayal, despair, and shame.”
Canadian fraud investigator Jason Roy of the Manitoba Securities Commission, who heads Canada’s binary options task force, told The Times of Israel several months ago that “binary options fraud appears to be the current greatest threat to Canadian investors.”
Alison Trollope, director of communications for the Alberta Securities Commission, said that “the ASC and our colleagues in the Canadian Securities Administrators are aware of multiple websites promoting binary options trading platforms that are soliciting Canadians. Unfortunately, not only are these sites not registered to sell securities in Canada, but generally they are fraudulent. We have and will continue to advise Canadian investors to avoid investing in such schemes, which are often located offshore.”
A third Canadian law enforcement official who spoke to Turbide’s family, and who alerted The Times of Israel to his suicide, said 23Traders somehow managed to charge more money to Turbide’s credit card even after his death and even after his family had put a hold on the card.
23Traders.com is not licensed to operate in Canada, the regulators said, and was violating the law by transacting with Frederick Turbide.
According to documents seen by The Times of Israel, and sources with knowledge of the company, 23Traders.com operates from a call center in Israel that goes by the name of “Market Giants Ltd,” whose company address is listed in Israel’s corporate registry as 9 Barkat Street, Petah Tikva.
According to Israel’s corporate registry, Market Giant’s director is Eran Schindler, whose LinkedIn profile describes him as the founder and owner of “Schindler CFO Financial Services.” Also according to Israel’s corporate registry, Market Giants is owned by a company called “CFO Outsourcing Services Ltd,” which is owned by Eran Schindler together with a third company called I-TLD Management Ltd. According to the Israeli corporate registry, I-TLD Management Ltd is owned by Tal Dayagi, whose LinkedIn profile describes him as a partner in the same Schindler CFO Financial Services.