It is currently high season in the civil and criminal courts for the fraudsters of the binary options industry. The Israeli boiler room CEO Lee Elbaz was already convicted of investment fraud by a U.S. jury in August 2019. She must serve 22 years in prison and repay $28 million to investors. In Vienna, the Israeli Gal Barak has been sentenced to four years imprisonment without probation and the confiscated millions will be repaid to his victims. In the U.S. and Canada, regulators are suing the notorious Canadian-Israeli Cartu Brothers for binary options fraud. Accusations of lies and systematic manipulation are the very essence of the charges and complaints.
Detailing the manipulation
Most recently, the U.S. CFTC has filed a detailed complaint detailing how the Cartu brothers – David Cartu, Joshua Cartu, and Jonathan Cartu – and their co-conspirators in the U.S. and Israel systematically manipulated client transactions through their white label broker solution. We also heard this in the Lee Elbaz trial as we did in the Vienna Cybercrime Trials around Gal Barak. The manipulations were manifold and ranged from unauthorized reclassifications of a client’s risk profile to changing the strike price of trades and the system-enabled feature to fake entire transactions. The software developed by the Cartu Brothers is said to have had the system-level manipulation as a central feature.
Unbeknownst to customers, the results of binary option transactions could be manipulated on the Spot Platform, for example, by changing the strike price of a trade just before expiry. For at least part of the Relevant Period, Jonathan and/or the Peretz Brothers typically approved requests to alter trading outcomes for customers of the Cartu Brands.CFTC Complaint (link)
Gal Barak already confessed in court in Vienna that the client’s transactions were systematically manipulated with the support of the white label software. He would have known and tolerated this. This confession saved Barak at least two more years in prison.
Fraud tool Anydesk
Another possibility of manipulation was the use of remote desktop software like Anydesk. This allowed the boiler room agents to directly access the client’s account and perform transactions without authorization. Since the transaction is performed via Anydesk on the client’s PC, the client’s IP address appears in the log. Thus, it looks as if the client himself had performed these transactions.
Boiler room manipulations
Ultimately, the boiler room agents have manipulated on a human level. They used fake IDs including fake CVs and pretended to be experienced traders. They promised their clients completely unrealistic returns and risk-free and/or insured trades and thus motivated them to make more and more deposits. Bonus payments as a sort of Toyan Horse were given which ultimately led to the clients not being able to withdraw their money and many more dirty tricks were used to manipulate clients.
Get the money back!
The Cartu Brothers and Gal Barak and their respective co-conspirators and facilitators are chased and sued by the authorities. Many more will follow. The goal must be to pay back the investors’ money and punish the attackers.
According to CFTC Complaint, the Cartu brothers have personally ripped off millions with the three brands BeeOptions, Glenridge Capital, and Rumelia Capital alone, financing their Ferraris and luxury lives. At the expense of tens of thousands of small investors, some of whom have lost their life savings. Gal Barak also used the money to buy expensive cars, watches, and real estate and invested in online casinos of his partner and principal Gery Shalon. Now they are being held responsible.