The Times Herald (Norristown, PA)
Israeli woman convicted in $150M global scheme to defraud investors
COLLEGE PARK, MD. >> An Israeli woman was convicted Wednesday of charges she orchestrated a scheme to defraud tens of thousands of investors across the globe out of tens of millions of dollars.
Lee Elbaz, 38, is scheduled to be sentenced Dec. 9 by a federal judge in Maryland following her conviction on of three counts of wire fraud and one count of conspiracy to commit wire fraud, according to Justice Department spokesman Peter Carr. Each count carries a maximum sentence of 20 years in prison.
Elbaz was CEO of Yukom Communications, an Israel-based company that operated in the “binary options” industry under the brand names BinaryBook and BigOption. Elbaz trained employees to lie to investors and rigged the odds against them making and recouping any money, Justice Department prosecutor Rush Atkinson said during the trial’s closing arguments last week.
“There is no way this fraud happened without Lee Elbaz,” Atkinson said. “Everybody told the exact same lies because that is what Ms. Elbaz trained them to do.”
Elbaz is one of 15 defendants in the case and was the first to be tried. Five have pleaded guilty and agreed to cooperate with prosecutors. A February indictment against nine other defendants, including Yukom owner Yosef Herzog, says the scheme involving BinaryBook and BigOption cost investors more than $145 million worldwide, including thousands of victims in the U.S.
Jurors began deliberating last Thursday. On Tuesday, a judge replaced one of the 12 jurors with an alternate after the dismissed juror said he overhead somebody making disparaging remarks about Elbaz while visiting an unspecified “local establishment” on Sunday. U.S. District Judge George Hazel denied a request by Elbaz’s attorney to declare a mistrial. The judge instructed jurors to start their deliberations “from scratch.”
Defense attorney Barry Pollack said Elbaz didn’t condone any of the fraudulent tactics used by employees who worked under her supervision at a call center in Caesarea, Israel. Elbaz urged her employees in writing to “work clean,” her attorney said.
“The employees that were defrauding clients were also defrauding Ms. Elbaz,” Pollack said. “She was trying to prevent (fraud).”
FBI agents arrested Elbaz in September 2017 after she traveled to New York.
The binary options market largely operates outside the U.S. through unregulated websites. The payout on a binary option typically is linked to whether the price of a particular asset, such as a stock, rises above or falls below a specified amount at a particular time, at which point the investor receives either a predetermined amount of cash or nothing.
Yukom employees pretended to be from other countries, lied about their professional qualifications and adopted “stage names.” Elbaz used the alias “Lena Green” while interacting with investors, according to prosecutors.