Fraud gang boss fled after tip-off
Head of global scam vanished after being told of impending arrest
A LEGAL blunder seems to have resulted in one of the world’s most wanted alleged investment scammers getting off the hook.
Yossi Herzog is accused of being the ringleader of a gang that ran websites that fleeced victims globally, many from Britain.
He was supposed to have been hauled from his base in Israel to face trial in the United States, but before the extradition papers were prepared he is said to have been alerted to the fact that he had been indicted.
So he vanished before he could be put on a plane.
According to court papers filed in the States, 54-year-old Herzog ran sales company Yukom Communications, better known to victims through names including BinaryBook and BigOption.
These firms convinced investors to put their savings into binary options, with the possibility of making money by predicting price movements of currencies, shares or commodities over a set period.
The reality was that victims could not withdraw any returns, or were told they’d lost their money – which had been pocketed by the gang.
They were sucked in by slick websites and persistent sales reps on high commission rates who used fake names, lied about their financial qualifications, promised “risk-free trades” and claimed to work from prestigious London addresses when in fact they were in Israel.
The chief executive of Yukom, Lee Elbaz, was arrested after flying to New York and in December was jailed for 22 years after being convicted of fraud offences.
The US Justice Department put the scale of global losses at $140million – around £110million.
In a recorded conversation 38-yearold Elbaz described herself as a “f***ing money-making machine”.
When she was jailed, assistant attorney general Brian A. Benczkowski of the Justice Department’s Criminal Division said: “This defendant targeted and defrauded thousands of victims, looting monies from retirees, veterans and other individuals, many of whom lost their entire savings.
“Today’s sentence demonstrates that criminals who defraud US
investors will face serious consequences, no matter where in the world they commit their crimes.”
Except that the key figure seems to have escaped.
Although Elbaz was the titular boss, US Justice Department papers name the owners of Yukom as Herzog and accomplice Yakov Cohen, 27.
Herzog was known to have still been in Israel last June, but disappeared shortly afterwards – just after the Justice Department informed his lawyer that he had been indicted, but before extradition papers were ready.
The details came to light after the US regulator, the Commodities Futures Trading Commission, told the Times of Israel newspaper that attempts to serve legal documents on Herzog had failed because it now could not “determine Herzog’s current geographic location”.
The news will shock the gang’s victims, just as it has shocked Ankush Khardori, the US prosecutor who led the enormous international investigation.
“The Elbaz conviction and the charging of Herzog, among others, was the result of years of work by me and two outstanding agents at the FBI, who deserve pretty much all of the credit,” he said.
“That included collecting a massive amount of documents and recordings, which were central to the success at Elbaz’s trial, and conducting hundreds of interviews, including in foreign countries.
“We also had to get a critical mass of cooperators, which was not an easy task considering that the fraud was physically based outside of the United States.
“It was entirely predictable – it was predicted, in fact – that Herzog would flee if he was told he had been charged without the new trial team spending a little more time to finalise the extradition paperwork.
“It was entirely avoidable.” The US Justice Department did not respond to a request for comment.
In March last year, the Financial Conduct Authority banned UK firms from marketing binary options to small investors, describing them as “gambling products dressed up as financial instruments”.
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Victims could not withdraw any returns or were told they had lost cash