Global FTI Team
"Israeli binary options firm inadvertently tries to sell to Canadian fraud investigator"
Jason Roy couldn’t believe his luck when a salesman from what he later established was an Israeli company, Central Option, phoned him, and illegally tried to persuade him to ‘invest’
Several weeks ago, Canadian fraud investigator Jason Roy was enjoying an evening at home when the phone rang. It was a recorded message offering “an amazing investment opportunity” and asking him to press “1” for more information.
Roy, who happens to be the senior fraud investigator for the Manitoba Securities Commission, and is part of a national Canadian working group to combat binary options fraud, couldn’t believe his luck. He grabbed his notebook and pressed “1.”
“There are approximately a million people who live in the Canadian province of Manitoba,” he told The Times of Israel recently, describing the auspicious (for him) phone call. “I’m probably the worst possible person the company could have called. It was really bad luck on their behalf that their robocall machine ended up dialing my home phone number.”
Posing as an interested investor, Roy asked the binary options “broker” on the phone to explain how the “investment” worked. The broker said his name was “Sean Bessi” and that he was calling from a company called Central Option, located in Toronto.
“I spent about an hour on the phone with him and he actually walked me through doing the trading,” said Roy.
A view of Winnipeg, Manitoba (Facebook)
“Bessi” put $100 into Roy’s account and showed him how to execute several trades. He assured Roy that binary options investing is “very safe” and “not gambling.” After about an hour, however, Bessi began pressuring Roy to send money.
“He wanted me to wire some money to a bank account in the country of Georgia. Or I could give them my credit card number.”
For the past two years Jason Roy has been investigating binary options firms that target Canadian citizens. The majority are fraudulent, he says, and often their sales pitch is no more than a ruse to steal money. Not a single binary options company is licensed to operate in Canada, he noted, which means any and all such solicitation activity — most certainly including the phone call he received — is downright illegal.
When Roy got off the phone with “Sean,” he got to work. He managed to trace the phone number through several layers, from Toronto to Pennsylvania, to Colorado, to Latvia. He eventually discovered that both the website and phone number belonged to an individual in Israel.
“Sean Bessi” was almost certainly not named Sean Bessi. He was not calling from Toronto, but most likely from Tel Aviv. And the name of his firm, Roy told The Times of Israel, was Central Option. Roy established the name of the individual who owned the phone numbers and the website. He sent the name, home address and photos of the Israeli owner/operator of Central Option to the Israel Securities Authority, and lodged a complaint.
Roy also promptly issued an official alert, warning Canadian investors to steer clear of Central Option.
Roy says he was able to trace CentralOption’s phone number and web site to Israel (Screenshot)
Roy gave The Times of Israel information regarding three residents of Manitoba who he said have been defrauded of approximately $160,000 in total by binary options firms in recent months. He named two of those firms, FMTrader and OneTwoTrade, both of which he has reason to believe call customers from Israel while they tell investors they are located elsewhere.
In fact, in March, the Winnipeg Free Press published the story of Ken, a 74-year-old retiree who said he lost $100,000 trading with OneTwoTrade, a company that claims to be located in Malta. However, echoing Roy’s investigation, employees of the company have told The Times of Israel that OneTwoTrade, known locally as Inventiva Marketing, operates a call center out of Ramat Gan.
Companies that have or had call centers in Israel that have been the subject of alerts and cautions by Canadian regulators include Titan Trade, Benedict Morris Binary Option, 24Option, AnyOption, Avatrade, BancdeBinary, BinaryTilt, CherryTrade, OneTwoTrade, FMTrader, Central Option, NRGBinary, Opteck, OptionRally and Ubinary
A third company, ISeeBinary, contacted an 81-year-old woman in Manitoba and managed to take all of her savings.
“All the woman had to her name was about $28,000 Canadian,” recalled Roy. “She was using that to supplement her monthly small pension income. So she is in a really bad position. She’s an elderly widow, it’s not like she can go to work.”
Asked whether she can sue this third company, Roy explained that the woman had wired money to a bank in Moldova but that he had yet to track down the location of the company and its salespeople.
Fraudulent Israeli binary options companies — hundreds of which are engaged in a massive swindling operation that has snowballed over the past decade and that Israel’s ISA has proved disinclined to tackle — commonly obfuscate the names of their owners, employees and their geographical location. This often creates a situation where customers who feel they have been defrauded have no one to hold accountable. The Times of Israel has been exposing and detailing these firms’ activities in recent weeks, beginning with an article entitled “The wolves of Tel Aviv.” While the ISA has yet to act publicly to tackle the colossal industry of theft, international regulators and lawyers are getting increasingly involved on behalf of their defrauded citizens.
Named and shamed
Canadian regulators have issued specific alerts about numerous binary options and forex platforms that operate call centers and other functions from Israel. Roy told The Times of Israel that the Manitoba Securities Commission issues an “alert” when it is approached by an investor who claims to have been defrauded, after it has reviewed the evidence and concludes the investor is correct. The commission also issues a “caution,” a red flag for potential fraud, when a company tries to solicit customers — even if the customer hangs up.
Companies that have or had call centers in Israel that have been the subject of alerts and cautions by Canadian regulators include TitanTrade, Benedict Morris Binary Option, 24Option, AnyOption, Avatrade, BancdeBinary, BinaryTilt, Central Option, FMTrader, OneTwoTrade, CherryTrade, NRGBinary, Opteck, OptionRally and Ubinary.
Cumulatively, the Israeli binary options industry is estimated to turn over hundreds of millions of dollars a year, if not billions. A large portion of the industry engages in deceptive and fraudulent practices, from lying about their names and locations, to allegedly rigging the trading platforms, to refusing to allow customers to withdraw their money under any circumstances. These fraudulent companies are not offering clients the opportunity to invest or trade, as they claim. They are not even offering clients the opportunity to gamble, casino-style, in a regulated environment. They are, rather, luring clients in what are akin to rigged casinos, with the single aim of fleecing them of as much money as possible, and getting away untraced.
‘I am personally ashamed that this kind of thing is happening in Israel. The Israel Securities Authority can’t just stand aside and ignore it’ — industry veteran Jonathan Hoffman
Jason Roy believes most cases of binary options fraud go unreported.
“In my estimation, binary options fraud appears to be the current greatest threat to Manitoban and Canadian investors,” he said. “As most people do not report being defrauded, it is impossible to know how many Canadians have been affected.”
Roy also says there is not much that Canadian regulators can do without the cooperation of the country where the fraud originates.
“It’s tough for us to take action here. We can issue alerts or warnings. I think we would need the assistance of the government where the matter is actually occurring from,” he said.
Why doesn’t the Israel Securities Authority take action?
Given that so much binary options fraud targeting Canadians and citizens of other countries originates in Israel, why has the Israel Securities Authority allowed it to continue for years?
In an interview with The Times of Israel in March, Itzik Shurki, director of the ISA’s Exchange and Trading Platforms Supervision, acknowledged that he is aware of massive binary options fraud being carried out by employees in Israel against investors abroad. But he claimed that such activity is not under the ISA’s jurisdiction, in the same way that the Financial Conduct Authority (FCA) only protects British citizens and the Commodity Futures Trading Commission, or CFTC, only protects Americans.
In March, the ISA outlawed the sale of binary options to customers in Israel, but companies in Israel are still permitted to sell the financial product to people overseas — which is where the overwhelming proportion of the fraud is perpetrated.
Itzik Shurki of the ISA (Courtesy)
“If an American company tried to sell securities to Israelis, it would be our job to protect our citizens, not the Americans’ responsibility,” Shurki said by way of explaining the ostensible division of authority.
But one veteran of the financial services industry outside of Israel said he was shocked by that statement. “The universally recognized convention is that securities supervisors are responsible for all business conducted in their jurisdiction, whether customers are based onshore or offshore,” Jonathan Hoffman, a London-based former official with the Bank of England and Credit Suisse, told The Times of Israel.
Hoffman added that if a company has a physical presence in Israel, which can include employees or an office, then the ISA is obligated to regulate it or shut it down if it is fraudulent.
Jonathan Hoffman (Facebook)
“It is simply not acceptable to regulate the binary options business for Israel-based investors alone,” he charged.
Hoffman, who has also served in a voluntary capacity as co-vice chair of the UK Zionist Federation, added: “I am personally ashamed that this kind of thing is happening in Israel. The Israel Securities Authority can’t just stand aside and ignore it. It’s not an option.”
Jason Roy, the Canadian regulator, said he could not comment on securities laws in other countries, but indicated that in his country, things are done differently. “In Manitoba and in the rest of Canada, when we have individuals involved in securities fraud, we investigate. It doesn’t matter if they are targeting people outside of Canada. If they’re based here, they’re under our jurisdiction.”
As for the Israel Securities Authority, asked repeatedly by The Times of Israel if it was doing anything to stop or shut down fraudulent binary options companies operating from Israel, a spokeswoman replied: “The ISA cooperates with securities authorities in foreign countries regarding securities crimes perpetrated there that have a connection to Israel.
“This cooperation,” she added, “is carried out in accordance with Israel’s securities law and with the ISA’s agreements with the securities authorities of many other countries. The aid the Israel Securities Authority provides includes the use of all its investigative authority, and this constitutes intensive activity in which the ISA invests many resources. Due to the sensitivity of the topic, the ISA is not authorized to reveal its enforcement activity in these matters.”
Asked if the Israel Securities Authority is addressing his complaints of binary options fraud diligently, Roy said: “I have been in contact with the ISA, but I cannot provide specific details about our dealings with other regulators.”
And what, specifically, about “Sean Bessi,” who purported to be calling Roy from Toronto to invite him — illegally — to “trade” in binary options? What has the ISA done in response to the formal complaint lodged by this senior Canadian binary fraud investigator? What action has it taken against Central Option?
Roy said he could not elaborate. But the ball, as with the entire Israeli binary options fraud colossus, is in the ISA’s court. As it has been for years, while the corrupt industry snowballed, enabling unscrupulous Israeli firms, employing thousands of Israelis, to steal huge sums of money from vast numbers of people all over the world. credit to: Time of Israel