Lee Elbaz Jury Trial Day 4 – former boiler room agent about SpotOption involvement, lies and client manipulations

Yukom Case with BinaryBook and Boiler Room
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The Yukom Case and Lee Elbaz jury trial continued on Monday. The prosecutors called the former Yukom employee, Liora Welles, as a witness. The Californian-born Welles worked as boiler room agent for Yukum and cheated on numerous client-victims of the illegal binary options platform BinaryBook under the direction of Lee Elbaz. Welles has already pleaded guilty to fraud with binary options and is cooperating with the prosecution. Law360 provided a detailed court session report.

Cooperation with prosecutors

Lee Elbaz‘s defender, Barry J. Pollack, accused Welles of merely reducing her own punishment with her statements. Welles can be punished on the basis of her Plea Agreement with a maximum of five years in prison. If there is good cooperation with the public prosecutor’s office, this penalty could be reduced again. However, this would require a motion filed by prosecutors. However, such a motion would only be made if Welles cooperates well in the criminal proceedings against Lee Elbaz, Pollack argued. Pollack therefore believes that Welles’ statements have no real value.

While Welles is facing a maximum of five years in prison, according to the plea agreement she signed, Pollack pointed out she avoided a heftier sentence with her commitment to aid the government in the prosecution her former boss. When asked by Pollak how she might get an even lighter sentence, she responded, “If I tell the truth.

Pollack is a well-known defense attorney in the U.S. and also represents WikiLeaks founder Julian Assange against U.S. computer hacking charges. In Monday’s trial session, he challenged Welles during cross-examination about her background in the binary options industry and the terms of her plea agreement.

Preventing Withdrawals at all cost

Welles testified that Lee Elbaz, then-CEO of Israeli boiler room operator Yukum Communications, instructed her to “fight them like a lioness” when clients wanted to take money out of their Yukom accounts.

Who told you to prevent withdrawals?” U.S. Department of Justice attorney Rush Atkinson asked on the fourth day of Elbaz’ trial. “Lee Elbaz did,” replied Liora Welles. “It wasn’t standard to return profits to a client’s account,” she explained.

Welles continued to testify that once the money was deposited by their client-victims, Elbaz took steps to ensure those investors never got it back. Yukom employees were directed to “take care of” clients trying to withdraw their money, Welles said. 

Welles’ statements are consistent with those of Shira Uzan, who testified last week.Shira Uzan, another former Yukom boiler room agent who pleaded guilty to binary options fraud testified last week that she was trained by Elbaz and other managers to lie to potential clients about everything from her name and her background in financial markets to the past successes of her clients and the nature of binary options.

To prevent withdrawals Welles and her fellow boiler room agents were to tell client-victims all their cash was tied up in trades or invoking a purposefully convoluted list of requirements needed to pull the cash.

SpotOption involvement and trading manipulations

One of the more drastic methods was draining the account with risky trades, Welles told the jury. Only Elbaz could organize these trading manipulations. If a boiler room agent requested such manipulations, Elbaz would reach out to her contact at the trading platform provider SpotOption to adjust the risk setting accordingly, Welles said.

Elbaz and her co-conspirators are accused of having lured nearly 150 million out of the client victims of the BinaryBook and BigOption binary options platforms. Both platforms have been operated as white-label solutions of the Israeli SpotOption. While Elbaz and other Yukom employees got rich through the binary options scam, nearly all of the client-victims lost all their money, prosecutors say.

It will be interesting to see how the prosecutors view the role of SpotOption in the trial. According to the witness statements available so far, one would probably have to qualify the white-label provider as co-conspirators who supported Lee Elbaz in the manipulation of customer accounts and trades.

Welles testified that she worked for another binary options call center prior to her two years at Yukom, and conceded she lied to investors at the other job, too.

The lies and client manipulations

Federal prosecutors supported Welles’ testimony with snippets of recorded phone calls Welles had with clients. In one of the recordings, Welles can be heard promising a client she’d plugged €100,000 of her own cash in the same market event she wanted her client to invest in, though Welles said she’d never invested any money in binary options.

In a second recording, Welles crafted a story about her son breaking his arm at a private day care to try and “make a connection” with the investor, who ran a day care from her home, though Welles said she has no children.

Welles said she lied about the massive returns she promised and falsely assured investors that they could withdraw their money at any time. As a matter of fact, however, the Yukom management ensured that clients couldn’t withdraw their profits with a purposefully convoluted process. Elbaz, on the other hand, took the necessary measures to empty the accounts altogether. 

According to Law360, Welles confirmed prosecutors’ allegations that Elbaz fleeced investors into funneling more deposits into Yukom with constant lies about the company and the potential growth of investors’ cash. She instructed sales representatives she oversaw to do the same, according to the Welles, to ensure money kept flowing into the binary options.

The defense strategy – Lee Elbaz is being framed

Pollak apparently is creating a defense scenario based on US prosecutors attempting to frame Lee Elbaz with the support of former Yukom employees. These employees would be the cheaters but certainly not their boss Lee Elbaz. These former collaborators like Liora Welles, Shira Uzan or Austin Smith would only say what the prosecutors like and certainly not the truth.

In a statement to the Law360, Pollack said, “We have confidence that when the jury has heard all of the evidence, Ms. Elbaz will be acquitted.

Next on schedule

Prosecutors intend to call on Aquil Bryant, an investor who was duped in the alleged binary options scheme, to testify next. According to Welles, Bryant is from the U.S. and spent time in the military.

Judge Theodore D. Chuang granted in part a motion to compel by the US Government. The motion by the Government concerned the “expert” testimony by Bruce Lebowitz, whom Elbaz wants to call as a witness. The prosecutors had moved the Court to order Lee Elbaz to disclose to the government additional information about the defendant’s proposed expert witness testimony.

According to FinanceFeeds, Lee Elbaz intents to call Bruce Lebowitz as an expert witness an alleged expert for the call center and binary options industry. He would testify that employees working for Elbaz at Yukom behaved in a manner “consistent with common and accepted industry practices.”

The trial is slated to run until Aug 2, 2019.

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