Lee Elbaz Jury Trial Day 6 – FBI agents explained SpotOption involvement in account manipulations

Lee Elbaz and Liora Welles in US trial
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Lee Elbaz is on trial for the $150 million binary options scam around Yukom Communications. Allegedly, she wanted investors to lose profits from their trades and made sure that happened. That’s what an FBI agent told the trial jury on Wednesday, the sixth day of the Elbaz trial. Yukom was the operator of the boiler rooms behind the binary options platforms BinaryBook and BigOption. The Yukom Boiler Room agents have, according to the prosecutors, fraudulently lured $150 million out of the customers of these platforms with lies, misrepresentations, and psychological tricks. Law360 provides impressions of the courtroom.

The prosecutors claim that the 38-year-old Lee Elbaz trained Yukoms‘ sales representatives (boiler room agents) to defraud clients with lies about the potential growth of their cash, their past trading successes and the nature of binary options. Furthermore, the prosecutors claim that Elbaz also worked in the background to drain client accounts that had too much liquid, or withdrawable, cash.

The FBI special agent Greg Fine read aloud to the jury some emails in which Elbaz urged her contact at SpotOption – the white-label provider of the trading platform – to switch clients to “high-risk” trades when they had too much money they could potentially withdraw from the account.

“The customer have [sic] a profit of $50,000 from $6,000 deposit! Friends, how did this happen? Please put on high-risk,”

Lee Elbaz in an email to SpotOption

U.S. prosecutor Henry Van Dyck provided the email conversations to the jury immediately after playing the video of Elbaz’s interrogation with FBI investigators, in which she denied working against clients’ success. In this interview, Elbaz was asked if she’d ever worked with SpotOption to prevent an investor from winning. “No way,” Elbaz responded.

Bleeding clients

Though according to prosecutors, Yukom clients’ trading success was irrelevant, if not undesired at the company, as Yukom and its employees’ profits stemmed from the client deposits less any withdrawals they made. And bleeding clients’ accounts with risky trades stymied any potential withdrawals, according to prosecutors, so Elbaz did it often.

Defense Attorney’s response

Elbaz’s attorney Barry J. Pollack attempted to poke holes in prosecutors’ interpretations of the conversations when it was his turn to question the FBI agent.

In one of the emails Pollack again showed the jurors — in which Elbaz stressed that money that isn’t traded is the equivalent of money the company didn’t bring in at all — Pollack suggested this could easily be a benign directive. Elbaz instructed subordinates to keep clients’ accounts active and keep the investors actively engaged, because she thought it was a good way to ensure they kept doing business with Yukom, Pollack pointed out to Fine.

He questioned whether the special agent or anyone on this team used FBI forensic tools to determine whether or not Elbaz had actually opened the marketing attachments she had circulated.

Yossi Herzog and other perpetrators

Fine initially appeared taken aback by the question, but ultimately replied that no one at the FBI had investigated whether or not Elbaz had seen the marketing material she had sent along for her colleagues to review.

Not only Lee Elbaz as former CEO of Yukom is indicted but also the company’s majority shareholder Yossi Herzog. Six other people from the Yukom environment have already pleaded guilty to fraud with binary options. According to Herzog’s indictment, the scam caused investors worldwide to lose more than $145 million.

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