The Commodity Futures Trading Commission (CFTC) has brought civil charges against five Canadians, including three Canadian-Israeli brothers, for soliciting victims to trade binary options, bilking investors out of $165 million.
Joshua Cartu, Jonathan Cartu, and David Cartu allegedly operated three binary options brands, BeeOptions, Glenridge Capital, and Rumelia Capital, from a call center they established in Israel. The now-shuttered facility, which is understood to have operated from the Tel Aviv area, went by the name of Tracy PAI Management Limited (Tracy PAI).
In addition, the CFTC charges two Canadian brothers living in Israel, Leeav Peretz and Nati Peretz, for helping the Cartu brothers in targeting U.S. residents, as well as investors from Canada, Singapore, UAE, and Britain.
The investors were induced by the defendants to open accounts with false claims that they would earn significant profits, promising ‘quick’ returns of ‘between 60-85%’. In fact, the defendants controlled the software system that their trades were conducted on and manipulated the results of some trades to ensure customers lost their money.
The regulator said the call center in Israel functioned as a ‘boiler room’, a type of fraud that involves cold calling potential investors offering to sell them exotic financial products.
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The CFTC further alleged that the Cartu brothers had set up two companies in Ireland to facilitate payments for their own binary options brands as well as for other platforms belonging to different people. A company known as UKTVM Ltd. (UKTVM) was established in the UK to process credit card payments for BeeOptions.com and Glenridgecapital.com. At a later date, processing was carried out by a company called Greymountain Management, which was incorporated in Ireland and acquired credit card payments for binary brokers who were unable to obtain banking services.
From 2014 through to 2017, they received about $165 million from investors worldwide, including the US and Canada. Once the money was ‘invested’, the defendants usually refused to allow these clients to withdraw their money.
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Also charged in the same case is Ryan Masten from Texas, and his company BareIt Media, aka SignalPush, as well as All Out Marketing Limited, Blue Moon Investments, Ltd., and Orlando Union Inc., each of these, is an offshore entity owned and controlled by one of the Cartu brothers.
As was customary, sales staff at these companies lied about their names, location, titles, experience, and the fact that they made profits when the traders lost their balance.
“At the direction of the Cartu and Peretz brothers, the individual brokers soliciting U.S. customers falsely represented their financial expertise, compensation structure, physical location, and identity. These brokers also falsely claimed that the offered binary options transactions were profitable when the majority of customers lost money,” the CFTC further states.
The agency is seeking full restitution for the defrauded individuals, disgorgement of earnings from the fraud, civil monetary penalties, permanent registration and trading bans.