This morning Finance Magnates broke the news on an imminent crackdown by the US federal regulators on binary options brokers and the adjacent service providers. Now, it seems that this enforcement wave is upon us.
Jared Davis, the former CEO of several binary options labels was arrested yesterday (Tuesday) by the Cleveland police at the Cleveland Hopkins International Airport. Davis will face indictment in Toledo’s US District Court on 19 counts, such as fraud, money laundering, wire fraud and obstruction of justice. According to the Department of Justice (DoJ), Davis succeeded in collecting at least $10 million. The case was under a joint investigation of the FBI and the IRS, with the assistance of the US Attorney.
Manipulative and deceptive practices
According to the charges, Davis, who was dubbed the leader of an international binary options scheme by the Department of Justice press release, ran various fraudulent binary options schemes between 2012 and 2016. Binary options labels, such as OptionKing and OptionMint operated under the umbrella of his Sandusky, Ohio-based firm Erie Marketing LLC.
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The DoJ stated that while being a broker, Davis “did not connect investors to a legitimate binary options exchange that would match investors who chose different options outcomes. Instead, Davis took the opposing position on each trade.”
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The statement continued along these lines saying Davis “only made money when investors lost money, providing a built-in incentive to employ manipulative and deceptive practices, including failing to disclose to victims that they were not matched with individual investors, failing to disclose to them that he could and did manipulate trading conditions, falsely telling investors their money was held in an account.”
Davis also, allegedly portrayed his employees as “brokers” and “analysts”, despite the fact that they had virtually no experience, and promised his clients a “risk free” and “guaranteed” trading opportunities, while in fact all that was false.
His acquisition practice was based on call centers located in Sandusky, Costa Rica and St. Maarten, and operated by foreign nationals from various locations in the Americas.
A chain of events
As reported earlier, according to sources close to the matter, this arrest is another milestone in a major crackdown by the US federal regulators and the federal enforcement bodies. This move is the product of evidence gathered by the investigative bodies during a few legal processes, unfolded during the last year. Among others, cases like the affiliate marketer Michael Shah and his company Zilmil and another binary options broker who’s case is currently discussed in the court of law.
Another chain in that link would be the arrest of the binary options technology provider Yukom’s CEO Lee Elbaz last year. According to the source, the information obtained in this arrest will also lead to additional indictments.
Judging from the current chain of events, it is reasonable to assume that Davis’s arrest will not be the end of it.