The US Commodity Futures Trading Commission has charged a Californian resident for operating a set of binary options affiliate websites. The entities were illicitly referring clients to binary options brokers via several offshore businesses.
One other affiliate marketer allegedly participated in the scheme, which has been estimated to have cost US residents $16 million.
The CFTC complaint was unsealed on July 10, 2017. It charges Jason B. Scharf of Valley Village, California, and his companies CIT Investments LLC in Nevada, Brevspand EOOD in Bulgaria, CIT Investments Ltd in the Marshall Islands, CIT Investments Ltd in Anguilla and A & J Media Partners, Inc, which is a California corporation.
According to the CFTC, Scharf colluded with affiliate marketers Michael Shah and his company Zilmil, which are both based in Jacksonville, Florida.
The unlawful solicitation of over $16 million was via illegal binary options contracts. Scharf also does business through Citrades.com and AutoTrading Binary.com.
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A court hearing has been scheduled for July 26th to enter an order for a preliminary injunction against the defendants.
$16 million Solicited from Over 8,000 US Clients
Commenting on the news, James McDonald, the CFTC Director of Enforcement, stated: “The CFTC continues to be committed to rooting out and prosecuting binary options fraud in our markets. As alleged, the fraudulent scheme here involved false claims of outsized profits, fake testimonials, and “guaranteed returns.”
“The scheme, as alleged, was massive, resulting in the misappropriation of over $16 million from more than 8,000 customers. This action should send a message to would-be fraudsters that the sort of conduct alleged here will not be tolerated. We thank our international law enforcement partners for their assistance in this case,” McDoland elaborated.
The perpetrators of the scheme have allegedly been operating since at least January 2014 and the operation is ongoing at present. The duo is claimed to have been scamming potential customers through fraudulent ad campaigns to purchase binary options trading systems. Clients that have shown interest in the product were redirected to the binary options brokers like those operated by Scharf.
The defenders are charged with fraudulently soliciting customers to open binary options accounts with false claims of outsized profits and “guaranteed returns” in trading binary options. The solicitations have been bolstered by fake testimonials of purportedly successful customers.
In reality, once customers funded their binary options trading accounts, they never received their funds back. According to the complaint, the funds are routed through numerous foreign corporations and overseas accounts before being spent on business and personal expenses, and compensating Shah and Zilmil.