The US Securities and Exchange Commission today charged Gil Beserglik, Raz Beserglik, and Kai Christian Petersen with engaging in a binary options scheme that defrauded retail investors out of “millions of dollars.”
The SEC’s complaint alleges that defendants sold more than $100 million in binary options contracts through three affiliated brands – Bloombex Options, Morton Finance, and Starling Capital.
Authorities believe the fraud scheme cost investors tens of millions of dollars. Bloombex Options alone received customer deposits totaling nearly $80 million from 2012 through 2016, with a significant percentage of these deposits were from US investors.
The scammers misrepresented the profitability of investing in the binary options, as well as investors’ ability to access their funds. They told investors that their company only earns money if investors make profits while, in fact, any broker handling binary options trades only makes money when its customers lose their deposits.
Those were just some of the lies told to dozens of victims of the multimillion-dollar investment fraud scheme, the agency said.
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A boiler room fraud
The SEC added that this binary options fraud was a high-tech variant of boiler room scams, a type of fraud that involves cold calling potential investors offering to sell them little-known shares or exotic financial products. Although the boiler rooms often claim to be authorized service providers with professional websites and forms to fill out, they are in reality swindlers that offer fictitious or worthless shares or products.
Originally the fraudsters operated out of Germany and Israel but soon spread to other countries. The scheme operators and other co-workers made commissions based on the amounts of clients’ deposits, not their profits, the SEC said.
As is often the case, Bloombex employees pretended to be from other countries, falsely guaranteed returns, lied about their professional qualifications and adopted fake names while contacting with customers.
“For some victims, this international scheme cost them entire life savings. This action reflects the SEC’s continued pursuit of those that drain the retirement accounts of vulnerable investors, including those who perpetrate their fraud from abroad,” said Melissa Hodgman from the SEC’s Enforcement Division
The complaint seeks a permanent injunction, disgorgement plus prejudgment interest, and a penalty.