US Federal prosecutors have reportedly said that Lee Elbaz, the former CEO of Israel-based Yukom Communications, should be ordered to pay $28 million in restitution for her participation in a $145 million fraud scheme.
As Finance Magnates reported, Elbaz was sentenced to 22 years in prison after being found guilty by a US Judge for her participation in a $145 million fraud scheme carried out by Israeli-run binary options websites.
Throughout this fraud, thousands of investors were scammed. According to a report from the Associated Press, prosecutors said that the scheme cost investors more than $137 million between May of 2014 until June of 2017.
According to the news agency, US District Judge Theodore Chuang is yet to decide how much Elbaz owes to her victims. However, the judge calculated that her role in the scheme led to investors being defrauded of $28 million.
This calculation has been supported by the prosecution, which has said that their restitution calculations match that of the judge. However, a government expert in a court filing said last Wednesday that the $28 million figure is likely a conservative estimate.
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Background on the Lee Elbaz binary options scam
As reported by The Bureau of Investigative Journalism, the binary options scandal was a sophisticated technology-powered boiler room scam. As is characteristic of many scams, the fraudsters would cold call potential investors and convince them to place money on the direction a share or commodity price would go.
To ensure investors continued to send the fraudster’s money, victims would initially be able to see their money growing in an account held by the company and were then encouraged to invest more.
However, when they tried to withdraw the money, the scammers would act evasively and eventually stop taking their calls.
Elbaz was arrested in 2017 after traveling to New York and was indicted in March 2018 alongside 15 defendants in the case. In August, she was convicted by a federal jury in connection with a vast binary options scheme to defraud investors all over the world.
Elbaz was the first to be tried, but Lissa Mel, an Israeli former reality show contestant, was the first of 21 defendants to be sentenced. Five have pleaded guilty and agreed to cooperate with prosecutors while nine other defendants, including Yukom owner Yosef Herzog, were found guilty in February.