The Tel Aviv District Attorney (Taxation and Economics) has issued on Wednesday an indictment against two members of UTrade, according to a report in the Israeli business daily Calcalist.
The primal indictee is Aviv Talmor, the former owner and CEO of the Israeli algo-trading forex brokerage. He is facing charges of severe fraud, money laundering, obstruction of justice, and illegal investment portfolio management.
Apart from Talmor, the prosecutor has also indicted his alleged co-conspirator Roey Cozin, who served as the former chief analyst of the company. He will face charges of severe fraud.
Aggressive marketing techniques
Between 2012 and 2015, UTrade raised a total sum of 100 million Israeli Shekels (ILS) from 600 clients. According to the indictment, the fundraising was managed by Talmor and was a result of an aggressive marketing campaign, that included false representation and partial information.
The clients were misled in regards to the usage of their funds, and the firm didn’t disclose the conflicts of interests between the traders and UTrade. Despite what was promised, only a part of the invested capital was used for trading, while the rest was diverted to Talmor’s needs. Talmor has also presented his clients with false data on the potential gains that can be made from the trading.
The Rising Star of the DeFi Project, GIBXSwap, Passes CertiK Security AuditGo to article >>
Below you can see a typical post in an Israeli Facebook group, inviting potential clients to a gathering with the participation of Talmor and Cozin. “UTrade R&D department invites you to learn about a new technological product in the capital market (…) The meeting is limited to 12 participants…”. During the mentioned time period, the Hebrew speaking internet was flooded with similar posts, alongside with animated videos, on-site banners, and numerous promoted landing pages.
Insolvency and eventual liquidation
Utrade’s saga began in mid-2015 when several investors asked to withdraw their funds from their accounts. Later, the firm ran out of money and became insolvent. Talmor tried to resolve the situation by reaching debt settlements with some creditors while concealing the information from others. Eventually, the firm was dissolved by a court decision.
“Auditing reveals UTrade Premium’s liquidity hardship, while traders asking for their cash back didn’t receive it [at all], or are receiving funds back bit by bit, through forced layout plans imposed by the company, which are expected not to be fully completed considering its current financial status”, ISA appeal stated.
ISA audit has also revealed that since the regulator banned the brokerage from signing new clients in May of 2015, it nonetheless acquired 44 new clients, pouring $3.5 million into UTrade Premium’s bank account.
On the run
Following the rising suspicions, Talmor left Israel in September 2015 – first to Cyprus and then went missing. After a long period of laying low – during which he allegedly was busy trying to move UTrade funds to firms listed in his name, Talmor eventually returned to Israel and was immediately arrested, as Finance Magnates reported.
UTrade onboarded clients primarily from Israel, but according to another Israeli business outlet The Marker, it also targeted clients from around the globe. One department handled English speaking clients from the UK and the US. Another handled French-speaking clientele, while yet another department was focused on clients from Jordan Lebanon and the Gulf countries. The Middle Eastern operation was allegedly conducted through the brands Option Now and CySEC regulated Capital Option.