The regulator insists that Cohen controlled the bank accounts used to transfer and hold fraudulently obtained funds, controlled the websites used to solicit customers, employed the brokers who directly communicated with customers, and the companies he controlled entered into at least eight different agreements for the platform used by Yukom to trade against customers.
In a document filed by the United States Commodity Futures Trading Commission (CFTC) with the Illinois Northern District Court on August 21, 2020, the regulator seeks to nix a motion to dismiss by one of the defendants in a lawsuit against large-scale fraudulent binary options scheme. Yakov Cohen, who is trying to axe the US action against him, is among the defendants in a lawsuit targeting a number of entities and individuals linked to Israel-based Yukom Communications.
In its response to Cohen’s motion to dismiss, the CFTC argues that its Complaint establishes that Cohen and three other individuals, along with five entities that Cohen owned and controlled, all of whom were “acting individually, in concert with each other, and through their officers, employees, and agents,” violated the Commodity Exchange Act and Commission Regulations by operating a fraudulent binary options trading scheme through various fictitious trade names including “BinaryBook,” “BigOption,” and “BinaryOnline”.
As alleged in the Complaint, the five entity defendants –Yukom, Linkopia, Wirestech, WSB, and Zolarex – functioned as a common enterprise (the Yukom Enterprise) in fraudulently soliciting and accepting over $103 million for illegal, off exchange-binary option transactions. Cohen, along with Yossi Herzog, has owned, operated, and controlled each entity comprising the Yukom Enterprise from at least March 26, 2014 through August 12, 2019 (the “Relevant Period”), the CFTC explains, adding that Cohen, acting alone or in concert with others, has formulated, directed, controlled and/or participated in the Yukom Enterprise’s violations.
Many of the charged false statements were made on the Yukom Brands’ websites controlled by Cohen and Herzog, while others were made in telephone and email solicitations by the individual brokers employed by entities owned by Cohen who solicited customers on behalf of the Yukom Enterprise.
For instance, employees routinely told customers that that the trading offered by the Yukom Brands was profitable, when in fact the substantial majority of customers lost money; and the brokers misrepresented that they were paid based on customer profits, when in fact employees (and the defendants) made money based on customer net deposits and actually lost money when customers withdrew funds from their account after so-called winning trades.
The websites also misrepresented the fundamental nature of the binary options trading offered by the Yukom Brands, falsely claiming that BigOption was a “top-notch binary option trading platform” launched by “financial service experts” and BinaryOnline was a “brokerage firm providing trading services through a trading platform,” when the so-called transactions offered by the defendants were not actual trades but rather “mere book entries on the platform, and the results of binary options transactions may be manipulated.” The CFTC argues that these allegations establish Cohen’s liability, individually and as a controlling person, for commodity options fraud through false statements.
This same conduct also establishes Cohen’s liability for fraud in connection with swap transactions, the CFTC says.
The CFTC also notes that Cohen is liable for the scam as he was a controlling person at Yukom. The Complaint charges that Cohen controlled the bank accounts used to transfer and hold fraudulent obtained funds, controlled the websites used to fraudulently solicit customers, employed the brokers and other employees who directly communicated with customers, and that the companies he controlled entered into at least eight different agreements for the platform used by the Yukom Enterprise to “trade” against their customers.
The lawsuit continues at the Illinois Northern District Court.