A United States district court has entered a consent order requiring Yakov Cohen to return the $7 million he illegally obtained from participating in fraudulent binary options schemes involving the brands BigOption, BinaryBook, and BinaryOnline.

The court order, issued yesterday (Monday), followed complaints filed by the Commodity Futures Trading Commission (CFTC) in 2019 against Cohen and several other individuals and entities.

Many Names in the Binary Options Fraud

The other co-defendants in the case include three individuals: Yossi Herzog, Lee Elbaz, and Shalom Peretz, and four entities: Yukom Communications Ltd, Linkopia Mauritius Ltd, Wirestech Limited (BigOption), WSB Investments Ltd (BinaryBook), and Zolarex Ltd (BinaryOnline). These companies were based in Israel, the UK, Mauritius, the Marshall Islands, and other offshore jurisdictions, and targeted investors in the US and elsewhere.

Although Cohen has been ordered to return the ill-gotten gains, the decision against the other co-defendants is still pending.

A Massive Operation

According to the CFTC’s complaint, the group operated from around March 2014 until September 2017 and facilitated binary options trading through the three brands. The regulator found that the defendants did not disclose that they profited from customers' losses.

Further, the defendants claimed that the offered binary options were actual transactions subject to objective market conditions. However, the regulator argued that the transactions were merely book entries manipulated by the defendants.

The regulatory lawsuit also revealed that the defendants misrepresented their financial expertise, the basis for compensation, their physical location, and the identity of their employees and agents. Despite claiming that customers' funds were segregated for safekeeping, the defendants mixed them with their own funds and transferred them through offshore bank accounts, some of which were controlled by Cohen.

Cohen received at least $7 million in gains from the fraudulent binary options trading operations.

Apart from the actions by the CFTC, Cohen also faced criminal charges of wire fraud and conspiracy to commit wire fraud for operating the binary options schemes. He pleaded guilty last month and was sentenced to 66 months in prison, along with a $7 million penalty, which will be distributed among the victims of the binary options schemes.

Elbaz was also convicted in 2020 and has been sentenced to 22 years in prison. According to the FBI, Elbaz-controlled Yukom brands defrauded investors to approximately $145 million between 2016 and 2017, while only $20 million of this amount was paid back to defrauded victims during this period.