The former CEO of Citrades pleaded guilty today for his role
in a scheme to defraud investors out of $8.3 million in the United States and
across the world in financial instruments known as “binary options,” announced
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s
Criminal Division and Acting Director in Charge Nancy McNamara of the FBI’s
Washington Field Office. Citrades was a
purported internet-based investment platform.
Jason Benjamin Scharf, 37, of Los Angeles, California,
pleaded guilty to one count of conspiracy to commit wire fraud before U.S.
District Judge George H. Wu of the Central District of California. Sentencing has been scheduled for Feb. 25,
2019, before Judge Wu.
As part of his guilty plea, Scharf admitted that from
February 2013 through December 2015, he oversaw the day-to-day operations of
Citrades as the company’s CEO, and that he agreed with his co-conspirators to
induce investors to purchase binary options based on materially misleading
misrepresentations and omissions. As
described in the plea agreement, a binary option is a type of option contract
in which the payout depends on the outcome of a discrete event, typically
related to whether the price of a particular asset—such as a stock or a
commodity—will rise above or fall below a specified amount.
Scharf admitted that representatives of Citrades falsely
claimed to be representing the interests of investors in binary options when in
reality they were representing the financial interests of Citrades. Scharf further admitted that while Citrades
marketed itself as a trading platform through which binary options could be
traded, investors were not actually trading with other investors. Instead, they were investing in transactions
whose parameters, including the “strike price” associated with the binary option,
were set by a separate company that served as a platform provider. Scharf admitted that Citrades operated its
binary options business principally out of Israel, but had representatives and
co-conspirators working on its behalf in the United States.
Scharf further admitted that after being served with an
administrative subpoena, he deleted potentially incriminating emails from an
account that he used to conduct Citrades-related business.
This case was investigated by the FBI. Trial Attorney Ankush Khardori of the
Criminal Division’s Fraud Section is prosecuting the case. The Criminal Division’s Office of
International Affairs and the Israeli National Police also provided assistance.
Individuals who believe that they may be a victim in this case
should visit the Fraud Section’s Victim Witness website for more information.
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