22.10.2021 | Teodor Burnar
“You can’t imagine the places that people called us from”: Mr. Yossy Haezrachy on representing victims of the Binary Option scam
Q: Financial crime tends to transcend borders and it usually does. What does that mean for your Law firm in particular and what kind of professional collaborations does it entail?
A: Israel is the start-up nation, which means it’s full of high tech, with all the buildings all over the place, huge companies, Nasdaq companies being traded, billions of dollars coming in, and we see it all over Israel. Thirty or forty percent of people my age are high tech employees in some capacity.
High tech brings a lot of benefits, however, it also brings a scam world, a world of fraud. It’s very easy to find financial victims all over the world, and take their money in all types of ways. Unfortunately, Israel is very well-known, very famous for this as well. They do it with very high skill, Israelis speak perfect English, they are very high tech savvy.
So some Israelis were able to start a real business of fraudulent crime on the Internet. Once this started to get bigger and bigger, it was easier for Israelis not to address Israeli victims, but to go global. For one, it protects them, because it is much harder for a Romanian, or someone from England, or the USA even, to find out that the fraud is being made in Israel, and once he finds out it is made in Israel, to even approach an Israeli lawyer or the Israeli authorities. Israel conducts itself in Hebrew, it is very tough to understand the regulations here, the law here, you need an Israeli lawyer. So the way these high-tech savvy companies did it is very global.
The agent or the people you spoke to sat in Israel, but the company was in some offshore haven. When you spoke to them, they told you that they were either in England or in the United States or wherever around the world, so it took a very long while, about two or three years, for financial victims to even find out that the base is in Israel. Once they found out, it took them approximately another year to even start to address the problem in Israel. They tried to do it in the United States, they tried to do it in England, they tried to do it in Italy, in France - nothing happened. Because the authorities, even the Americans five or six years ago, when their arm wasn’t as long as it is today, weren’t able to do anything.
We’re talking about hundreds of thousands of victims around the world who were frauded with billions of dollars. You can’t even imagine the money that went through the Binary Option Industry and the Crypto industry, coming into Israel and going through European banks. It is huge. It’s tremendous. Today it’s one of the main five issues the FBI addresses: Financial crimes related to Binary Option and Crypto industry in Israel. It’s that big. Just three days ago, there was a story in the newspaper that twenty five Israelis were arrested by the Israeli police acting on behalf of the American FBI. And this happens nearly every month.
Our firm deals with heavy litigation: commercial litigation in the high district courts of Israel, or big arbitration dealing with businesses, partners, shareholders issues and on that basis, we had a lot of English cases handled, and a lot of global introductions with Clients. We had a few Clients overseas, but we had a notion of knowing a lot of people. So one day, approximately seven years ago, we received a phone call from a person named Robert, if I recall correctly. He was an English citizen. And he told me his story. And to be honest, up until that point, I had never heard the phrase “Binary Option”. I never even dealt with financial crimes, it was all news to me. The story he told me was shocking.
Back then, it was the peak of the Binary Option industry. It was all over Israel: you’d open the newspaper and you’d see a notice, “Employees needed”, buildings were filled with offices of Binary Option, everybody knew it, but nobody really knew what they were doing. It seemed like it was part of the high tech industry.
So the man on the phone said that he had seen a video on YouTube showing a person that made an investment in a derivative called Binary Option. He was making 20 percent yield a month and it was all very, very clean. And it seemed very legit. The video said that it’s being made in Goldman Sachs. So he clicked on the “Get in touch” button, and he left his name and his phone number. And after a day, he received a phone call. It was from a Joe, or Josh, he said his offices were in New York, and he started to tell my client a story about Binary Option, how he acts as a broker, that he would escort him in everything related to the investment, and that if he could make an investment over 50.000 dollars, then he would be his exclusive broker, and he would manage all his activity on the platform. Additionally, he would give him a 10.000 dollars bonus, plus an insurance that he could not lose more than 50 percent of the money. It all seemed incredible, it seemed legit, it seemed high tech, like they’re sitting on a mountain of money, and so Client went ahead and started. And he thought he was acting smart, because he didn’t invest 50.000 dollars, but 5000 dollars, which was not big money for him. And he said it was great, they talked through Skype, it was all handled great, and he was making money for weeks. 5000 dollars became 10.000 dollars. He was very satisfied, and they convinced him to put in more money - his portfolio was handled so well that he was to receive a dollar for each dollar invested. They told him that they believed in him. So he put in 50.000 dollars, really confident that he would make money but also willing to take a loss. He knew he was in good hands, he was sure that nobody would steal his money.
What happens after 24 hours? He goes back online, into the platform, he looks for a small yield, maybe 1 percent, maybe a small loss, just like in any portfolio for shares. He goes online and there’s zero money in his account. He suffered losses of 120 percent in less than 24 hours. So he says to himself: “It’s probably a mistake”, and he calls up the agent. So Robert says: “Did you see what happened to my account? There’s zero dollars on it and it seems that I owe you money”. So the agent says: “Yeah, it was a really tough day on the market!”. And Robert, who accidentally was a real broker, sitting in England in a real brokers’ firms, he says: “Look, nothing happened on the markets today. It was a very easy day, there were no ups and downs”. The agent says: “No, no, it’s different markets. In the Binary Options markets, something happened, you don’t understand, but look, don’t worry. It’s just 50.000 dollars, we can get it back in a week. Put in another 10.000 dollars now, I give you a guarantee that you’ll have your money back in a week”. So Robert says, “OK, this happens, the Binary Option market’s insane. So let’s try to solve this.” Puts in another 10.000 dollars, the same thing happens after a day. He understands. So he tells the agent, “I want to know your real name”. He says, “That’s my real name”. He claims that his company is from New York. Robert says, “Where in NY? I have friends in NY”. He gives him an address, but my Client finds out from his friend that there’s no company there. Calls the guy, says: “Look, I’m in NY right now, and there’s nothing here”. So the guy pretends they just moved, and my Client says: “I come wherever you want in NY, and if you do, I’ll invest another hundred thousand dollars”. But the agent refuses, so finally Robert understands this company is not from NY, and that his money is not on the market but in the company’s pocket. And he starts looking around to understand what on Earth did he do. What are binary options, what are these platforms. He made a serious research, also hiring a Private Investigator, who finally got to the bottom of this and made the connection to Israel. But they still didn’t understand that the brokers were also in Israel.
So the Client went online to look for a Law Firm, and he found us, and he gave me a call. I was amazed, because I’d never heard of this. I thought it was an isolated incident. And we started to take care of the issue. We received all the correspondence, we received screen photos of his account, and we sent a letter to the Company in which we explained the situation, and we invited them to talk. And after we sent the letter, we received 50.000 dollars in 10 minutes! They got our letter, and they paid him back his money. We were very happy, we said: “Wow!”, unbelievable, it was just a letter and this happens. And he says, “Look, I have a friend to whom the same thing happened a week ago, but with a different company!”
And this friend calls me, and he tells me pretty much the same story, but with smaller numbers. Again, we take a P.I. in Israel, to find out where the company is located in Israel. And we sent out a letter, and guess what happens? We get the money in 10 minutes.
Q: Was it the same company?
A: No, it was a different company. Different address, different label. Everything was different. And then we understand, and I tell to the lawyers in my office: “Look, it’s impossible that two companies paid up the entire sum in 10 minutes after we sent our letter. There’s something fishy here, they’re scared. They didn’t even try to negotiate”.
I didn’t understand back then the scope of this “pandemic” in Israel. And then, what happened from then on in Israel, for approximately two years, is that the same exact thing like these two calls, we received hundreds of calls from people all over the world. You can’t imagine the places that people called us from: Dubai, Saudi Arabia, which we aren’t even allowed to do business with, Jordan, Europe – all around, the United States. Every day, it was the same exact story.
And every time we issued a letter, we would receive the entire sum, between 24 hours to a week. It was that easy. It was easy money for us, it was – I’m guessing – easy money for the label, cause we represented a percent from the people they stole money from. So it was easy for them to give the money back. Until one day, we received a “No”. They said we can do whatever we wanted, but they wouldn’t pay the money back.
So we said, “OK, let’s go back to the business that we know how to handle. Let’s go to court”. Our client was from Ireland, so we called him. He was a very serious guy, very offended. He had a relationship to a company called “Big Option”, for a year, he talked to the broker every day, and he had invested almost 250.000 euros. It was all going OK, and then one day, boom – no money. And his trust was so broken, that he was willing to do anything not even to get his money back, but to find out who the people were, and make sure that they pay their debt to society.
So we filed the lawsuit in Israel. We found out who the people were, we found out who the owner and the CEO of the company were. And we found out the name of the broker who talked to him on the phone. And we filed a lawsuit against all of them, in a small court in Israel, in a city called Hadera, where the company was located.
End of Part 1