Federal court fines operator of binary options scam $561K
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A federal court in Ohio has ordered Jared Davis to pay $561,971 in restitution to the victims of a fraudulent scheme. Davis is the mastermind of a $10 million binary options scam. The individual operated fraudulent binary options brands: Option King, Options Mint, and Option Queen.
Federal court fines $561K to the mastermind of a binary options scam
Davis operated this scheme between 2012 and 2016 under Erie Marketing, LLC. According to the Commodity Futures Trading Commission (CFTC), the court imposed an order on Friday. The regulator said Davis was also facing a permanent registration and several trading bans.
The judgment also comes after an action was taken against Davis in September 2019. At the time, the CFTC had filed charges against Davis for running a similar scheme. Davis has pled guilty to three counts of personal tax evasion. He has also admitted to 11 counts of wire fraud he committed on behalf of his company known as Erie Marketing
US prosecutors in the Northern District of Ohio initiated the charges facing Davis. The statement released by the CFTC also said that the regulator had earlier said that Davis was sentenced to 30 months in prison in January. He was also charged with subsequent three years of supervised release.
The binary options operator was also targeted with several monetary penalties, with the expected payments totaling around $7 million. According to the regulator, the victims of this scheme would also receive compensation.
“He was also ordered to pay a $300,000 fine, $1,039,208 in restitution to the Internal Revenue Service (IRS), and to be jointly and severally liable for the debts of Erie Marketing, LLC, including $656,493.20 in restitution to victims and a $4.4 million fine,” the statement from the CFTC said.
The US Securities and Exchange Commission (SEC) has also said that the case against Davis was still pending. In February 2019, the regulator secured a partial settlement with Davis dependent on the court determining the disgorgement and civil penalties at a later date.
Davis operated a $10M scam
The derivatives regulator said Davis operated this scam using internet and website marketing campaigns. The activities targeted investors based in the US and other countries. He promoted trading opportunities on off-exchange binary options on commodities, forex, indices, and stocks.
However, the binary options executive also had other plans, as he made several misrepresentations and hid access to material facts about the trading activities. He failed to reveal that he took opposing positions on each trade. The CFTC also said that Davis severally manipulated the settings of his options trading software to raise the odds of customers making losses.
The charges against Davis come as David Butler, the operator of binary options companies like SpotFN and Binary FN, pled guilty to defrauding investors of $2.9 million using binary options schemes. John Black, another individual based in California, was also ordered to pay $29 million in restitution and penalties.
