Israeli binary options lawyer probed by UK
Israeli lawyer Moshe Strugano, a self-described expert in
the “formation of offshore companies,” is under investigation in the UK “for
possible money laundering and conspiracy to defraud,” the Financial Times
reported on Friday.
“The City of London police is currently conducting a number
of enquiries to assist with the Crown Prosecution Service’s decision on
charging advice for a number of individuals who are under investigation in this
case,” a spokesperson told the British newspaper.
Strugano, 50, was prominently associated with Israel’s
largely fraudulent binary options industry. For many would-be binary options
brokers, he was the go-to person for incorporating offshore companies, opening
bank accounts abroad and connecting call centers with credit card processors,
sources told The Times of Israel. He also represented binary options companies,
including IvoryOption, BeeOptions and SecuredOptions, vis-à-vis lawyers who
tried to recover money on behalf of allegedly defrauded investors.
A source close to Strugano denied that Strugano incorporated
offshore companies for clients or formally connected call centers with credit
card processors, but did acknowledge that Strugano opened bank accounts on
behalf of clients.
Strugano was arrested in early 2019 by City of London police
and released on bail, the Financial Times reported, citing UK court records.
In response to a query from The Times of Israel, the source
close to Strugano denied that the investigation in London has anything to do
with binary options, but said it was related to the collapse of an investment
company in the UK.
“Last year Mr. Strugano was asked to come to an investigation
in London and gave a full statement regarding the collapse of a UK investment
house,” the source said. “This case has no relation to binary options, but
rather to a UK investment house that Mr. Strugano gave services to for 4-5
months, six years ago. Since then Mr. Strugano was not asked to come again to
the UK for further investigations.”
‘Legal opinions’ for binary options firms
Strugano has provided countless “legal opinions” to binary
options companies that needed a bank or merchant acquirer to process their
credit card payments, claiming that these companies were in compliance with
anti-money laundering laws in the countries where they had been incorporated.
Any online merchant that wants to accept credit card
payments needs an “acquiring bank” or “merchant acquirer” to accept and
underwrite them. The acquiring bank is required by law in many countries to
make sure the merchant’s activity is not illegal and to know the true identity
of the merchants’ owners and not just the identity of its directors, who may be
stooges.
Strugano provided these “legal opinions” as a way of helping
payment processors conduct due diligence, despite the fact that the activities
of many binary options companies were far from legal.
An October 31, 2016 legal opinion that he provided to a
binary options website called StellarFinance.com said that it was legal to
operate a binary options company from Bulgaria.
“I, the undersigned Moshe Strugano…hereby confirm that
BANKXI LTD (StellarFinance.com) operates in accordance with the laws and
regulations in its country of incorporation Bulgaria, where there are no
requirements of operating license for entities offering binary options
services. I also hereby confirm that BANKXI LTD operates in accordance with the
AML and due diligence policies of Bulgaria.”
Strugano claimed that he was not employed by, nor did he
hold any position within, any binary options companies.
“Please note,” he wrote at the bottom of many of the legal
opinions he issued, “I, the undersigned, am an independent attorney and hold no
position and/or am employed by the merchant.”
At various times, Strugano has in fact been a shareholder in
the Israeli call centers of the binary options companies he issued opinions
for, as documented in Israel’s corporate registry.
Strugano told The Times of Israel that on every occasion he
held these shares “in trust” for the real owner.
As a lawyer, myself and my firm are registered in more than
100 companies on trust, therefore I can’t remember each one. My office is
offering for Israeli and foreign companies nominee services. Our clients sign
trust agreements and when and if we find out there was illegal activity we
resign acting as nominee. We are not involved in any way with the activity of
the companies, we only serve as nominee on company documents,” he told The
Times of Israel in an October 2019 email.
The source close to Strugano told The Times of Israel on
Monday that “until two years ago the law firm represented approximately 300
clients and 100 companies on trust. The firm resigned immediately when it found
out that clients are involved with binary options.”
The source insisted that Strugano’s law firm does not open
offshore companies but merely introduces clients to third-party companies that
do so.
“The firm does not open offshore companies or connect call
centers to credit card companies but introduces clients to offshore or onshore
brokers, ” he said.
Documents from the Panama Papers, obtained by the German
newspaper Süddeutsche Zeitung and shared with the International Consortium of
Investigative Journalists, belie this claim, however. The documents describe
Strugano as a “client” of the Israeli branch of the infamous corporate service provider
Mossack Fonseca and even show Mossack Fonseca invoicing Moshe Strugano in 2014
for maintenance of several Anguilla-based binary options companies, including
CIT Investments Ltd., which was associated with the binary options website
Citrades.com
In November 2008, the former CEO of Citrades Jason Scharf
pleaded guilty in the United States for his role in an $8.3 million binary
options fraud scheme and is currently serving a 57-month sentence.
Archived pages of Strugano’s website show that in 2010, he
specialized in helping clients buy apartments in Israel, helping terminated
employees get their due from employers and helping foreign workers with visas,
in addition to setting up forex companies. By late 2013, however, Strugano’s
office mainly billed itself [Hebrew link] as an incorporator of offshore
companies.
“The office provides services in a variety of areas
including trusts, opening companies in tax havens and in planning structures
for companies and individuals to open bank accounts in different countries
around the world. In addition, the office provides services to the finance
sector all over the world,” according to archived pages.
Legal documents from 2010 show that Strugano lived in the
Neve Tzedek Tower, one of Tel Aviv’s most luxurious residential buildings,
where he met some of his clients at the building’s swimming pool.
The binary options industry flourished in Israel for a decade
before it was outlawed via Knesset legislation in October 2017, largely as a
result of investigative reporting by The Times of Israel that began with a
March 2016 article entitled “The wolves of Tel Aviv.”
At its height, hundreds of companies in Israel employed
thousands of Israelis who allegedly fleeced billions out of victims worldwide.
The fraudulent firms would dupe victims into believing that they were
successfully investing and earning money, encouraging them to deposit more and
more into their accounts, until the company eventually cut off contact with the
investor and disappeared with all or almost all of their money.
Israeli prosecutors have yet to indict a single binary
options suspect on charges of fraud, while the United States has indicted about
two dozen, with seven convictions of Israelis, and taken civil enforcement
actions against many others.
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