German police zero in on alleged scammers behind 24Option investment site

On August 10, 2021, Israeli police raided the multi-million dollar home of Roey Hayun, a seed funder of the trading website 24Option.com. Police seized the home, froze Hayun’s bank accounts, and also took Audi, Range Rover, Polaris, and Bentley vehicles, a Rolex Cosmograph Daytona Rainbow watch, and a Cartier Panthere necklace, among other luxury items.

This was not Hayun’s first run-in with the law. In 2016, he pled guilty to bookmaking and money laundering charges. He was sentenced to 28 months, but won early release thanks to glowing recommendations from prison social workers, even though police and prosecutors were opposed.

Halfway through his stint, the Prison Authority abruptly sent him to what his lawyer described as “the toughest wing” of Rimonim Prison, after getting a tip from police that he was a member of the Musli crime organization. His lawyer denied any knowledge of such affiliation and said the move had put Hayun’s life in danger.

Now the police were back, and this time they were not after him for sports books or washing money. This alleged crime was bigger.

Late last month, police and public prosecutors in Cologne, Germany, announced that they were collaborating with Israeli police on an investigation into a suspected multimillion euro fraud though 24Option, a high-profile website that advertised on prime-time television in Europe and was an official sponsor, from 2014-2019, of Italy’s Juventus football club — and was the source of much of Hayun’s fortune.

In recent months, German authorities have instigated the arrests and indictments of dozens of alleged investment fraudsters, but the December 21 press release is the first official announcement of actions against 24Option.

Police in Cologne said they arrested two unnamed suspects on December 21, both aged 30, who are suspected of defrauding 107 known investors out of a total of around 6 million euros. Cologne police told The Times of Israel that this sum relates only to people who have filed complaints with German police.

The two suspects had allegedly worked for the 24Option website, of which Hayun was the beneficiary, for at least five years prior to their arrest. Israeli police allege the amount of money laundered in Israel in the case was over $65 million.

According to Cologne police, 24Option allowed investors to bet on fluctuations in the prices of stocks, commodities, currencies, contracts for difference and cryptocurrencies. However, the site was entirely fraudulent and manipulated investors’ trades so that investors always ended up losing, they alleged.

According to Cologne police, 24Option had a call center in Cologne as well as offices in Cyprus and Israel.

“The accused are alleged to belong to an international criminal organization that is said to have deceived investors across Europe.” Cologne police said in a press release. “They allegedly pursued the sole aim of collecting all of the investors’ money for themselves.”

Proceeds from fraud

The fact that police in Israel carried out the raid last August was kept under gag order until October, and many filings in the case remain sealed.

According to Cologne police, on August 10, Israeli police raided several homes and offices related to the same alleged crime ring, seizing assets valued at 12 million euros.

According to Israeli court filings that have been made public, one of the homes belonged to Hayun, 39.

Israeli police said he is suspected of receiving tens of millions of dollars of proceeds of aggravated fraud from 24Option and laundering them in Israel. Hayun’s attorneys have said that the allegations are without foundation and they are confident the case against him will be closed.

The same day, Israeli police raided the office of BitTech Advance Technologies in Ramat Gan, which they allege was behind some of 24Option’s operations.

Israeli police have questioned Hayun as well as numerous employees of BitTech, court filings show.

Police say they have opened their own separate investigation into Hayun, which may lead to Israeli charges against him, in addition to whatever charges he may face in Germany. Neither Hayun nor any BitTech employees have been arrested or formally accused.

The Times of Israel sent a list of detailed questions to Ronen Rosenbloom, an attorney for Hayun. Rosenbloom confirmed to the Times of Israel that his client had been questioned but not arrested, but did not respond in detail.

“The investigation against Mr. Hayun in Israel lacks any evidentiary or legal basis and we are convinced that the case will be closed,” Rosenbloom said.

The December 21 arrests in Germany come on the heels of a recent slew of raids and arrests against Israeli alleged investment fraudsters carried out at the behest of German authorities in Europe, the Philippines and Israel.

According to statistics compiled by the FBI and European Commission, internet fraud is on the rise globally, although experts claim it is rarely prosecuted. In recent years, Israel has become a global hub of a particularly sophisticated type of internet fraud involving fake online investments.

Israel’s Justice Ministry assessed in a November 2021 report that online fraud, including investment fraud perpetrated against victims abroad, is the top source of dirty money for Israeli organized crime groups, ahead of drug trafficking and loan sharking.

While many law enforcement agencies have a dismal record when it comes to prosecuting internet fraud, Germany in recent months has taken the lead in pursuing not only alleged scam websites or call centers, but also the high-tech platforms that serve as the backend for hundreds of online trading websites.

Turf battle

24Option was founded in 2010 by Israeli entrepreneurs Gilad Somjen, Asaf Lantziano, Gil Ben Moshe and a fourth person. In 2016, they pleaded guilty to false company reports in connection with 24Option; they have not been publicly linked to the current investigation.

Roey Hayun, who at the time ran an illegal sports betting business, became the company’s main investor. The 24Option website was set up to offer investments in a then-novel financial product known as “binary options” – billed as a combination of gambling and financial trading – that had been pioneered by an Israeli company founded a year earlier known as SpotOption. SpotOption, owned by a Georgian-Israeli businessman with prominent Russian partners, was recently charged with large-scale fraud by the US Securities and Exchange Commission.

Binary options websites, which ostensibly offered a get-rich-quick opportunity to mom and pop investors, quickly became popular business ventures among two main groups of operatives: native-born Israelis involved in the illegal gambling and gray-market money service businesses, and individuals from the former Soviet Union with family and business ties to powerful oligarchs.

Binary options websites, which were by and large fraudulent, used targeted Google and Facebook advertising to find people all over the world whom the tech giants’ algorithms deemed susceptible to their sales pitch. These people would then be called by unctuous call center agents who would try to persuade them to trade on slick websites and eventually lose some or all of their money.

The fraudulent binary options industry flourished in Israel for over a decade, from 2007, when the first such company, eTrader, was founded, until the industry was outlawed by the Knesset in 2017. This was as a direct result of The Times of Israel’s investigative reporting, which began with a March 2016 article entitled “The wolves of Tel Aviv: Israel’s vast, amoral binary options scam exposed.” Many of the Israeli firms relocated overseas and continued to carry out Internet investment fraud.

The 24Option website attracted customers throughout Europe with advertisements featuring celebrities like Boris Becker. At a later stage, the company used social media ads that allegedly falsely claimed 24Option had been endorsed by Lions’ Den, a German investment reality TV show, according to Cologne police.

Some of 24Option’s commercials showed ordinary people employed in service jobs catering to the wealthy and glamorous. Now that they were trading with 24Option, the commercials suggested, they no longer had to be obsequious to the upper classes.

In 2011, Israeli court filings show, 24Option became involved in a turf war with SpotOption.

SpotOption’s in-house binary options website, TraderXP, sued Beta Media Ltd (the company that ran 24Option, now known as BitTech) for allegedly poaching one of its senior employees along with his client lists, which the SpotOption subsidiary had acquired by paying hundreds of thousands of dollars to Google, the lawsuit alleged. A meeting was held, and the 24Option executives capitulated.

“On February 24, 2011, there was a meeting at Ilan’s Cafe in Ramat Gan between [SpotOption’s] Mr. Pini Peter, myself, Mr. Asaf and Mr. Roey,” TraderXP’s director Yuri Madorsky said in an affidavit.

The case was settled with Beta Media agreeing to refrain from using any of TraderXP’s leads and agreeing to immediately pay SpotOption NIS 200,000 should it renege on its promise.

Behind bars

In 2016, as 24Option was becoming a household name among European prime-time television viewers and soccer fans, Hayun’s past caught up with him. He was convicted in Israel of running an illegal gambling business in 2006-2012 and laundering the proceeds through what prosecutors described as legitimate business ventures.

According to prosecutors, in 2006 Hayun set up an illegal Israeli sports betting site known as king-bet.com, and in 2009-2012, he served as an Israeli bookmaker for international sports betting companies, including In2bet, Pinnaclesports, and Agama Sport. He collected money from Israeli gamblers and distributed their winnings to them. Hayun had also allegedly run an unlicensed loan and money service business, prosecutors said.

Prosecutors alleged that Hayun took millions of dollars of his illicit profits and used them to increase his wealth by investing in legitimate businesses, including Israeli natural gas fields, real estate and the stock market. He also invested in 24Option, which the 2016 prosecutors presumed was a legitimate business.  The prosecutors did, however, note that the company had a confusing structure involving shell companies in multiple jurisdictions, and alleged that the purpose of this setup was tax evasion.

“It was decided to establish a complex array of offshore companies that were said to be the owners and operators of 24Option,” prosecutors wrote in the indictment, “despite the fact that the companies were registered outside of Israel, they were all controlled and run from Israel by the founders… this was done on purpose in order to evade Israeli taxes.”

In July 2018, near the end of his prison term, Hayun sued Bank Leumi for refusing to allow him to transfer money earned through 24Option into his Israeli bank account.

While the bank had previously transferred such funds, in 2017 it expressed concern over the fact that the money came from binary options, which the Bank of Israel had recently flagged as a money-laundering risk. Nevertheless, in December 2018 the bank agreed to a compromise that allowed Hayun to transfer a smaller sum, NIS 70 million, to his Israeli account.

Hayun sued Bank Leumi again in 2020 for refusing to transfer an additional $3 million. This time he claimed that his money came from an investment he had made in Moshe Hogeg’s Singulariteam venture capital fund. Hayun claimed that this made the money legitimate. The judge ruled in favor of the bank, saying it was not possible to know where the money came from.

In November 2021, just three months after Hayun’s home was raided, Hogeg was arrested for alleged fraud of hundreds of millions of dollars through cryptocurrency ventures launched by Singulariteam.