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Foreigners file slew of lawsuits against alleged Israeli investment scammers

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A new spate of lawsuits suggests that despite legislation and prosecutions by foreign governments, alleged investment fraud remains a lucrative business in Israel, with local law enforcement doing little to crack down on suspected online scammers.

Among the recent lawsuits — filed in Israel by alleged victims from countries including Australia, Azerbaijan, Germany, Holland, Hong Kong, India, Ireland, Italy, Japan, Malaysia, Norway, Singapore, South Africa, Sweden, Switzerland, United Kingdom and the United States — are claims against individuals who used to sell binary options investments and pivoted to other financial instruments. When the binary options industry was outlawed by the Knesset in October 2017 for being irredeemably fraudulent, some of the individuals involved began selling foreign exchange bets, contracts for difference (CFDs), and cryptocurrency investments. Israeli law enforcement has indicted almost no online fraudsters, despite the fact that the industry employed thousands of people and allegedly stole billions of dollars. Advertisement

Prosecutors in a European country recently told The Times of Israel that while investment scam call centers are now located throughout Europe, time after time investigators have found that a scam website’s service providers are Israeli or that fraud proceeds end up in Israeli bank accounts or in the bank accounts of individuals of Israeli origin.

Many of the plaintiffs are over 50 and some were allegedly bamboozled out of their retirement savings. Many of the plaintiffs allege that they began trading successfully on what seemed like a reputable website, but that when they tried to withdraw money from their accounts, they encountered resistance and were ultimately ghosted, with their formerly friendly, warm and caring account managers failing to respond to their phone calls or messages.

They soon learned that their brokers had used fake names and identities. Through determined research, the hiring of private detectives, or an occasional lucky break, the plaintiffs managed to track down their alleged victimizers to Israel.

While there are dozens of lawsuits currently in process against alleged Israeli investment fraudsters, The Times of Israel in this article highlights 10 such suits — all of them filed in the last year and a half — as a representative sample.

In almost all cases, the defendant’s first line of defense was that they had nothing to do with the alleged scam. This claim is made by possible by the dense forest of shell companies the alleged fraudsters use, normally registered to offshore locales that keep the identities of owners and beneficiaries secret. The alleged victim often has no way of ascertaining who actually owns the website that scammed them — although often it is the owner, or an associate of the owner, of the Israeli call center involved.

Most of these lawsuits are ongoing. In the past, such lawsuits have often been resolved when the plaintiff settled with the defendant in exchange for withdrawing their lawsuit and signing a nondisclosure agreement.

While settlements or even victories in civil lawsuits offer relief to the individual plaintiff, critics argue that only criminal prosecutions can achieve a measure of justice for victims who have fallen prey to Israel’s fraudulent online trading industry.

According to Nimrod Assif, an Israeli lawyer who is suing several forex and binary options companies, only a tiny percentage of alleged victims even get as far as filing a lawsuit.

“Since the perpetrators of the scam use fake names and lie about their location, most of the victims don’t know whom to sue,” he said, “or even in which country they need to search for an attorney who can help them. Also, losses up to a certain amount — at least $50,000 — don’t justify the legal costs of pursuing cross-border and complex litigation. Furthermore, the victims who have suffered significant losses are often in dire financial condition and will find it extremely difficult to come up with the amount needed to even start civil litigation.

“Consequently,” said Assif, “civil litigation provides no deterrence against this kind of fraud. So long as the Israeli police don’t step in, continuing the fraud is worthwhile for the perpetrators.”

In August 2020, John, a Hong Kong businessman, sued an Israeli company called Random Technology Company Ltd. for $650,000. (For privacy reasons, only the first names of the plaintiffs are being published here.) He also sued three individuals: Michael Mireli, who he alleged was running the company, Jorge Aitor Azpiazu Cigaran, who is registered as the company’s director, and Haim Eliezer Schwartz, the company’s sole shareholder.

The lawsuit came about in an unexpected way. In March 2019, the plaintiff, in his 50s, came across several ads for Infinitrade.com on the internet and social media sites. The ads claimed that Infinitrade was an easy-to-use and cutting-edge platform for trading on the value of currencies, indices and commodities.

The ads further proclaimed that Chinese businessman Jack Ma, the founder of Alibaba and one of the richest men in the world, was a client of Infinitrade. This caught John’s attention.

“At the plaintiff’s request, a representative of Infinitrade contacted him and told him over the phone and by email that Jack Ma did in fact carry out investments through Infinitrade,” the lawsuit alleged.

A recording posted online appears to include an Infinitrade representative speaking to a chatbot named Lenny, referencing ads that claim that billionaires Bill Gates and Richard Branson are clients.

According to the suit, between March and June 2019, John made 37 bank transfers to his Inifinitrade account, for a total of $582,000. Through successful trades, his account balance reached over $2 million. He asked to withdraw $50,000 here and $75,000 there, and encountered no problem. But then everything changed.

“On June 5, 2019, the plaintiff tried to withdraw an additional $50,000 from his account. The plaintiff received a message confirming that the money had been transferred, but in contrast to previous times, the money never arrived,” the complaint alleged.

Two weeks later, John’s life allegedly turned into a nightmare.

One day, the plaintiff received a “surprising and worrying phone call from someone who claimed to be an employee of Random Technology Company.”

The employee was named Ilya.

“In that conversation, Ilya told the plaintiff that Random Technology Company in fact operates Infinitrade (as opposed to what the website says), that it operates from Tel Aviv and not from London and Bulgaria as it claims, and that Ilya personally had carried out trades in the man’s account as part of his job,” the complaint alleged.

Ilya told him in no uncertain terms that Infinitrade was a scam.

“Ilya warned him that Random Technology had no intention of returning his money, and said that the money only appeared to be in his account, describing it as ‘virtual money,’” the complaint alleged.

Upon hearing this, the Hong Kong man was devastated, the complaint said. He stopped all trading in his account, then tried to withdraw $600,000, to no avail. His phone calls, emails and texts to Infinitrade went unanswered.

“The plaintiff, who was an established businessman in Hong Kong, lost his money, his house and his business as a result of a fraud. He is left with heavy debts and doesn’t know what to do,” said the complaint.

Attorney Gidon Weinbaum filed John’s lawsuit in August. It alleges that the company had no legitimate business purpose.

“All of the professional lingo used by the defendants, terms like ‘financial tools,’ ‘business plan,’ ‘account manager,’ ‘trading platform,’ etc. were all a ruse — a cover for the real activity of the defendants, which is defrauding innocent people and stealing their money never to be returned,” the complaint alleged.

Two of the defendants, Schwartz, a Rehovot-based lawyer, and Azpiazu Cigaran, a Spanish man living in Israel, did not respond to the complaint.

While Schwartz has almost no online footprint, the backstory of Jorge Aitor Azpiazu Cigaran, the company’s director, is described in several articles in Spanish-language media.

A November 29, 2011 article in the Colombian newspaper Vanguardia describes him as a cycling enthusiast and the organizer of an athletic delegation to Israel under the auspices of Saxo Bank — a Danish bank with strong ties to Israel’s online forex industry.

A June 2012 article in Spain’s El Mundo describes him as a former military officer who moved to Israel in 2007 to work at........

© The Times of Israel

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