USA – Owner of OptionMint Indicted for Running a Binary Options Scam
by Alexander M
Businessman indicted for running a string of fraudulent trading sites for years, facilitated by trading platforms
The USA authorities have announced Jared J Davis, an Ohio Businessman who owned and operated the once successful binary options site OptionMint was arrested and indicted with a 19 count charge by the federal court. The charges he is facing include; wire fraud, conspiracy to commit wire fraud, money laundering and obstruction of justice. According to the documents submitted by the prosecution it is believed that Davis’ fraudulent scheme ran for many years, shifting shapes and hiding under new names, defrauding customers of tens of millions of US dollars.
Davis, who made his fortune as a real estate entrepreneur in the suburbs of Columbus, Ohio, launched his first binary trading platform, OptionMint, in 2012. The site won relative success at the time, but according to the USA Department of Justice it was all just a big scam. While posing as a legitimate trading site, it never did anything of the sort. In a statement released by the Justice Department following his arrest, it is stated that “Davis, acting as a broker, did not connect investors to a legitimated binary options exchange … Instead, Davis took the opposing position on each trade, similar to a casino or sports book”.
Unlike binary options trading platforms who make a commission off any investment made through them, and therefore do not stand to benefit from the success or failure of investments made through their platform, Davis only made a profit when his investors lost money. This served as an incentive for him to manipulate and deceive his investors, failing to inform them of his interest in their failure, promoting ‘risk-free’ investments while in fact it was impossibly difficult for customers to retrieve their funds and close their accounts, falsely presenting his employees as ‘analysts’ and ‘brokers’ although they had no such training or expertise and constantly applying pressure on the customers to invest greater sums of money. Davis ran marketing campaigns and call centers from a number of offices he ran in Ohio, Costa Rica and several Caribbean islands under several corporations registered in half a dozen countries around the globe.
Platforms of Evil – Same scam, different names
As exposed in FinLeaks’ ‘Platforms of Evil’ series, many trading platforms, including some of the biggest names in the industry (Airsoft, Panda), are facilitating scams on the largest scales imaginable and profiting off scams committed through their platforms. Scammers, who get their sites flagged by regulators or even shut down, approach – or are approached themselves by – executives from the trading platform companies. They take the same fraudulent code and methods used to scam customers, and apply it in new sites that are given a fresh new branding.
This allows the scammers to continue with their schemes, virtually uninterrupted, constantly shifting guises, using new brands for the same scam while remaining undetectable.
The case of Davis’ various scams, in particular once his original site ‘OptionMint’ was flagged and shut down by authorities, only to use the same code and methods to open a platitude of various brands, continuing with his scams undetected for years (likely to this very day) – is a textbook example of the evil ways of some of the biggest trading platforms.
The platform of evil series:
- Special Series – Platforms of Evil Part 1
- Special Series – Platforms of Evil Part 2
- Special Series – Platforms of Evil Part 3
The trading platform’s basic scheme:
Platforms of Evil – Saving the scammer, sacrificing the investors
The scheme, shown in the ‘OptionMint’ case, is quite likely the bigger issue detailed in the charges made against Davis. The operation of the new sites opened by Davis over the years, is a prime example of the classic scheme presented by Finleaks’ ongoing series ‘Platforms of Evil’. The ongoing scheme was facilitated, for years, by trading platforms, profiting from his scam.
Davis’ original brand ‘OptionMint’ was launched in 2012, gaining a fair amount of success before being flagged by the CFTC and closed down. Rather than putting an end to his scam, Davis did what so many other scammers do under the guidance, or at the very least negligent indifference, of the owners of the trading platforms – he used the same fraudulent code and opened a barrage of ‘new’ brands operating the same scam. His new brands, which were essentially the fraudulent ‘OptionMint’ with a different guise, ran under various names, with the most successful of his new brands being ‘OptionKing’ and ‘OptionQueen’, each having no apparent connection to the original fraudulent site – although owned by the same people, using the same fraudulent code, operating from the same questionable locations and using the same manipulative and deceptive ways.
The new brands were opened faster than the authorities could have identified and closed them and the trading platforms allowed Davis to open more and more brands, making a profit off his scheme. Their facilitation allowed Davis to continue his scam over the next years. While OptionMint was flagged in 2013, opening the new brands allowed the scam to continue, bigger and stronger than before. In 2015, the Canadian financial regulators warned against OptionMint and two of its new brands – OptionQueen and BinaryPays. The official warning was followed by a full investigation against the sites leading to their closure. But Davis just kept on going, opening more and more brands, investigators estimate he has opened as many as 20 new brands, with some feared to be still operating today.
Same scam, different names
Yet the platforms facilitating these crimes and reaping a benefit off the defrauding of innocent customers, are not held accountable for their crimes. While the prosecution mentions the fact that the new brands were opened, as essential to the longevity of the scheme and ongoing defrauding of innocent investors, and the part that the trading platforms themselves played in allowing it is undeniable, no trading platform executives were indicted for their part in the scam.
