A Los Angeles man pleaded guilty Thursday to his role in a scheme to fleece online investors out of $8.3 million in the United States and across the world.
Jason B. Scharf, 37, of Valley Village pleaded guilty in downtown Los Angeles to one count of conspiracy to commit wire fraud, with sentencing set for Feb. 25, according to the U.S. Department of Justice.
As part of his plea, Scharf admitted that from February 2013 through December 2015, he oversaw the day-to-day operations of the website Citrades as the company’s CEO, and that he and co-conspirators used lies and false promises to induce investors to purchase binary options, prosecutors said.
As described in the plea agreement, binary options are transactions that allow customers to make predictive trades as to whether the price of a certain commodity will rise or fall by a certain date and time. They must be traded on a registered board of trade in order to be lawfully offered in the United States.
Scharf admitted that representatives of Citrades falsely claimed to be representing the interests of investors in binary options when in reality they were representing the financial interests of Citrades. Scharf further admitted that while Citrades marketed itself as a trading platform through which binary options could be traded, investors were not actually trading with other investors, according to federal prosecutors.
Instead, they were investing in transactions whose parameters were set by a separate company that served as a platform provider. Scharf admitted that Citrades operated its binary options business principally out of Israel, but had representatives and co-conspirators working on its behalf in the United States.
Scharf further admitted that after being served with an administrative subpoena, he deleted potentially incriminating emails from an account that he used to conduct Citrades-related business, according to the DOJ.