A Los Angeles man faces sentencing Thursday for running a scheme to fleece online investors out of more than $8 million.
Jason B. Scharf, 38, of Valley Village pleaded guilty a year ago in Los Angeles federal court to one count of conspiracy to commit wire fraud, admitting his role as CEO of now-defunct CITrades, which swindled more than $8 million from at least 8,000 victims, 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 company, using lies and false promises to induce investors to purchase binary options.
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 the company.
The Israeli-American defendant 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. Instead, they were investing in transactions whose parameters were set by a separate company. 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.