Jason B. Scharf, Binary Options Fraud, Florida 2017

Federal regulators have accused Jason B. Scharf, of Valley Village, California, and his network of companies of running a $16 million binary options fraud. The Commodity Futures Trading Commission (CFTC) filed a complaint in the Middle District of Florida on July 10, 2017, alleging Scharf and his associates unlawfully solicited funds from over 8,000 customers for illegal binary options contracts.

The complaint names CIT Investments LLC (Nevada), Brevspand EOOD (Bulgaria), CIT Investments Ltd. (Marshall Islands & Anguilla), and A & J Media Partners, Inc. (California) as entities controlled by Scharf. Also named are affiliate marketers Michael Shah and his company Zilmil, Inc., both based in Jacksonville, Florida. Scharf allegedly operated the scheme through websites including Citrades.com and AutoTradingBinary.com.

The CFTC alleges that Scharf, Shah, and Zilmil acted as unregistered Futures Commission Merchants (FCMs) and Commodity Trading Advisors (CTAs), violating federal regulations. Binary options, which allow traders to speculate on the future price of commodities, require trading on a registered exchange to be legal in the United States. The complaint asserts that none of the defendants were registered with the CFTC nor executed trades on a registered board of trade.

On July 12, 2017, Judge Brian J. Davis issued a Statutory Restraining Order, freezing the assets of Scharf, Shah, and Zilmil. The order also prevents the destruction of records and grants the CFTC immediate access to financial documentation. A hearing is scheduled for July 26, 2017, to determine whether a preliminary injunction will be issued and the asset freeze will continue.

“The CFTC continues to be committed to rooting out and prosecuting binary options fraud in our markets,” stated James McDonald, CFTC’s Director of Enforcement. “As alleged, the fraudulent scheme here involved false claims of outsized profits, fake testimonials, and ‘guaranteed returns.’ This action should send a message to would-be fraudsters that the sort of conduct alleged here will not be tolerated.”

According to the complaint, Shah and Zilmil used deceptive advertising campaigns to attract customers and direct them to Scharf’s binary options websites, beginning as early as January 2014. The scheme allegedly promised substantial profits and falsely advertised returns to lure investors.

Source: CFTC.gov

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