Jacksonville, Florida resident Dr. Michael Shah and his company, Zilmil, Inc., have been hit with a massive financial penalty following a CFTC investigation into a large-scale internet fraud scheme involving off-exchange binary options. U.S. District Court Judge Timothy Corrigan entered a Consent Order on April 29, 2019, imposing a total of $22,854,289.69 in monetary sanctions.
The CFTC alleges that Shah and Zilmil engaged in fraudulent activities from June 2013 through July 10, 2017. They operated as “affiliate marketers,” attracting customers to unregistered binary options trading websites with promises of high returns through autotrading systems like “Millionaire Money Machine.” These systems, according to the Order, continued trading customer accounts until depleted.
Zilmil reportedly claimed to be a leading affiliate marketer in the binary options industry, sending over 60 million mass emails to over 1.4 million unique addresses within a seven-month period. These emails contained false and misleading statements, claiming customers could earn “millions” using the autotrading systems.
The defendants generated over $17.8 million in profits from the sale of these systems and commissions earned from the binary options websites. The court order mandates a restitution award of $9.3 million against Dr. Shah, alongside a $1 million civil monetary penalty. Zilmil is required to pay $8,554,289.69 in restitution, plus a $4 million penalty.
Approximately $9.2 million in cash and cash equivalents has been transferred to Kenneth Murena of Damian & Valori LLP in Miami, the court-appointed equity receiver overseeing the case. Further information regarding the receivership is available at www.BinaryOptionsReceivership.com. The case originated from the enforcement action CFTC v. Scharf, No. 3:17-cv-00774-TJC-MCR (M.D. Fla.).
CFTC Enforcement Division Director James McDonald emphasized the agency’s commitment to prosecuting fraud, particularly from those utilizing the anonymity of the internet. He warned “affiliate marketers” that they cannot evade detection and prosecution by hiding behind online platforms.
Source: CFTC.gov
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