Receiver Seeks to Block Michael Shah’s Access to Citrades Frozen Assets
Kenneth Dante Murena, the appointed receiver in the binary options fraud case targeting Jason Scharf, told the court that he objects Michael Shah’s pursuit to use the money recovered from Zilmil to pay the heavy monetary penalty imposed by the CFTC.
Michael Shah was hit with over $22 million penalties for defrauding his American victims through numerous binary options websites, as well as violating the Commodity Exchange Act. Shah, who worked in tandem with call centers in Israel in return for large commissions, sent traffic to binary options sites including LBinary, TraderXP, Trade Rush, Banc de Binary and OptionRally.
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The CFTC originally asked the court to order the defendants to pay back over $75 million in fines and penalties.
Since the inception of the receivership, Murena has frozen more than $9 million and recovered nearly $6 million in funds held in accounts at multiple financial institutions and in an attorney’s trust account.
As explained in the receiver’s filing, he never agreed to allow the Israeli-American binary options marketer to receive credit for $9.3 million in frozen funds after he satisfies obligations towards the CFTC.
The filing also states that primary defendants in this case, online advertiser Michael Shah and his company Zilmil, Inc twisted written communications between Murena and Shah’s counsel about the allocation of the funds frozen by the receiver.
Specifically, Shah cited that “the Receiver indicated he would be open to a scenario where Dr. Shah could approach him in the future about satisfying any owing deficiency for his restitution” and would be “willing to have a reasonable dialogue that would culminate in notifying the Court that Dr. Shah’s restitution obligation would then be satisfied” which “in turn would also discharge receivership at least with respect to Dr. Shah.”
Binary options marketer was hit by $22M fine
Murena further revealed that Shah only quoted two words of his response to indicate that he agrees to allocate frozen funds solely to pay Shah’s penalties.
Instead, the receiver’s statement “I agree . . .” refers to an agreement to “(i) discuss Shah’s satisfying any deficiency in his restitution obligation, (ii) notify the court of Shah’s future satisfaction of that obligation, and (iii) the possibility of a resulting discharge of the receivership as to Shah.”
In addition, the receiver noted that the value of some frozen assets that weren’t transferred to the estate have changed due to market fluctuations, so he can’t precisely determine the amount that can be applied to pay Shah’s restitutions.
The penalties, in this case, were the largest the US authorities have imposed so far against binary options operators. The case unfolded in 2018, just as Finance Magnates exclusively reported on a major crackdown by the US regulators against the binary options industry.
The court papers show that the fraud scheme had been going on since at least 2013 through July 2017, and involved fraudulent ad campaigns that relied on other marketers.
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