Next, Davis, acting as a broker, elects not to connect investors to a legitimate binary options exchange that matches investors. Instead, Davis takes the opposing position on each trade, much like a casino or sports book.
The problem is that Davis only makes money when his investors lose money; a clear conflict of interest. In effect, Davis has a built-in incentive to employ manipulative and deceptive practices. Some of the practices include failing to disclose manipulative trading conditions and falsely portraying employees as “brokers” or “analysts.” Meanwhile, the employees have no relevant experience or qualifications. Other illegal practices include Davis spending victim deposits and falsely representing to victims “risk free,” “insured,” or “guaranteed” binary options trades if they deposit more money.
“This defendant portrayed himself as a legitimate investment broker when he was really no better than a simple con man,”said First Assistant U.S. Attorney David Sierleja. “He fleeced his victims out of $10 million by manipulating trading conditions, falsely telling investors his salespeople were financial analysts and using offshore companies to spend money as fast as it came in.”
