An American businessman is suspected of using companies domiciled in Costa Rica to commit a scam for nearly $10 million. Jared J. Davis was arrested on June 5th at the Cleveland, Ohio, international airport after being charged with 19 counts for apparently scamming numerous investors who would have trusted a business he promoted.
According to the accusation raised by the US Department of Justice, Davis along with other top executives would have executed a fraudulent scheme of investment in binary options. The crimes would have been committed between 2012 and 2016.
A binary option is a concept in which the investor seeks a future payment based on the eventual price of a certain value or product. Sometimes they are traded in regulated exchanges that coincide with two investors: one that believes that the price of the asset will rise and the other one that believes it will fall. The exchange of options creates the collection of a commission, without a real interest in the result of the exchange.
Apparently, the business managed by Davis was not registered with the U.S. Securities and Exchange Commission or with the Commission on Commodity Futures Trading.
The investigation indicates that the foreigner would have used three companies to commit the crimes: OptionMint, OptionKing, and OptionQueen.
Davis, who acts as an intermediary, did not connect with investors in a legitimate exchange of binary options (…) He took the opposite position in each operation, similar to a casino or a sports betting site. Therefore, Davis only made money when the investors lost, which provided a built-in incentive to employ manipulative and deceptive practices, including the inability to reveal to victims that they were not paired with individual investors, by not disclosing to them that he could manipulate commercial conditions. He falsely told investors that their money was in an account,”
said a press release issued by the US Department of Justice.
Davis would have deceived his victims through a marketing campaign on the Internet and through call centers located in Costa Rica and the island of St. Marteen.