Manitoba fraud investigator gets phone call from scammer

Jason Roy couldn't believe his luck when a phone scammer rang him up and offered an "amazing investment opportunity" from a so-called binary options trading firm.

Roy is the senior investigator at the Manitoba Securities Commission (MSC) and happens to sit on a national working group on combating binary options investment fraud.

In the last two months, Manitobans have reportedly lost nearly $160,000 to fraudulent binary options firms, according to the MSC, which suspects losses may be higher due to unreported cases.

Roy's robocall came on April 11 from a man who said he was with a company called Central Option.

Roy didn't hesitate to begin a conversation with the self-described expert on binary options trading, pretending to be a potential high-value investor while using the opportunity to gather evidence.

"The voice on the phone said that I was talking to the No. 1 binary options firm in Canada, Central Option, and to press 1 if I wanted more details and wanted to make some money. So I pressed 1, grabbed a note pad and went from there," Roy said.

"I thought it would have been a good opportunity to hear the actual sales pitch that I'd been asking so many victims to tell me. That's the one thing that I do when I'm speaking to one of the victims is, you know, 'What were you told?' And, 'How did the pitch work?' And so it was interesting to get that pitch for myself."

[He] started to pitch me on the exact sort of illegal investments I've been investigating for the past two years. It was a bit surreal.- Jason Roy

After confirming some details with an operator, Roy was told he would be connected to senior broker Sean Bessi.

"Bessi started to pitch me on the exact sort of illegal investments I've been investigating for the past two years. It was a bit surreal," Roy said, describing Bessi as the "closer."

"In a typical boiler room they usually will get you hooked and then transfer you over for someone to close the deal," he said, noting that Bessi went on to explain binary options, how they worked and how much money he could make.

Roy tried to string them along by asking as many questions as he could and gathering as much information as possible on how the scam is conducted. But keeping them busy also served another purpose, he said.

"The longer I can keep them on the phone … there's no other victims being created. If I'm tying up their time maybe I'm protecting a Manitoba investor," Roy said.

Bessi walked him through the company's website and Roy actually opened an account under an alias. The company gave him a $100 credit and helped him perform some trades to illustrate how the investments worked.

Bessi then asked Roy to open a real account and pressured him to fund the new account by providing his credit card number or wiring money to the company. He was given a bank account in the Republic of Georgia, which is located between Turkey and Russia.

That's when Roy said he'd have to think about it and would get back to them in a day or two.

Got phone number shut down

Although the sales pitch can sound convincing, there are obvious red flags. Roy said one of the people he spoke to told him the company was in Toronto, but when Roy said, "Oh, you're in Ontario," the man said "No, Toronto."

A few days later, Roy tried to set up a meeting at the company's alleged office in Toronto. He asked for everything from a street to a floor number then contacted the Ontario Securities Commission to confirm the company didn't exist in the building.

The longer I can keep them on the phone … there's no other victims being created. If I'm tying up their time maybe I'm protecting a Manitoba investor.- Jason Roy

He checked into the phone number, which was Canadian, but it turned out to be a VOIP (Voice Over Internet Protocol) number only registered in Canada. A VOIP, in more common terms, is a phone service over the internet rather than through a telecom company.

"We tracked that phone number through a number of different layers from Toronto to Pennsylvania, to Colorado to Latvia and it was eventually sold to somebody in Israel," Roy said.

He then contacted the web phone company and got the number shut down.

"You never know who you're talking to and, you know, with the internet and with the lengths that some of these individuals will go to, you can't trust these people on the phone that are making these pitches," Roy said.

"The best way to combat this sort of thing is to make sure who you're dealing with is registered [as a company in Canada]."

There's currently no binary options firms registered anywhere in Canada and security commissions have been putting out alert after alert in Manitoba and across the country in an attempt to raise that awareness to combat the fraud, he said.

"[But] there's literally hundreds of these firms, new ones popping up every day," Roy said. "It's a bit like Whack-A-Mole."

According to MSC, binary options are a sort of "wager" where investors bet on the performance of an underlying asset, often a currency, stock index, or share, usually in a short period of time — sometimes minutes or even seconds. The investor receives a predetermined payout or loses his wager. It's an all-or-nothing proposition.

In some instances, no actual trading takes place — the sales pitch is just a channel to steal money. Any request to send money offshore to an unregistered firm is a red flag for investment fraud, the MSC says.

The MSC advises all investors:

• Never send money to anyone you only know from an unsolicited phone call or email.
• Never give out sensitive personal information online or over the phone.
• Research an investment before making a commitment.
• Make sure the firm and individual you are dealing with are registered in Manitoba by checking their registration status here. 

Investors who believe they've been approached by an unregistered individual or firm are encouraged to contact MSC immediately at 1-855-FRAUD-MB to file a complaint or speak with an investigator.