A US citizen extradited from Costa Rica after defrauding investors in a financial scheme involving binary options, including through a Glen Cove company, pleaded guilty on Wednesday to conspiracy to commit wire fraud, according to the federal prosecutors.
The US Attorney’s Office for the Eastern District says David Butler, 52, faces up to 20 years in prison after he and his co-conspirators defrauded investors out of nearly $3 million between 2011 and 2016.
A binary option is a type of options contract in which payout depends entirely on the outcome of a yes or no proposition, according to the U.S. Securities and Exchange Commission, which has said it does not give the holder the right to buy or sell the underlying asset.
“A large portion of the binary options market operates through Internet-based trading platforms that may not comply with applicable U.S. regulatory requirements and may engage in illegal activity,” the SEC also said in an investor alert on its website.
Federal officials said Butler, who also has an address in Costa Rica and another in Kansas, was arrested in Costa Rica in April before his extradition to the United States last month.
Butler and his co-conspirators operated binary options companies in Glen Cove, Costa Rica and Kosovo that promised to pay American investors a predetermined profit based on specific results in the securities, currency and trading markets. other investments, prosecutors said Wednesday.
They promised that pre-determined profits would be based on the actual prices of securities, currencies or other investments at particular times, according to the US attorney’s office.
But then Butler and his co-conspirators used computer software that allowed their companies to manipulate the data associated with investors’ binary options so that the likelihood of investors making a profit favors the companies.
“Butler’s guilty plea demonstrates that even when crimes are committed thousands of miles beyond our country’s borders using the latest computer software, neither the alien nature nor the sophistication of the scheme will stop fraudsters from ‘to be brought to justice in an American courtroom,’ Eastern U.S. District Attorney Breon Peace said in a statement.
“Mr. Butler should be commended for taking responsibility for his actions. He will accept his sentence in the near future and looks forward to being reunited with his beloved wife and young daughter,” Butler’s attorney Anthony La said. Pinta at Newsday.
Court records show Butler is expected to be sentenced in December.