Jefferson County man charged with operating binary options fraud scheme
COLUMBUS, Ohio – A federal grand jury here has indicted William T. Caniff, Jr., 52, of Toronto, Ohio alleging multiple wire fraud and money laundering charges related to a binary options fraud scheme.
Binary options are a type of options contract in which the payout depended on the outcome of a yes/no proposition, typically related to whether the price of a particular asset would rise above or fall below a certain amount. A binary option did not give the holder the right to buy or sell the underlying asset. Instead, the holder received a pre-determined amount of money or nothing at all.
According to the indictment, it is alleged that Caniff and another individual formed Berkley Capital Management, LLC in January 2016 which purported to be in the business of trading binary options. Berkley Capital Management was the general partner for Bbot 1 LP (Bbot) which was created in January 2016 and Berkley II LP (Berkley II), which was created in August 2017. Bbot 1 LP and Berkley II LP were established as an investment pool that would offer participants the opportunity to trade binary options in a pool with other participants.
Caniff was the designated trader for Bbot and Berkley II. Caniff established bank accounts for Berkley Capital Management, Bbot 1, and Berkley II and had control of the bank accounts.
The indictment alleges that Caniff knowingly made and caused to be made materially false representations to investors to fraudulently obtain and retain money, including false representations about the risks involved with the investments, the expected and actual returns on investments, and the ways investor funds would be used and were used. Caniff created or caused to be created false documents in order to mislead investors, including false account statements.
The indictment also alleges that, even though Bbot and Berkley II received more than $4 million in funds from investors, Caniff caused only $85,000 of the funds to be invested through Nadex, an online binary options exchange. Caniff fraudulently misappropriated at least $2 million of investors’ funds for his own benefit and the benefit of a business partner, the indictment charges.
If convicted of wire fraud, Caniff faces a maximum sentence of 20 years in prison. Money laundering is punishable by up to ten years in prison.
Vipal J. Patel, Acting United States Attorney for the Southern District of Ohio and Bryant Jackson, Special Agent in Charge, Internal Revenue Service Criminal Investigation, Cincinnati Field Office, announced the charges.
This case is being prosecuted by Assistant United States Attorney Peter K. Glenn-Applegate and was investigated by special agents of IRS-Criminal Investigation.
An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.
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