SEC v. Kai Christian Petersen; Gil Beserglik; Raz Beserglik; Shraga Holdings, Ltd.; and Lembex Global Investments, Ltd., No. 2:19-cv-08334, Central District of California (Sept. 30, 2019) — Complaint

COMPLAINT
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KENNETH W. DONNELLY (pro hac vice pending)
Email:  [email protected]

Securities and Exchange Commission
100 F. Street, N.E.
Washington, D.C. 20549
Telephone: (202) 551-4946
Facsimile: (202) 772-9282
LOCAL COUNSEL:
AMY J. LONGO (Cal Bar No. 198304)
Email: [email protected]

Securities and Exchange Commission
444 S. Flower Street, Suite 900
Los Angeles, California 90071
Telephone: (323) 965-3998
Facsimile: (213) 443-1904
Attorneys for Plaintiff
Securities and Exchange Commission
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
vs.
KAI CHRISTIAN PETERSEN; GIL
BESERGLIK; and RAZ BESERGLIK,
De
fendants,
S
HRAGA HOLDINGS, LTD. and
LEMBEX GLOBAL INVESTMENTS,
LTD.,
R
elief Defendants
Case No.
CO
MPLAINT FOR INJUNCTION
RELIEF AND OTHER REMEDIES
J
URY TRIAL REQUESTED
P
laintiff Securities and Exchange Commission (the “SEC”) alleges:
SUMMARY OF THE ACTION
1.This case involves the fraudulent and illegal offering and sale of more
than $100 million of securities called “binary options” from at least October 2014
through August 2017 (the “Relevant Period”).
1
9-cv-08334

COMPLAINT
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2. Kai Christian Petersen, Gil Beserglik and Raz Beserglik (collectively,
the “Defendants”) fraudulently offered and sold unregistered binary options through
their operation and control of three Internet-based brokers acting under the names: (a)
Bloombex Options (www.bloombex-options.com); (b) Morton Finance
(www.mortonfinance.com); and (c) Starling Capital (www.starlingcapital.com)
(collectively, the “Bloombex Brokers”).  The Bloombex Brokers functioned through
a combination of websites and marketing which mislead investors to invest in binary
options, overseas call centers which applied boiler room tactics to manipulate
investors into depositing substantial sums of money toward the purchase of binary
options, and international companies which collected investor funds into overseas
bank accounts and misappropriated investor funds.  Neither the websites, the brokers,
the call centers, nor the companies ever registered with the SEC as a broker or dealer
or were ever associated with a SEC-registered broker or dealer.
3. The Defendants, through their various operations, used a series of
deceptive devices and false and misleading statements in offering and selling binary
options securities.  The Bloombex Brokers operated professionally-designed
websites, complete with convincing trading platforms, to create the false impression
that investors were entrusting their money to legitimate financial firms.  The websites
falsely stated that professional brokers and financial experts would enable investors
to earn large profits by trading in binary options.  After investors opened an account,
the call centers then made materially false statements and engaged in other deceptive
acts to complete the ruse.  Call centers employees, for example, falsely held
themselves out as experienced brokers and advisors who would help investors to
trade profitably.  They told investors that their clients typically made large sums by
trading binary options, and told investors that they could withdraw their money (and
profits) at any time.  The call centers then encouraged investors to make large
deposits, oftentimes from credit cards and retirement and savings accounts.  They
also falsely told investors that they only made money when investors made money.

COMPLAINT
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4. Unbeknownst to investors, Defendants only earned money if investors
made large deposits and then lost their trades.  Defendants thus had but one goal in
mind for investors who opened accounts at their broker firms: to convince those
investors to continue depositing more and more cash into their accounts and cause
them to lose their money by trading binary options.  The Bloombex Brokers in fact
typically refused to permit investors to withdraw their money.  Despite the assurances
on the websites and the promises made by the call centers, investors depositing
money for trading typically lost all of their money.  And Defendants, the Bloombex
Brokers, and the call center employees all knew this would be the result.
5. Defendants also misappropriated millions of dollars of investor deposits
by, among other things, sending investor money to Shraga Holdings, Ltd. and
Lembex Global Investments, Ltd. (collectively the “Relief Defendants”), entities
owned and controlled by Gil Beserglik.  Gil Beserglik sent millions of these dollars to
his son, Raz Beserglik.  Defendants sent millions of dollars of investor money to
companies owned and controlled by Defendant Petersen as well.
6. As a result of this conduct, Defendants were able to procure millions of
dollars in investor deposits by fraud.  Defendants’ entities solicited tens of thousands
of investors in the United States, in particular; and thousands of investors in the
United States opened binary options trading accounts and deposited millions into
accounts controlled by Defendants.  Many U.S. investors lost hundreds of thousands
of dollars, and many lost their entire retirement and life’s savings.
7. As a result of this conduct, Defendants violated the antifraud provisions
of Sections 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b)
of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 77q(a) and 15
U.S.C. §§ 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. § 240.10b‒5].  Defendants
are liable directly for these violations and as control persons under Section 20(a) of
the Exchange Act [15 U.S.C. § 78t(a)].  Defendants’ offerings of binary options also
violated the registration provisions of Sections 5(a) and 5(c) of the Securities Act [15

COMPLAINT
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U.S.C. §§ 77e(a) and 77e(c)].  Defendants are also liable under Section 20(e) of the
Exchange Act [15 U.S.C. § 78t(e)] for aiding and abetting violations of Section 10(b)
of the Exchange Act (and Rule 10b-5) and Section 17(a) of the Securities Act.
8. To deter additional fraudulent activity, and recover fraudulently obtained
funds, the SEC seeks civil monetary penalties as well as remedial ancillary relief,
including Defendants’ disgorgement of ill-gotten gains, prejudgment interest on ill-
gotten gains, a civil injunctive order against further violations of the federal securities
laws, and other appropriate relief.  Unless restrained and enjoined by this Court,
Defendants are likely to continue to engage in the acts and practices alleged herein.
JURISDICTION AND VENUE
9. The SEC brings this action pursuant to Sections 20(b), 20(d)(1) and
22(a) of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d)(1) & 77v(a)] and Sections
21(d)(1), 21(d)(3)(A), 21(e) and 27(a) of the Exchange Act [15 U.S.C. §§ 78u(d)(1),
78u(d)(3)(A), 78u(e) & 78aa(a)].  Defendants, directly or indirectly, have made use of
the means or instrumentalities of interstate commerce, of the mails, or of the facilities
of a national securities exchange in connection with the transactions, acts, practices
and courses of business alleged in this Complaint, including by making use of the
Internet to offer securities and sending or receiving interstate email and participating
in interstate voice or video calls.  This Court has subject matter jurisdiction under
Section 22 of the Securities Act [15 U.S.C. § 77v], Sections 21(d) and 27 of the
Exchange Act [15 U.S.C.§§ 78u(d) and 78aa], and 28 U.S.C. § 1331.
10. Venue is proper in this district under Section 22(a) of the Securities Act
[15 U.S.C. § 77v(a)] and Section 27(a) of the Exchange Act [15 U.S.C. § 78aa(a)]
because certain of the transactions, acts, practices and courses of conduct constituting
violations of the federal securities laws occurred within this district.  Venue is also
proper in this district under 28 U.S.C. § 1391(c)(3), as each of the defendants resides
outside of the United States and therefore venue is proper in any district court.

COMPLAINT
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DEFENDANTS
11. Kai Christian Petersen, age 52, resides in Germany.  Along with Raz
and Gil Beserglik, Petersen owned and operated the Bloombex Brokers.  Petersen
also directly or indirectly owned and operated the three telephone call centers that
solicited investors to open binary options trading accounts.
12. Raz Beserglik, age 33, is a citizen of Israel.  Along with Petersen and
Gil Beserglik, Raz Beserglik owned and operated the Bloombex Brokers.  He also
was the Chief Executive Officer of the Bloombex Brokers’ main call center in Israel.
13. Defendant Gil Beserglik, age 63, is a citizen of Israel who resides in
Germany.  Along with Petersen and Raz Beserglik, Gil Beserglik owned and operated
the Bloombex Brokers.  Gil Beserglik is Raz Beserglik’s father.
RELIEF DEFENDANTS
14. Shraga Holdings, Ltd. (“Shraga”) is a company domiciled in the
British Virgin Islands and beneficially owned by Gil Beserglik.
15. Lembex Global Investments, Ltd. (“Lembex”) is a company domiciled
in the British Virgin Islands and beneficially owned by Gil Beserglik.
FACTS
I. BINARY OPTIONS GENERALLY
16. Binary options are financial instruments with a value tied to the price of
other financial assets, including securities or securities indices.  An investor chooses
whether the underlying asset’s price will be above or below a certain price at a
particular time (e.g., will Apple stock be above $100 per share at 1 p.m. on a
particular day).  The options are considered “binary” because they carry only two
possibilities: the investor whose prediction is correct makes money (typically
receiving back 170 to 180 percent of the amount invested); the investor whose
prediction is incorrect loses all or nearly all the investment.
17. Given this all-or-nothing payout structure, binary option contracts are
also sometimes referred to as “all-or-nothing options” or “fixed-return options.”

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Unlike other types of options, a binary option does not give the holder the right to
purchase or sell the underlying asset —instead, it is “cash settled.”
18. Binary options referencing a security or securities within the meaning of
Section 2(a)(1) of the Exchange Act [15 U.S.C. § 77b(a)(1)] and Section 3(a)(10) of
the Exchange Act [15 U.S.C. § 78c(a)(10)] are themselves “securities” within the
meaning of those provisions.
19. Binary option brokers like those operated by the Defendants derive their
revenue and profit from being the counterparty to losing customer trades and
retaining the customers’ losses.  In other words, binary option brokers have a keen
interest in having their customers make large deposits and then to lose that money
trading binary options.  Given the payout structure outlined above (e.g., 70 percent
return if correct and 100 percent loss if incorrect) and assuming a 50 percent win rate,
investors trading over a long enough period of time will lose all of their investment.
20. To survive long-term, binary option brokers like those owned and
operated by Defendants require three things: (i) that customers make deposits and
actively trade; (ii) that the trading is unsuccessful (i.e., customers lose money to the
broker); and (iii) a constant stream of new deposits from existing and new investors.
II. DEFENDANTS’ BINARY OPTION SCHEME
21. During the Relevant Period, Defendants owned and operated three
binary options brokers—(a) Bloombex Options, (b) Starling Capital, and (c) Morton
Finance—that offered and sold security-based binary options over the internet to
customers in the United States and around the world.
22. The Bloombex Brokers offered and sold binary options referencing
securities, including those of Amazon, Google, Nike, Coca Cola, Citi Group, Apple,
IBM, Microsoft and numerous other domestic and international companies.  They
also offered and sold binary options referencing domestic and international securities
indices, including the Nasdaq Composite and Dow Jones Industrial Average.

COMPLAINT
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23. The Bloombex Brokers operated from the following Internet domains,
which were accessible from the United States during the Relevant Period:
a) Bloombex Options (www.bloombex-options.com);
b) Morton Finance (www.mortonfinance.com); and
c) Starling Capital (www.starlingcapital.com).
24. The Bloombex Brokers functioned through a web of international
corporations controlled by the Defendants.  The Bloombex Brokers’ day-to-day
activities took place through three telephone call centers owned directly or indirectly
by Petersen: (a) TS Trading Services, GmbH (a German corporation); (b) MI6,
GmbH (a German corporation); and (c) Five Stones Monopoly Marketing, Ltd.
(“Five Stones” and an Israeli corporation) (collectively the “Call Centers”).  Petersen
managed the two German call centers, and Raz Beserglik managed the Israeli call
center, the largest of the three.  The Call Centers solicited investors to open and fund
binary options trading accounts, and encouraged investors to use those funds to trade
binary options, including binary options referencing securities.
25. Corporations owned and controlled by Gil Beserglik, through nominees,
opened bank accounts to receive and hold investor deposits, to make payments
associated with running the scam, and to transfer profits derived from the scheme to
Defendants.  These corporations—which are identified as the operators of the
Bloombex Brokers’ on iterations of the brokers’ websites—also technically acted as
the counterparty to investors’ binary option trades.  In other words, these companies
profited when investors lost money, owed investors’ money when the investors
placed winning trades, and were responsible for paying investors the amounts
reflected in the account balances shown on the Bloombex Brokers’ websites.
26.  The Bloombex Brokers, and Raz Beserglik in particular, found many
investors through affiliate marketers that they knew used false and misleading
advertising materials—including spam emails, infomercial-like videos, and
websites—to lure investors to the brokers’ websites.  The Bloombex Brokers paid the

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affiliate marketers a commission for every customer who opened and funded a binary
options trading account after viewing the affiliate marketer’s fraudulent
advertising.  Once the affiliate marketers fraudulently drew investors to the
Bloombex Brokers’ websites, the Bloombex Brokers used additional deceptive and
misleading tactics to obtain as much of the investors’ money as possible.
A. Deceptive Websites
27. Opening and trading in an account at the Bloombex Brokers occurred
through their websites.  The trading engine embedded on the websites created the
appearance of actual market-oriented options trading that looked similar to what an
investor would see on a legitimate broker’s website.  The trading engine allowed
investors to place “trades,” see “live”   market quotations, make deposits, and track
their trades and balances.  The trading engine referred to binary options positions as
“assets” or “investments” and, in the case of securities-based options, showed the
corporate logos of the companies the positions referenced.
28. But investors were not purchasing real financial assets from any real
market and were not trading with other investors.  Instead, investors were actually
trading against the Bloombex Brokers, who profited when the investors lost their
trades.  The so-called trades and investments reflected on the investors on-line
account statements were simply book entries reflecting positions facing the
Bloombex Brokers.  Bloombex Brokers offered, recommended, and sold binary
options to investors without disclosing that the brokers profited when investors lost
money trading the binary options they offered, recommended, and sold.
29. Additionally, information on certain pages within the websites that
showed an investor his or her account balances falsely stated that investor funds were
held in segregated accounts.  The Bloombex-Options website further stated:
“Client’s funds are held in a segregated account. Funds are used only for
trading options through our website upon client’s instructions and are never
used for any other cause. Our liabilities and exposures are professionally
handled and we guarantee payouts of your profits based on our terms”

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In reality, investors’ deposits were comingled and used to pay the Bloombex Brokers’
expenses, and Bloombex Brokers seldom allowed “payouts.”
30. The investors’ purported account balances did not reflect segregated
accounts that could be withdrawn.  Instead, and unbeknownst to investors, these
balances reflected underfunded financial obligations of the Bloombex Brokers.  The
Bloombex Brokers did not have the funds necessary to cover the liabilities they owed
to investors because, contrary to the disclosure above, the Bloombex Brokers used
investor money to cover their expenses.  These expenses included referral fees paid to
affiliate marketers, fees to the Bloombex Brokers platform providers, commissions
for Call Center employees, website hosting and maintenance, and credit card
processing fees.  The undisclosed disparity between the liabilities the Bloombex
Brokers owed to investors and their actual bank account balances revealed that the
Bloombex Brokers were unable to return funds to all of their customers.
31. The Bloombex Brokers’ websites also falsely stated that trading binary
options would be profitable, that the Bloombex Brokers were there to help, and that
they wanted investors to succeed in making money.  For example, at various times
the websites made the following misrepresentations:
Bloombex Options offers access to one of the world’s most profitable
trading solutions, accompanied by a dedicated team of financial experts
ready to assist you at every step on your way to success.
* * *
Trading at Starling Capital is as simple as it can be, thanks to one of the
most intuitive platforms on the market and a team of Account Managers
eager and available to guide you through the best strategies and the most
profitable techniques to get your share of the Financial Markets.
* * *
Over the years Morton Finance has enriched the life of thousands of
investors, empowering them to achieve their financial goals. We don’t
just serve customers – we create power traders.  Interested?

COMPLAINT
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32. These statements were false and misleading because investors depositing
funds with the Bloombex Brokers generally lost their money, the call center
employees generally had no financial training or background, and the Bloombex
Brokers actually wanted investors to lose their binary options trades.
B. Fraudulent Call Center Operations
33. Shortly after registering their binary options trading accounts on one of
the Bloombex Brokers’ websites, customers typically heard from the Call Centers,
which operated as boiler rooms where sales persons used high-pressure sales tactics
to offer and sell speculative and fraudulent binary options securities to investors.  Call
Center employees were incentivized to fraudulently induce investors to deposit
additional funds to trade binary options and to prevent withdrawals because their
commissions were based on the amount of net deposits they obtained from investors.
34. The Call Centers—which at their height collectively employed as many
as 200 people—and their employees were tasked with convincing investors to deposit
as much money as possible into their trading accounts, getting investors to trade, and
eventually helping investors lose those funds.  Employees received training on how to
deceive investors from written scripts riddled with false and misleading statements,
verbal instructions, and examples of recorded calls with in which salespersons made
false and misleading statements to persuade investors to open trading accounts.
These materials were intended to help salespersons build rapport with clients, learn
about the size and location of their assets, and convince them to move those assets—
including retirement accounts—into their accounts with the Bloombex Brokers.
35. Call Center managers who reported to Petersen or Raz Beserglik closely
monitored the salesforce’s efforts.  Some managers wore headsets to monitor calls
and advised salespersons in real-time how to overcome investors’ resistance to
depositing money.  In some cases the managers instructed salespersons to hang up
when an investor was being difficult.  Managers held meetings before shifts to
discuss recent tactics that successfully resulted in new deposits.  The managers also

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set and monitored weekly deposit targets and required some salespersons to stay at
work until meeting those targets.
36. Investors typically deposited money into their Bloombex Brokers
accounts by credit card and bank wire.  Credit card payments were forwarded to bank
accounts held by companies created by Gil Beserglik named Bloombex, Ltd.
(incorporated in Dominica, “Bloombex Dominica”) and Chromex Capital, Ltd.
(“Chromex”).  The Call Centers typically instructed investors to send bank wires to
the Bloombex Dominica and Chromex accounts.  Typically, the Bloombex Dominica
account received deposits for Bloombex Options and the Chromex account received
deposits for Starling Capital and Morton Finance.
i. The Conversion Desk
37. The first calls to investors typically came from the Call Centers’
“conversion desk” (“Conversion”), the group of employees responsible for
convincing new customers to make an initial deposit.  Conversion employees
routinely initiated up to 200 calls per day, reaching 30-60 customers, and generally
resulting in three to eight funded accounts daily.
38. From the outset, these sales calls were replete with false and misleading
statements.  As directed or endorsed by Petersen and Raz Beserglik, the salesforce
used aliases instead of their real names.  Indeed, many employees in the Call Centers
did not even know the real names of their coworkers.
39. Call Center employees were also directed to fabricate   their titles,
choosing ones normally associated with legitimate trading and the provision of
financial advice.  For example, even though they typically had little or no relevant
experience, salespersons called themselves “Senior Brokers,” “Head Brokers,”
“Analysts,” “Senior Trading Advisors” or “Senior Financial Advisors.”
40. Salespersons falsely told customers that they had years of trading
experience.  Additionally, with Petersen and Raz Beserglik’s knowledge and at their
direction, salespersons lied about their locations, claiming, for example, they were

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calling from Stockholm or London, instead of their actual locations in Germany or
Israel.  The Call Centers used voice-over-Internet-protocol (VOIP) phones and
telephone numbers local to the United Kingdom to convey the impression that the
salesforce was located in that country.
41. In initial calls to customers, Conversion also claimed that to generate
meaningful profits investors needed to deposit more than the minimum amount of
$250-$500.  Conversion often pushed investors to make initial deposits of $2,000 or
more with statements like “the more you invest the more profits you can make.”
ii. The Retention Desk
42. Once investors made their initial deposit, the Call Centers’ “retention
desk” salespersons (“Retention”) assumed the relationship.  Retention—which also
used fabricated titles like “Broker” and “Financial Adviser”—continued the practice
of lying about their real names, relevant business experience, and location.
43. The Conversion and Retention salesforce also employed a “bait and
switch” tactic with investors who opened their accounts after watching fraudulent
affiliate marketing videos and expected to profitably trade using computer software.
The software the campaigns advertised did not exist.  Instead, affiliate marketers used
the promise of this nonexistent software as a lure to trick investors into visiting the
Bloombex Brokers’ websites and registering a binary options trading account.
44. As described below, Raz Beserglik worked directly with affiliate
marketers using these types of fraudulent materials “make money funnels” to lure
investors to Bloombex Brokers’ websites.  Raz Bererglik knew or recklessly failed to
know that these marketing materials were false and misleading.  Once investors
registered, training materials authored by Kai Petersen instructed salespersons to urge
investors not to rely on the advertised software, but to instead let the Call Centers’
supposed “Brokers” and “Financial Advisers” guide their binary options trading.
45. The salespersons often claimed the software did not work that well (or at
all) and that investors had a greater chance of trading successfully working with the

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Bloombex Brokers’ traders.  For example, one script authored, edited or approved by
Petersen advised salespersons to “Immediately move [investors] away from the bot.,”
Another instructed them to make the following false and misleading statements:
“Software: Do you have any experience using this particular software? The
reason I ask is because in my opinion, there is no such thing as a successful
algorithm-based software for the financial market... And there will never be
one. Understand _____?

Listen _____, it’s not my job to talk bad about third party software, but they
haven’t worked in well over a year unless you have experience in the market
and you know exactly when to turn it on and off. Does that make sense _____?

This is why I’m here; to help my clients become successful. Trading Binary
Options requires strategic timing, knowing when to trade and when not to
trade. I mean if you’re a surfer and there are no waves, you won’t go surfing,
right?

The problem with the software is that it doesn’t know when something is going
on (ex: Brexit, NFP, elections) so it just keeps on placing trades all day and
that’s what we would call unnecessary risk, wouldn’t you agree?”

46. On-going personal interaction gave Retention—who were also
compensated based on investor deposits and penalized for investor withdrawals—
repeated opportunities to earn the investors’ trust and solicit additional deposits.
47. Retention also used additional manipulative and deceptive practices and
additional false and misleading statements to elicit further deposits.
(a) False and Misleading Statements to Customers
48. Alignment of Interest.  Retention told investors, in substance, “We only
make money when you make money.”  One script authored, edited, or approved by
Petersen instructed salespersons to falsely state:
Senior Account Managers at Morton Finance/ Starling Capital work on
something called ROI. Are you familiar with the term?  No?  ROI means
Return On Investment.  What this means is that I can see profits in my
paycheck ONLY when you withdraw profits to your personal bank
account or your credit card [. . . .]  Do you understand?  Can you see
why this is good for you?  Because what this means is that I need to

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support you making profits for me to get paid at the end of the month.
Both our interests are fully aligned and we work as a team.

49. In reality, Retention employees profited from investor losses, not profits.
In addition, their commissions were based on customers’ net deposits, which
encouraged salespersons to use deceptive tactics to obtain the largest deposits
possible and discourage or prevent customers from making withdrawals.  This
statement also conflicts with the Call Centers’ policy to provide investors bonuses
(described below) to lock up their funds to prevent withdrawals.
50. Withdrawals.  Retention falsely told investors that they could withdraw
funds any time from their accounts.  The Bloombex Brokers’ websites also described
the ease of withdrawing funds.  For example, the Bloombex-Options website stated:
“Your withdrawals can be received just as efficiently.  You can transfer the funds into
your account in the currency that you choose, and in the secured method which is
most convenient for you.  Your funds will be received in a short time period.”  The
Morton Finance website stated “Withdrawals can be made fast and easy.”
51. In fact, the Call Centers rarely allowed investors to withdraw funds.
Employees used numerous tricks—including recommending that customers enter into
long-term trades and accept bonuses (described below)—to lock up investor funds
and prevent withdrawals.  In other instances, Call Center employees simply ignored
withdrawal requests or lied about why withdrawals were not received as promised.
Only Raz Beserglik and Kai Petersen could approve withdrawal requests.
52. Promises of profitable trades.  Retention typically urged investors to
liquidate their other financial accounts, including retirement accounts, because they
could achieve greater returns trading binary options.  In one script, sales persons were
advised to state: “Most of my clients are withdrawing profits of anywhere between
$5,000 and $9,000 every month.”  Another script told sales persons to say “Don't
worry _____, 75% of my clients had no trading experience when they started and
now they are ALL trading successfully.”  Such statements lacked any basis, as

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salespersons knew that investors usually lost money trading and typically could not
withdraw funds from their accounts.
53. Elevation to “VIP” status.  Retention routinely told investors that if they
increased their total deposits—usually to the five-  and six-figure range —they would
achieve “VIP,” “gold,” “platinum,” or some similarly-named elevated status that
provided access to more experienced brokers, larger bonuses and payouts, and access
to special VIP-only opportunities.  The Bloombex Brokers’ websites also described
these tiers and so-called benefits.  In a recorded call, a salesman used this tactic and
told one investor that increased deposits would qualify him to join a select group of
traders making $8,000-$10,000 per month.  In reality, there were no real benefits to
the so-called “VIP” status and it was merely a trick to lure more and larger deposits.
(b) Deceptive tactics and manipulative devices designed to
obtain additional investor deposits
54. In addition to making false and misleading statements, Retention used
deceptive tactics that tricked customers into depositing additional funds.
55. Confidence Trades and Withdrawals.  The Bloomberg Brokers
increased the odds of customers winning initial small-dollar trades to boost their
confidence (including through manipulation of risk settings, as described below) and
convince them to deposit more money to make larger trades.  The Bloombex Brokers
also permitted some investors to make relatively small withdrawals to boost their
confidence that they could later withdraw larger dollar amounts.  If investors asked
for sizable withdrawals or said they had no more money to deposit, the Bloombex
Brokers typically refused further withdrawal requests.
56. Contrived Urgency.  To create a sense of urgency and encourage
investors to make additional deposits, salespersons routinely told investors of
supposed imminent market events that would result in profitable trading but only if
they acted immediately.  Bloombex Brokers’ training materials stated “you need to
create urgency at the beginning of the call” and defined “urgency” as “giving the

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client a reason to proceed today and not tomorrow.”  Consistent with this training,
salespersons cited upcoming earnings announcements by well-known public
companies such as Apple or Amazon or expected public disclosures of economic
news, such as the jobless rate.  But the salesforce knew nothing about how such
events would impact stock prices.  Instead, citing such events was simply a high-
pressure sales tactic to trick customers to make the additional deposits necessary to
take advantage of a contrived trading opportunity.
57. Bonuses.  To encourage large deposits, salespersons frequently
promised investors a matching “bonus” for every dollar deposited, e.g., investors who
accepted a “bonus” and deposited $50,000 would see an additional $50,000 “bonus”
deposited in their accounts.  Indeed, the “VIP” programs described above often touted
such bonuses (and other schemes akin to bonuses like “Risk Free Trades”).  Investors
were often not told, however, that bonuses came with attached conditions that made it
all but impossible to withdraw any of their funds, including non-bonus money.
58. The Bloombex Brokers required investors receiving a bonus to conduct
trades equivalent to many multiples of the bonus amount—e.g., 27 times.   Under this
multiple, an investor who deposited $50,000  and received a $50,000 bonus would
need to conduct trades valued at $1,350,000 before he or she could withdraw any
funds, including funds previously deposited that did not have any bonus attached.
The bonuses locked up investors’ funds, forcing them to trade large amounts to make
their account liquid.  Given the payouts on winning and losing binary options trades,
trading profitably at such volumes was extremely difficult.
59. Scripts discussing bonuses omitted any discussion of these withdrawal
restrictions.  For example, one script authored or edited by Petersen stated as follows:
Great, __________; that’s why I want to set you up with a program we
have for beginners such as yourself. It’s called the Protected Capital
Program. Do you know what it means? No? but the name kind of gives it
away, doesn’t it?

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Let me ask you this __________: when you have money in your bank
account, what kind of interest are you receiving? Yeah, it’s pretty sad,
isn’t it? Your money is sitting in the bank collecting DUST for you,
while your bank makes DOUBLE-DIGIT PROFITS off YOUR
MONEY!!! The difference between your bank and Morton Finance/
Starling Capital is that, as a Private Investment Institute (never use the
word bank) you can enjoy what we call “Beginner’s Benefits”. The
immediate interest/ bonus we give you is 100% (... Pause...) That’s a
dollar-for-dollar match!!! Just so you understand me perfectly, when you
start with $10,000, Morton Finance/ Starling Capital will
IMMEDIATELY add $10,000 to your account as interest/ bonus.
Now, in the protected capital program that we’re talking about, for the
first 30 days, trades will only be placed using the interest/ bonus money
to show you what kind of results we can obtain together. Basically,
we’re putting you in a WIN-WIN situation because the trading will
happen with OUR money, showing you some amazing result, all the
while leaving YOUR money completely unexposed!
You might be asking yourself “why” Morton Finance/ Starling Capital
would do such a thing as give you an additional 10K. It’s not because we
are nice... It’s just good business sense. We understand that in this
business, the most important thing is TRUST. And we need to build your
trust. We are SO comfortable in our ability to provide profitable trades
that we are willing to put you in this WIN_WIN situation for the first 30
days. Like this, you can see with your own eyes how good we are, and
how much profit we can generate together.
Once you see the results, and the profits we generate here, that’s when we will
have gained your trust and you will become one of the happy, profitable long-
term customers of our tight-knit family.
60. The Bloombex Brokers had the bonus conditions on their website; but,
these disclosures were typically deeply embedded and only available if investors
clicked the correct link and read long boilerplate disclosures.  The Bloombex Brokers
also sometimes disclosed these bonus-withdrawal rules in written bonus agreements
provided to investors.  But concealing the bonus-withdrawal rules from investors was
a deliberate tactic discussed in daily strategy sessions with management.  Retention
often failed to highlight or otherwise mention these rules to customers.  Consistent
with the tone of the scripts above, other investors were told by Call Center employees

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— e.g., the customers’ so-called Brokers or Financial Advisers — not to worry about
the turnover requirement because it would be easy to meet.  Email and banner
advertisements touting the bonuses also did not disclose these conditions.  And as
discussed above, far from explaining these bonus withdrawal rules, salespersons often
told investors that they could withdraw funds at any time.
61. Risk Settings.  The Bloombex Brokers could manipulate the odds that
particular trades would be profitable.  They put certain customers on a lower risk
setting (which made winning trade more likely) to induce them to make additional
deposits.  Once an investor stopped making deposits or won large amounts in trading,
the brokers put the investor on a higher risk setting, making it more difficult to profit.
62. For example, in one email from July 2015, a Bloombex Options Call
Center representative emailed SpotOption, its platform provider, saying: “Client won
last 10 trades in a row in the 60 seconds platform.  Please put this client on a high
risk.”  In another instance, a representative wrote: “Please put trader on high risk,
started winning big ladder trades.”  In some instances, Raz Beserglik (using his alias
“Jack Besser”) personally requested SpotOption to  change investors’ risk setting.
63. The use of risk settings is especially manipulative when investors’ funds
are locked up as a result of bonuses or a failure to honor withdrawals.  For example,
investors could accept the bonus under favorable risk settings and, after their funds
were locked up, could then be unknowingly forced to trade under higher risk settings
that made profitable trading all but impossible.
64. KYC:  Under the guise of “know-your-customer” diligence, salespersons
were trained to ask investors about their financial goals.  They asked questions like:
Did the investor seek to earn enough money from trading binary options to cover a
mortgage payment, or pay off credit card debt or other loans or help pay down a
deposit for a new home?  Such questions—seemingly for the customers’ benefit—
were actually designed to have the customer reveal their financial condition and the
dollar amount and location of additional funds that salespersons then targeted.  The

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Bloombex Brokers also used KYC rules to justify requiring customers to submit
photos of their credit cards, drivers’ licenses, and a utility bill.  In truth, they actually
sought these documents to dispute credit-card chargebacks and fraud allegations.
65. Credit Loop:  Salespersons also employed a so-called “credit card loop”
scheme, where they encouraged investors to borrow the maximum amount on their
credit cards for short-term binary options trading.  Under the “loop,” investors were
supposed to withdraw their profits and pay off the credit card debt before the next
billing cycle.  Salespersons pitched the “loop” as essentially an interest-free loan to
fund binary options trading.  When the time to repay the credit cards arose, however,
the Bloombex Brokers typically refused to permit the investor to withdraw funds.
(c) The “Recovery” Department
66. Once investors lost the money they deposited with the Conversion and
Retention desks, they were turned over to the “Recovery” department, whose goal
was to convince investors to make additional deposits.
67.  Training materials instructed Recovery agents to give investors hope
they could recover their losses by working with new people at the Bloombex Brokers.
The materials directed Recovery agents to call investors and say things like “I am
calling today because I have a chance to recover your account.”  They were told to
introduce themselves as a “higher authority,” such as a manager or head of
department.  The training materials further instructed Recovery agents to express
disappointment with the investor’s prior results or account condition, adding: “The
key is to always explain how this time will be different.”
68. Statements made by Recovery agents were false and misleading, as
Recovery made no genuine effort to recover lost investor funds — indeed it was not
in their interest to do so.  Instead, the Recovery pitch was merely another deceptive
device aimed at stealing whatever money investors had left.
69. The false and misleading statements and deceptive acts employed by the
salesforce in Conversion, Retention and Recovery occurred with the full knowledge

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of, and at the direction of, Petersen and Raz Beserglik.  Several scripts provided to
Bloombex Brokers’ Call Center employees-in-training—including scripts authored,
edited or approved by Petersen and/or Raz Beserglik—contained statements similar
to those described above.  The salesforce made misrepresentations that closely
followed the scripts and training materials.
70. Petersen and Raz Beserglik each supervised the Call Center locations,
interviewed and hired employees, and were responsible for seeing that employees
were paid (in their actual names).  Petersen regularly reviewed and edited documents
reflecting employees’ names and aliases.  Raz Beserglik regularly received email
messages reflecting the use of fictitious names and titles.  Raz Beserglik himself used
a fake name when conducting the business of the Bloombex Brokers.
C. A Case Study: A U.S. Retiree
71. The Bloombex Brokers used recorded telephone calls to train Call
Center employees how to successfully solicit funds from investors.  Recorded calls
between a particular retiree in the United States (“Investor A”) and a Bloombex
Options salesman (“Employee A”) illustrate the nature of the Call Centers’ egregious
misconduct and the type of calls that were used to train Call Center employees.
72. Investor A had already deposited $2,000 in her binary options account
when Employee A contacted her in about August 2015.  In a series of phone calls
over the next approximately six months, through at least February 2016, Employee A
persistently used fraudulent statements and deceptive devices, consistent with the
Bloombex Brokers’ training materials, to solicit additional deposits from Investor A.
73.   He falsely told Investor A that he worked in Bloombex Options’
London office and was a “financial adviser” for more than 12 years.  He falsely said
he only trades on “major” economic events, and described the next week’s scheduled
announcement of “core retail sales” as “one of the largest events in the U.S.
economy.”  He falsely told Investor A that their interests were aligned, saying “I need
my traders to be successful for me to make my money.”  Employee A falsely told

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Investor A that people at Bloombex Options were making “50 percent a month,” but
that he opted to be more conservative and instead offered Investor A a 15-20 percent
profit per month.
74. Employee A recommended the “credit card loop” scheme, in which
Investor A would borrow money on her credit card accounts to conduct short-term
binary options trading.  Employee A also stated that Investor A would receive a
dollar-for-dollar bonus for new deposits without disclosing the attached conditions.
75. Employee A also schemed to learn about Investor A’s assets, asking if
she had a “magic number target” for trading or “any major debts that we need to clear
off the bat?”  Investor A eventually disclosed that she had no debt and approximately
$600,000-$700,000 in savings.  Investor A emphasized that she did not want to invest
all of her savings and that she was seeking to generate about $300,000 in profits to
cover the cost of building a new home.
76. Employee A repeatedly told Investor A she needed to deposit more
funds to reach “VIP level,” falsely saying that such status would provide “class A
signals on the top-tier trades.”  Employee A relentlessly pushed Investor A to deposit
money, saying she was “close” to attaining VIP status and that she could generate
more profits from trading binary options than she was earning in other accounts.
77. At one point, Employee A sternly directed Investor A to liquidate an
insurance fund and transfer those funds to her binary options account.  When Investor
A said she needed to withdraw $100,000 from her account to cover medical expenses,
Employee A turned the tables and instead convinced Investor A to deposit still
additional money that would generate “a guaranteed return of 62 percent,” which
Investor A could then use to pay those expenses.
78. At Employee A’s urging, Investor A deposited more than $600,000 with
Bloombex Options.  She lost most or all of these funds.

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D. The Defendants Owned and Controlled the Bloombex Brokers
79. Defendants are longtime business associates who shared ownership and
control of the Bloombex Brokers.  Call Center employees understood that Petersen,
Gil and Raz Beserglik owned the Bloombex Brokers.  The employees’ impression is
consistent with the brokers’ actual operation and control.
80. Each Defendant took an active role in operating the Bloombex Brokers.
For example, Petersen and the Besergliks led regular in-person or telephonic
meetings to discuss the operation of the Bloombex Brokers.  Among other things,
they discussed the operation of the Call Centers, the creation of new brokers/brands,
opening bank accounts with apparent nominees, contracting with platform providers,
sales and marketing activities, and finances.  Petersen and Gil Beserglik also each
loaned money to one or more of the Bloombex Brokers.
i. Gil Beserglik
81. Gil Beserglik admitted he was an owner of Bloombex Options (one of
the Bloombex Brokers).  When Gil Beserglik opened a bank account for Shraga on or
about October 15, 2015, he told the bank “[h]e now invests in real estate and is the
owner of Bloombex Options with his son Raz Beserglik.”  Under the heading “Main
business activity” on the account application, it reads “Gil Beserglick [sic] is a
partner of Bloombex options [sic].”  The application’s personal information form,
under the heading “Business activity for the owner,” identifies his business as
“Bloombex Options www.bloombex.options.com”; his “position/function” as “co-
owner with his son”; and the “Ownership structure” as “Family business with son.”
In the same document, Gil Beserglik also identified Raz Besrglik as the Chief
Executive Officer of Bloombex Options.
82. When the bank updated its documentation in early 2016, it continued to
reflect Gil Beserglik’s ownership of Bloombex Options.  It also listed the source of
funds going into the account as “From Business” – i.e. Bloombex Options.  Around
this same time, as reflected on the documentation, Gil Beserglik told the bank he

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“also owns ‘Chromex’ a sister company of Bloombex (same employees working for
both companies)”.  Chromex referred to Chromex Capital, Ltd., (“Chromex”) a
company incorporated in the British Virgin Islands that operated the bank accounts
used by Starling Capital and Morton Finance.
83. When Gil Beserglik opened the Shraga account in 2015, he informed the
bank that he planned to fund the account with a $2 million transfer from accounts he
controlled.  At Gil Beserglik’s direction, Bloombex Dominica then sent $2 million to
of Bloombex Brokers investor funds to Shraga.  At other times, Beserglik directed
Bloombex Dominica to transfer additional investor funds to the Shraga account and
another account he owned in the name of Lembex.
84. Beginning in 2016, Beserglik also directed Chromex to send investor
funds to the Shraga account.
85. Overall, during the Relevant Period, Gil Beserglik caused the Bloombex
Dominica and Chromex accounts to transfer approximately $11 million in investor
funds to his Shraga and Lembex accounts.  This $11 million came from investor
deposits for trading binary options with the Bloombex Brokers.
86. To hide his involvement in Bloombex Brokers, Gil Beserglik controlled
Bloombex Dominica and Chromex through a straw person or nominee (“Nominee
A”) who was a family relative.  At Gil Beserglik’s direction, Nominee A appears as
the initial shareholder and Director of both companies.  At Gil Beserglik’s direction,
Nominee A also opened the bank accounts in these companies’ names that accepted
investor deposits for Bloombex Brokers.  Gil Beserglik, however, directly or
indirectly controlled the bank accounts opened by both companies.
87. In June 2018, after becoming aware of an SEC investigation and in a
failed attempt to hide the admissions in the bank documents completed in 2015 and
2016 discussed above, Gil Beserglik asked the bank to replace that documentation
with new and fraudulent documentation indicating that he sold Bloombex Options in

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2014.  In doing so, Beserglik attempted to mislead the SEC’s staff and to obstruct its
investigation.
88. Gil Beserglik formed a company in the British Virgin Islands also named
Bloombex, Ltd. (“Bloombex BVI”) through which he signed the contracts and
contract amendments with SpotOption to provide the trading platform on which
Bloombex Options operated.  The SpotOption platform was a critical component of
the Bloombex Options website and necessary to its offer and sale of binary options.
89. Gil Beserglik also helped run the Call Centers.  He is listed as
“Management” and with a job title “Advisor” on call center telephone lists.  Payroll
records from TS Trading Services GmbH (one of the German call centers) show that
Gil Beserglik was among its highest paid employees.  Further, Gil Beserglik’s 2017
resume says he was a “Registered Manager” for TS Trading Service since 2009.
90. Gil Beserglik frequently visited the German call center offices.  During
those visits, Petersen treated him like an owner, instructing salespersons to “look
busy.”  While in Germany, Gil Beserglik also monitored activity at Five Stones, the
Israel-based call center.  For example, Gil Beserglik used his mobile phone to view
activity at Five Stones.  When he saw something that he did not like, he telephoned
the call center to correct the behavior or discipline the offending employee(s).
ii. Kai Petersen

91. Petersen was also an owner of the Bloombex Options broker.  In 2015,
he signed documents in support of an application for credit card processing on which
he represented that he owned the website www.bloombex-options.com and that he
had full control and authorization over the website content.  This application said that
“Bloombex Options is the on-line trading site for Bloombex LTD.”  The Bloombex
Ltd. referred to in the application was Cyprus entity owned by Petersen with the same
name as the other companies directly or indirectly owned by Gil Beserglik
(Bloombex BVI and Bloombex Dominica).

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92. Petersen also directly or indirectly (through intermediary corporations)
owned each of the three Call Centers and directed or approved of their fraudulent
conduct in inducing customers to deposit funds to trade binary options.   When
creating and issuing invoices to Bloombex Dominica and Chromex for services
performed at the German call centers, Petersen typically listed himself as “Managing
Director” of the relevant call center.  Bloombex Dominica and Chromex each sent
millions of dollars of investor money to the call centers owned by Petersen.
93. Petersen maintained an office in the German call centers and regularly
met with trading floor managers.  Petersen was only one of two people permitted to
authorize client withdrawals from the Bloombex Brokers (Raz Beserglik was the
other).  Petersen also interviewed and hired employees for the German call centers.
He often sought to employ native English speakers to serve English-speaking
countries like the United States.
94. Petersen authored or edited numerous spreadsheets reflecting
salespersons’ real and fake names at all three Call Centers.  These spreadsheets
confirm that Petersen knew and approved of the Call Centers’ use of false names
when talking to investors.  Petersen also created or edited Bloombex Brokers’
training materials, including scripts containing false and misleading statements as
described above.  For example, a script Petersen authored or edited instructed Call
Center employees to make the following false and misleading statements:
o My name is __________, and I’m a senior account manager here at
Morton Finance/ Starling Capital. My job here is to set financial
goals with you on your account so we can support you to achieve
these profits on a regular basis.

o Most of my clients are withdrawing profits of anywhere between
$5,000 and $9,000 every month. So, it seems that you’re looking to
make about what most of my clients are making. Does that sound
right? Perfect!

o Both our interests are fully aligned and we work as a team.

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95. Another script Petersen authored or edited, instructed Call Center
employees to make the following false and misleading statements:
o Don’t worry _____, 75% of my clients had no trading experience
when they started and now they are ALL trading successfully.

o This is why I’m here; to help my clients become successful.

96. Yet another script and list of “Best Practices” that Petersen authored or
edited, instructed employees to make the following false and misleading statements:
o “We make the profit out of your successful trades. When you make a
successful trade, you get 80 % of the profits, we get a commission of
20 %”with a matching bonus”

o “You are reserving yourself a seat and a call from one of our financial
advisors”

o “I don’t recommend clients just to start with the minimum as they
will be making less money”

o “My responsibility is simply to activate your account and assign you
to a senior broker: The more you invest, the better senior broker I can
assign to you.  They will help you to develop a trade [sic] plan.”

97. These and other similar statements were false and misleading because,
inter alia, the Call Centers jobs did not involve helping investors profit; virtually no
clients (if any) withdrew meaningful profits from any of the Bloombex Brokers; and
the interests of the Bloombex Brokers and investors conflicted and were not aligned.
98. The Best Practices portion of one Petersen script gave the following
instructions consistent with the boiler-room-like atmosphere at the Call Centers:
o “Don’t waste any time on the small fishes”

o “Immediately move away from the bot [the software systems
fraudulently advertised by affiliate marketing campaigns]”

o “Never get a ‘no’  don’t ask closed questions”

o “When a client enquires about the music, ‘manager’s birthday’ or
‘client just made 50.000 EUR’”

o “You need to create urgency at the beginning at the call”

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The egregiousness of the instructions in these examples confirms that Petersen knew
(or was reckless in not knowing) and approved of the Call Centers’ use of false and
misleading statements and deceptive devices when speaking with investors.
iii.  Raz Beserglik
99. Raz Beserglik also owned the Bloombex Brokers and served as the Chief
Executive Officer of the Israeli call center, Five Stones.  In this latter role, he was
responsible for that Call Center’s day-to-day activities.
100. When conducting business related to binary options, he used an alias,
Jack Besser, to conceal his involvement.  As “Jack Besser,” Raz Beserglik acted as a
control person over the Bloombex Brokers.  He used his alias when completing credit
card processing applications, registering the Internet domain for the Starling Capital
and Morton Finance websites, and contracting for platform series for Starling Capital
and Morton Finance.
101. Raz Beserglik also represented Starling Capital and Morton Finance in
reaching an agreement with their platform provider, and he dealt with that provider
and Bloombex Option’s platform provider in handling day-to-day activities
pertaining to the brokers’ operation.  “Jack Besser” also negotiated the commissions
paid to affiliate marketers who found potential investors for the Bloombex Brokers,
and offered to pay higher amounts in instances when marketers directed U.S.
investors to the web sites.  “Jack Besser” also asked SpotOption to adjust the “risk
settings” for certain investors who were winning their binary options trades.
102. Raz Beserglik also directed or approved of the Call Centers’ fraudulent
conduct in inducing customers to deposit funds to trade binary options.  He drafted or
edited scripts used by salespersons at the Call Centers that contained the false and
misleading statements, including:
o Trading with Bloombex is easy, simple and profitable.

o Bloombex is located in the UK with a local service team in Germany.

COMPLAINT
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o Bloombex is an International binary trading platform that is regulated
in Singapore and Cysec that works with customers from all over the
world and has been working with these thousands of customers for a
number of years now.

103. These and other similar statements were false and misleading because,
inter alia, trading with Bloombex was generally not profitable; Bloombex Options
had no true presence in the U.K.; and it was not a regulated entity.
E.    The Bloombex Brokers’ Fraud Targeted U.S. Investors
104. The Defendants purposefully solicited U.S. investors.  Raz Beserglik
(operating as “Jack Besser”) worked directly with affiliate marketers to drive U.S.
investors to Bloombex Options through false and misleading affiliate marketing
campaigns.  In one February 2015 email, he offered to pay an affiliate marketer $400
for each customer in the U.S. who deposited $500 with Bloombex Options.
105. In another February 2015 email, he wrote to the same affiliate marketer:
“We definitely want USA traffic but I would appreciate as well some
Canadians and Australians clients as well -  can you make it 70/30?
We have several USA campaigns already using make money funnels
and it works for us so far because we have agreed with all our partners
(and you can check) to have a $500 minimum deposit for their clients.”
106. Raz Beserglik knew or was reckless in not knowing that the affiliate
marketers’ use of “make money funnels” was false and misleading.  Specifically, he
knew or was reckless in not knowing such affiliate marketing materials drew
investors to binary options websites with promises of making money on the Internet
and trading software that would generate profits trading binary options.  He also
knew or was reckless in not knowing that the investors such materials recruited to
binary options brokers like the Bloombex Brokers were highly unlikely to ever make
any money trading binary options.

COMPLAINT
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107. Certain scripts prepared for the salesforce show that the Bloombex
Brokers knowingly solicited U.S. investors.  One such script authored, edited or
approved by Petersen, instructed salespersons to say:
Now, _____, I can see that you're from the States; what part of the
States are you from?  Really? Make some remark about that part of the
states that you know or something to create rapport with the client.  I'm
originally from ..._____... Have you ever been there? It's definitely
worth a visit.
108. In June 2015, Bloombex Options purportedly decided to stop accepting
customers from the U.S. until it finished setting up a new broker specifically intended
to solicit U.S. business, but then immediately reversed its decision because of the
high volume of U.S. investors.  In an email, the head of marketing wrote, “Due to the
sheer volume of traders from the US, management has decided to keep accepting all
US traders until the second brand is fully complete, up and running.:”  Defendants
later opened Morton Finance and Starling Capital in order to target U.S. investors.
109. Defendants each knew that many of their customers were U.S. residents.
The know-your-customer records that the Bloombex Brokers collected from
investors—including drivers’ licenses, copies of bills, credit card images, and
passports — clearly identified many investors as United States residents.
F. Defendants’ Conduct Resulted in Millions of Dollars of U.S.
Investor Losses
110. From 2012 through 2016, Bloombex Options received about $80 million
from investors worldwide, including investors in the United States.  A significant
percentage of these deposits were from investors in the United States.  Morton
Finance records reflect that by September 2016, more than 8,000 U.S. investors had
deposited more than $14,775,000, while Starling Capital records reflect that it had
more than 2,700 U.S. investors who deposited nearly $3 million.  However, these two
brokers continued accepting investor deposits for another full year and for the

COMPLAINT
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remainder of the Relevant Period, until at least August 2017, earning an estimated
$100 million or more over the Relevant Period through sales of binary options.
111. Many investors made at or near the minimum required deposits,
generally around $500.  Dozens of investors deposited sums reaching five, six and
even seven figures.  These latter victims included disabled persons, doctors, farmers,
and numerous retirees and pensioners who lost their life’s savings as a result of the
Defendants’ fraudulent statements and scheme.
FIRST CLAIM FOR RELIEF
Fraud in the Offer or Sale of Securities
Violations of Section 17(a)(1), (2) and (3) of the Securities Act
(All Defendants)

112. Paragraphs 1-111 are realleged and incorporated by reference herein.
113. Defendants, by engaging in the conduct described above, directly or
indirectly, in the offer or sale of securities, by the use of means or instruments of
transportation or communication in interstate commerce or by use of the mails:
(a) employed devices, schemes, or artifices to defraud;
(b) obtained money or property by means of untrue statements of a
material fact or by omitting to state a material fact necessary in order to make
the statements made, in light of the circumstances under which they were
made, not misleading; and
(c) engaged in transactions, practices, or courses of business which
operated or would operate as a fraud or deceit upon the purchaser of such
securities.
114. Kai Christian Petersen, Gil Beserglik and Raz Beserglik each knew, or
were reckless in not knowing, that he employed devices, schemes and artifices to
defraud.  Kai Christian Petersen, Gil Beserglik and Raz Beserglik each knew, or were
reckless or negligent in not knowing, that he obtained money or property by means of
untrue statements of a material fact or by omitting to state a material fact necessary in

COMPLAINT
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order to make the statements made, in light of the circumstances under which they
were made, not misleading; and engaged in transactions, practices, or courses of
business which operated or would operate as a fraud or deceit upon the purchaser.
115. By reason of the foregoing, Defendants violated, and unless enjoined
will again violate, Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)].
SECOND CLAIM FOR RELIEF
Fraud in Connection with the Purchase or Sale of Securities
Violations of Section 10(b) of the Exchange Act and Rule 10b-5 (a) and (c)
Thereunder
(All Defendants)

116. Paragraphs 1-111 are realleged and incorporated by reference herein.
117. Defendants, by engaging in the conduct described above, directly or
indirectly, in connection with the purchase or sale of a security, by the use of means
or instrumentalities or interstate commerce, of the mails, or of the facilities of a
national securities exchange, with scienter:
(a) employed devices, schemes, or artifices to defraud; and
(b) engaged in acts, practices or courses of business which operated or
would operate as a fraud or deceit upon other persons
118. Kai Christian Petersen, Gil Beserglik and Raz Beserglik each knew, or
were reckless in not knowing, that he employed devices, schemes and artifices to
defraud and engaged in acts, practices or course of business which operated or would
operate as a fraud or deceit upon other persons.
119. By reason of the foregoing, Defendants violated, and unless enjoined
will again violate, Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule
10b-5(a) and (c) thereunder [17 C.F.R. § 240.10b-5].

COMPLAINT
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THIRD CLAIM FOR RELIEF
Fraud in Connection with the Purchase or Sale of Securities
Violations of Section 10(b) of the Exchange Act and Rule 10b-5 (b) Thereunder
(Petersen)

120. Paragraphs 1-111 are realleged and incorporated by reference herein.
121. Petersen, by engaging in the conduct described above, directly or
indirectly, in connection with the purchase or sale of a security, by the use of means
or instrumentalities or interstate commerce, of the mails, or of the facilities of a
national securities exchange, with scienter: made untrue statements of a material fact
or omitted to state a material fact necessary in order to make the statements made, in
the light of the circumstances under which they were made, not misleading.
122. Petersen knew, or was reckless in not knowing, that he made untrue
statements of a material fact or omitted to state a material fact necessary in order to
make the statements made, in light of the circumstances, not misleading.
123. By reason of the foregoing, Petersen violated, and unless enjoined will
again violate, Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-
5(b) thereunder [17 C.F.R. § 240.10b-5].
FOURTH CLAIM FOR RELIEF
Unregistered Offer or Sale of Securities
Violations of Section 5 of the Securities Act
(All Defendants)

124. Paragraphs 1-111 are realleged and incorporated by reference herein.
125. No registration statement had been filed or was in effect with the SEC
for any of the security-based binary options offered or sold through the Bloombex
Brokers, their Call Centers and Defendants.
126. Defendants, by engaging in the conduct described above, directly or
indirectly, made use of means or instruments of transportation or communication in
interstate commerce or of the mails to offer to sell or to sell such securities.

COMPLAINT
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127. By reason of the foregoing, Defendants violated, and unless enjoined
will again violate, Section 5 of the Securities Act [15 U.S.C. §§ 77e].
FIFTH CLAIM FOR RELIEF
Control Person Liability Under Section 20(a) of the Exchange Act for the
Bloombex Brokers’ and Call Centers’ Violations of Section 10(b)
(All Defendants)
128. Paragraphs 1-111 are realleged and incorporated by reference herein.
129. At all times relevant hereto, each of the Defendants was a control person
of the Bloombex Brokers and their Call Centers for purposes of Section 20(a) of the
Exchange Act [15 U.S.C. § 78t(a)], directly or indirectly controlling those operations.
130. The Bloombex Brokers and Call Centers, directly or indirectly, by use of
the means or instruments of interstate commerce, or of the mails, or the facility of a
national securities exchange, in connection with the purchase or sale of securities, and
with knowledge or recklessness: (a) employed devices, schemes, or artifices to
defraud; (b) made untrue statements of material fact or omitted to state material facts
necessary to make the statements made, in light of the circumstances under which
they were made, not misleading; and/or (c) engaged in acts, practices, or courses of
business which operated or would operate as a fraud or deceit upon any person; and
thereby each committed violations of Section 10(b) of the Exchange Act [15 U.S.C. §
78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
131. Defendants cannot establish that they did not directly or indirectly
induce the acts of the Bloombex Brokers and their Call Centers that constitute
violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, nor that
they acted in good faith.
132. Defendants are therefore liable as controlling persons under
Section 20(a) of the Exchange Act to the same extent as Bloombex Brokers and the
Call Centers would be liable for violations of Section 10(b) of the Exchange Act and
Rule 10b-5 thereunder.

COMPLAINT
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SIXTH CLAIM FOR RELIEF
Control Person Liability Under Section 20(a) of the Exchange Act for The
Bloombex Brokers’ and Call Centers’ Violations of Section 15(a) of the
Exchange Act
(All Defendants)
133. Paragraphs 1-111 are realleged and incorporated by reference herein.
134. At all times relevant hereto, each of the Defendants was a control person
of the Bloombex Brokers and their Call Centers for purposes of Section 20(a) of the
Exchange Act [15 U.S.C. § 78t(a)], directly or indirectly controlling those operations.
135. By engaging in the conduct described above, the Bloombex Brokers and
the Call Centers: (a) engaged in the business of effecting transactions in securities for
the account of others; and (b) directly or indirectly, made use of the mails or the
means or instrumentalities of interstate commerce to effect transactions in, or to
induce or attempt to induce the purchase or sale of, securities without being registered
as a broker or dealer with the SEC or associated with a broker or dealer registered
with the SEC; and thereby each committed violations of Section 15(a) of the
Exchange Act [15 U.S.C. § 78j(b)].
136. Defendants cannot establish that they did not directly or indirectly
induce the acts of the Bloombex Brokers and their Call Centers that constitute
violations of Section 15(a) of the Exchange Act, nor that they acted in good faith.
137. Defendants are therefore liable as controlling persons under
Section 20(a) of the Exchange Act to the same extent as Bloombex Brokers and the
Call Centers would be liable for violations of Section 15(a) of the Exchange Act.
SEVENTH CLAIM FOR RELIEF
Aiding and Abetting The Bloombex Brokers’ and Call Centers’
Violations of 10(b) of the Exchange Act
(All Defendants)

138. Paragraphs 1-111 and 130 are realleged and incorporated by reference
herein.

COMPLAINT
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139. The Bloombex Brokers and Call Centers, directly or indirectly, by use of
the means or instruments of interstate commerce, or of the mails, or the facility of a
national securities exchange, in connection with the purchase or sale of securities, and
with knowledge or recklessness: (a) employed devices, schemes, or artifices to
defraud; (b) made untrue statements of material fact or omitted to state material facts
necessary to make the statements made, in light of the circumstances under which
they were made, not misleading; and/or (c) engaged in acts, practices, or courses of
business which operated or would operate as a fraud or deceit upon any person; and
thereby committed violations of Section 10(b) of the Exchange Act and Rule 10(b)-5.
140. Pursuant to Section 20(e) of the Exchange Act [15 U.S.C. § 78t(e)], any
person that knowingly or recklessly provides substantial assistance to another person
in violation of a provision of the Exchange Act, or of any rule or regulation issued
thereunder, shall be deemed to be in violation of such provision to the same extent as
the person to whom such assistance is provided.
141. Each of the Defendants knowingly or recklessly provided substantial
assistance to violations of Section 10(b) of the Exchange Act and Rule 10(b)-5
thereunder by Bloombex Brokers and their Call Centers.
142. By reason of the foregoing, Defendants are liable for violations of
Section 10(b) of the Exchange Act and Rule 10(b)-5 by the Bloombex Brokers and
their Call Centers to the same extent as each of the Bloombex Brokers and Call
Centers would be liable for their own violations and, unless enjoined, will again
violate Section 10(b) of the Exchange Act and Rule 10(b)-5 thereunder.
EIGHTH CLAIM FOR RELIEF
Aiding and Abetting The Bloombex Brokers’ and Call Centers’ Violations of
Section 17(a) of the Securities Act
(All Defendants)
143. Paragraphs 1-111 are realleged and incorporated by reference herein.

COMPLAINT
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144. The Bloombex Brokers and their Call Centers, by engaging in the
conduct described above, in the offer or sale of securities, by the use of means or
instruments of transportation or communication in interstate commerce or by use of
the mails directly or indirectly: (a) with scienter, employed devices, schemes, or
artifices to defraud; (b) negligently or with scienter, obtained money or property by
means of untrue statements of a material fact or by omitting to state a material fact
necessary in order to make the statements made, in light of the circumstances under
which they were made, not misleading; and (c) negligently or with scienter, engaged
in transactions, practices, or courses of business which operated or would operate as a
fraud or deceit upon the purchaser of such securities.
145. Pursuant to Section 15(b) of the Securities Act [15 U.S.C. § 77o(b)], any
person that knowingly or recklessly provides substantial assistance to another person
in violation of Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)], shall be
deemed to be in violation of such provision to the same extent as the person to whom
such assistance is provided.
146. Each of the Defendants knowingly or recklessly provided substantial
assistance to violations of Section 17(a) of the Securities Act by Bloombex Brokers
and their Call Centers.
147. By reason of the foregoing, Defendants are liable for violations of
Section 17(a) of the Securities Act to the same extent as each of the Bloombex
Brokers and their Call Centers would be liable for their own violations of Section
17(a) and, unless enjoined, will again violate Section 17(a) of the Securities Act.
NINTH CLAIM

Claims Against Relief Defendants As Recipient Of Investors’ Funds
148. Paragraphs 1-111 are realleged and incorporated by reference herein.
149. Exchange Act Section 21(d) provides: “[i]n any action or proceeding
brought or instituted by the SEC under any provision of the securities laws, the SEC
may seek, and any Federal Court may grant, any equitable relief that may be

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appropriate or necessary for the benefit of investors.”  15 U.S.C. § 78u(d)(5).
Exchange Act Section 27 gives the federal courts jurisdiction over such equitable
claims for relief.  [15 U.S.C. § 78aa.]
150. Relief Defendants received funds and property from one or more of the
Defendants, which are the proceeds, or are traceable to the proceeds, of the unlawful
activities of Defendants, as alleged in at least paragraphs 5, 14-15 and 81-90 above.
151. Relief Defendants obtained the funds and property alleged above as part
of and in furtherance of the securities violations alleged throughout this Complaint
and under circumstances in which it is not just, equitable or conscionable for them to
retain those funds and property.  Relief Defendants have thus been unjustly enriched.
RELIEF REQUESTED
WHEREFORE, the SEC respectfully requests that this Court:
a) Find that Defendants committed the alleged violations;
b) Order Defendants to disgorge, with prejudgment interest, all ill-
gotten gains they received or derived from the activities set forth in this
Complaint, and to repatriate any ill-gotten funds or assets they caused to be sent
overseas.  Order Relief Defendants to disgorge, with prejudgment interest;
c) Order Defendants to pay civil penalties under Section 20(d) of the
Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15
U.S.C. § 78u(d)(3];
d) Permanently enjoin Defendants from directly or indirectly violating
Sections 5 and 17(a) of the Securities Act [15 U.S.C. §§ 77e & 77q(a)] and
Sections 10(b) and 15(a) of the Exchange Act [15 U.S.C. §§ 78j(b)] and Rule 10b-
5 thereunder [17 C.F.R. § 240.10b-5];
//
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COMPLAINT
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e) Retain jurisdiction over this action to implement and carry out the
terms of all orders and decrees that it may enter, or to entertain any suitable
application or motion for additional relief within the jurisdiction of this Court; and
f) Grant such other relief as may be necessary or appropriate.

Dated:  September 26, 2019

Respectfully submitted,

 /s/ KENNETH W. DONNELLY

Kenneth W. Donnelly
Attorney for Plaintiff
Securities and Exchange Commission

COMPLAINT 1 

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KENNETH W. DONNELLY (pro hac vice pending) 
Email:  [email protected] 
Securities and Exchange Commission 
100 F. Street, N.E. 
Washington, D.C. 20549 
Telephone: (202) 551-4946 
Facsimile: (202) 772-9282 

LOCAL COUNSEL: 
AMY J. LONGO (Cal Bar No. 198304) 
Email: [email protected] 
Securities and Exchange Commission 
444 S. Flower Street, Suite 900 
Los Angeles, California 90071 
Telephone: (323) 965-3998 
Facsimile: (213) 443-1904 

Attorneys for Plaintiff 
Securities and Exchange Commission 

UNITED STATES DISTRICT COURT 

CENTRAL DISTRICT OF CALIFORNIA 

SECURITIES AND EXCHANGE 
COMMISSION, 

Plaintiff, 

vs. 

KAI CHRISTIAN PETERSEN; GIL 
BESERGLIK; and RAZ BESERGLIK, 

Defendants, 

SHRAGA HOLDINGS, LTD. and 
LEMBEX GLOBAL INVESTMENTS, 
LTD., 

Relief Defendants 

Case No. 

COMPLAINT FOR INJUNCTION 
RELIEF AND OTHER REMEDIES 

JURY TRIAL REQUESTED 

Plaintiff Securities and Exchange Commission (the “SEC”) alleges: 

SUMMARY OF THE ACTION 

1. This case involves the fraudulent and illegal offering and sale of more

than $100 million of securities called “binary options” from at least October 2014 

through August 2017 (the “Relevant Period”). 

19-cv-08334

Case 2:19-cv-08334   Document 1   Filed 09/26/19   Page 1 of 38   Page ID #:1

mailto:[email protected]
mailto:[email protected]


 

COMPLAINT 2  
 

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2. Kai Christian Petersen, Gil Beserglik and Raz Beserglik (collectively, 

the “Defendants”) fraudulently offered and sold unregistered binary options through 

their operation and control of three Internet-based brokers acting under the names: (a) 

Bloombex Options (www.bloombex-options.com); (b) Morton Finance 

(www.mortonfinance.com); and (c) Starling Capital (www.starlingcapital.com) 

(collectively, the “Bloombex Brokers”).  The Bloombex Brokers functioned through 

a combination of websites and marketing which mislead investors to invest in binary 

options, overseas call centers which applied boiler room tactics to manipulate 

investors into depositing substantial sums of money toward the purchase of binary 

options, and international companies which collected investor funds into overseas 

bank accounts and misappropriated investor funds.  Neither the websites, the brokers, 

the call centers, nor the companies ever registered with the SEC as a broker or dealer 

or were ever associated with a SEC-registered broker or dealer. 

3. The Defendants, through their various operations, used a series of 

deceptive devices and false and misleading statements in offering and selling binary 

options securities.  The Bloombex Brokers operated professionally-designed 

websites, complete with convincing trading platforms, to create the false impression 

that investors were entrusting their money to legitimate financial firms.  The websites 

falsely stated that professional brokers and financial experts would enable investors 

to earn large profits by trading in binary options.  After investors opened an account, 

the call centers then made materially false statements and engaged in other deceptive 

acts to complete the ruse.  Call centers employees, for example, falsely held 

themselves out as experienced brokers and advisors who would help investors to 

trade profitably.  They told investors that their clients typically made large sums by 

trading binary options, and told investors that they could withdraw their money (and 

profits) at any time.  The call centers then encouraged investors to make large 

deposits, oftentimes from credit cards and retirement and savings accounts.  They 

also falsely told investors that they only made money when investors made money.   

Case 2:19-cv-08334   Document 1   Filed 09/26/19   Page 2 of 38   Page ID #:2



 

COMPLAINT 3  
 

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4. Unbeknownst to investors, Defendants only earned money if investors 

made large deposits and then lost their trades.  Defendants thus had but one goal in 

mind for investors who opened accounts at their broker firms: to convince those 

investors to continue depositing more and more cash into their accounts and cause 

them to lose their money by trading binary options.  The Bloombex Brokers in fact 

typically refused to permit investors to withdraw their money.  Despite the assurances 

on the websites and the promises made by the call centers, investors depositing 

money for trading typically lost all of their money.  And Defendants, the Bloombex 

Brokers, and the call center employees all knew this would be the result. 

5. Defendants also misappropriated millions of dollars of investor deposits 

by, among other things, sending investor money to Shraga Holdings, Ltd. and 

Lembex Global Investments, Ltd. (collectively the “Relief Defendants”), entities 

owned and controlled by Gil Beserglik.  Gil Beserglik sent millions of these dollars to 

his son, Raz Beserglik.  Defendants sent millions of dollars of investor money to 

companies owned and controlled by Defendant Petersen as well.   

6. As a result of this conduct, Defendants were able to procure millions of 

dollars in investor deposits by fraud.  Defendants’ entities solicited tens of thousands 

of investors in the United States, in particular; and thousands of investors in the 

United States opened binary options trading accounts and deposited millions into 

accounts controlled by Defendants.  Many U.S. investors lost hundreds of thousands 

of dollars, and many lost their entire retirement and life’s savings. 

7. As a result of this conduct, Defendants violated the antifraud provisions 

of Sections 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) 

of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 77q(a) and 15 

U.S.C. §§ 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. § 240.10b‒5].  Defendants 

are liable directly for these violations and as control persons under Section 20(a) of 

the Exchange Act [15 U.S.C. § 78t(a)].  Defendants’ offerings of binary options also 

violated the registration provisions of Sections 5(a) and 5(c) of the Securities Act [15 

Case 2:19-cv-08334   Document 1   Filed 09/26/19   Page 3 of 38   Page ID #:3



 

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U.S.C. §§ 77e(a) and 77e(c)].  Defendants are also liable under Section 20(e) of the 

Exchange Act [15 U.S.C. § 78t(e)] for aiding and abetting violations of Section 10(b) 

of the Exchange Act (and Rule 10b-5) and Section 17(a) of the Securities Act. 

8. To deter additional fraudulent activity, and recover fraudulently obtained 

funds, the SEC seeks civil monetary penalties as well as remedial ancillary relief, 

including Defendants’ disgorgement of ill-gotten gains, prejudgment interest on ill-

gotten gains, a civil injunctive order against further violations of the federal securities 

laws, and other appropriate relief.  Unless restrained and enjoined by this Court, 

Defendants are likely to continue to engage in the acts and practices alleged herein. 

JURISDICTION AND VENUE 
9. The SEC brings this action pursuant to Sections 20(b), 20(d)(1) and 

22(a) of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d)(1) & 77v(a)] and Sections 

21(d)(1), 21(d)(3)(A), 21(e) and 27(a) of the Exchange Act [15 U.S.C. §§ 78u(d)(1), 

78u(d)(3)(A), 78u(e) & 78aa(a)].  Defendants, directly or indirectly, have made use of 

the means or instrumentalities of interstate commerce, of the mails, or of the facilities 

of a national securities exchange in connection with the transactions, acts, practices 

and courses of business alleged in this Complaint, including by making use of the 

Internet to offer securities and sending or receiving interstate email and participating 

in interstate voice or video calls.  This Court has subject matter jurisdiction under 

Section 22 of the Securities Act [15 U.S.C. § 77v], Sections 21(d) and 27 of the 

Exchange Act [15 U.S.C.§§ 78u(d) and 78aa], and 28 U.S.C. § 1331. 

10. Venue is proper in this district under Section 22(a) of the Securities Act 

[15 U.S.C. § 77v(a)] and Section 27(a) of the Exchange Act [15 U.S.C. § 78aa(a)] 

because certain of the transactions, acts, practices and courses of conduct constituting 

violations of the federal securities laws occurred within this district.  Venue is also 

proper in this district under 28 U.S.C. § 1391(c)(3), as each of the defendants resides 

outside of the United States and therefore venue is proper in any district court.   

Case 2:19-cv-08334   Document 1   Filed 09/26/19   Page 4 of 38   Page ID #:4



 

COMPLAINT 5  
 

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DEFENDANTS 
11. Kai Christian Petersen, age 52, resides in Germany.  Along with Raz 

and Gil Beserglik, Petersen owned and operated the Bloombex Brokers.  Petersen 

also directly or indirectly owned and operated the three telephone call centers that 

solicited investors to open binary options trading accounts. 

12. Raz Beserglik, age 33, is a citizen of Israel.  Along with Petersen and 

Gil Beserglik, Raz Beserglik owned and operated the Bloombex Brokers.  He also 

was the Chief Executive Officer of the Bloombex Brokers’ main call center in Israel.   

13. Defendant Gil Beserglik, age 63, is a citizen of Israel who resides in 

Germany.  Along with Petersen and Raz Beserglik, Gil Beserglik owned and operated 

the Bloombex Brokers.  Gil Beserglik is Raz Beserglik’s father.   

RELIEF DEFENDANTS 
14. Shraga Holdings, Ltd. (“Shraga”) is a company domiciled in the 

British Virgin Islands and beneficially owned by Gil Beserglik.  

15. Lembex Global Investments, Ltd. (“Lembex”) is a company domiciled 

in the British Virgin Islands and beneficially owned by Gil Beserglik. 

FACTS 
I. BINARY OPTIONS GENERALLY 

16. Binary options are financial instruments with a value tied to the price of 

other financial assets, including securities or securities indices.  An investor chooses 

whether the underlying asset’s price will be above or below a certain price at a 

particular time (e.g., will Apple stock be above $100 per share at 1 p.m. on a 

particular day).  The options are considered “binary” because they carry only two 

possibilities: the investor whose prediction is correct makes money (typically 

receiving back 170 to 180 percent of the amount invested); the investor whose 

prediction is incorrect loses all or nearly all the investment. 

17. Given this all-or-nothing payout structure, binary option contracts are 

also sometimes referred to as “all-or-nothing options” or “fixed-return options.”  

Case 2:19-cv-08334   Document 1   Filed 09/26/19   Page 5 of 38   Page ID #:5



 

COMPLAINT 6  
 

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Unlike other types of options, a binary option does not give the holder the right to 

purchase or sell the underlying asset —instead, it is “cash settled.” 

18. Binary options referencing a security or securities within the meaning of 

Section 2(a)(1) of the Exchange Act [15 U.S.C. § 77b(a)(1)] and Section 3(a)(10) of 

the Exchange Act [15 U.S.C. § 78c(a)(10)] are themselves “securities” within the 

meaning of those provisions. 

19. Binary option brokers like those operated by the Defendants derive their 

revenue and profit from being the counterparty to losing customer trades and 

retaining the customers’ losses.  In other words, binary option brokers have a keen 

interest in having their customers make large deposits and then to lose that money 

trading binary options.  Given the payout structure outlined above (e.g., 70 percent 

return if correct and 100 percent loss if incorrect) and assuming a 50 percent win rate, 

investors trading over a long enough period of time will lose all of their investment.   

20. To survive long-term, binary option brokers like those owned and 

operated by Defendants require three things: (i) that customers make deposits and 

actively trade; (ii) that the trading is unsuccessful (i.e., customers lose money to the 

broker); and (iii) a constant stream of new deposits from existing and new investors. 

II. DEFENDANTS’ BINARY OPTION SCHEME 
21. During the Relevant Period, Defendants owned and operated three 

binary options brokers—(a) Bloombex Options, (b) Starling Capital, and (c) Morton 

Finance—that offered and sold security-based binary options over the internet to 

customers in the United States and around the world.   

22. The Bloombex Brokers offered and sold binary options referencing 

securities, including those of Amazon, Google, Nike, Coca Cola, Citi Group, Apple, 

IBM, Microsoft and numerous other domestic and international companies.  They 

also offered and sold binary options referencing domestic and international securities 

indices, including the Nasdaq Composite and Dow Jones Industrial Average. 

Case 2:19-cv-08334   Document 1   Filed 09/26/19   Page 6 of 38   Page ID #:6



 

COMPLAINT 7  
 

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23. The Bloombex Brokers operated from the following Internet domains, 

which were accessible from the United States during the Relevant Period: 

a) Bloombex Options (www.bloombex-options.com); 

b) Morton Finance (www.mortonfinance.com); and 

c) Starling Capital (www.starlingcapital.com). 

24. The Bloombex Brokers functioned through a web of international 

corporations controlled by the Defendants.  The Bloombex Brokers’ day-to-day 

activities took place through three telephone call centers owned directly or indirectly 

by Petersen: (a) TS Trading Services, GmbH (a German corporation); (b) MI6, 

GmbH (a German corporation); and (c) Five Stones Monopoly Marketing, Ltd. 

(“Five Stones” and an Israeli corporation) (collectively the “Call Centers”).  Petersen 

managed the two German call centers, and Raz Beserglik managed the Israeli call 

center, the largest of the three.  The Call Centers solicited investors to open and fund 

binary options trading accounts, and encouraged investors to use those funds to trade 

binary options, including binary options referencing securities.   

25. Corporations owned and controlled by Gil Beserglik, through nominees, 

opened bank accounts to receive and hold investor deposits, to make payments 

associated with running the scam, and to transfer profits derived from the scheme to 

Defendants.  These corporations—which are identified as the operators of the 

Bloombex Brokers’ on iterations of the brokers’ websites—also technically acted as 

the counterparty to investors’ binary option trades.  In other words, these companies 

profited when investors lost money, owed investors’ money when the investors 

placed winning trades, and were responsible for paying investors the amounts 

reflected in the account balances shown on the Bloombex Brokers’ websites.    

26.  The Bloombex Brokers, and Raz Beserglik in particular, found many 

investors through affiliate marketers that they knew used false and misleading 

advertising materials—including spam emails, infomercial-like videos, and 

websites—to lure investors to the brokers’ websites.  The Bloombex Brokers paid the 

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COMPLAINT 8  
 

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affiliate marketers a commission for every customer who opened and funded a binary 

options trading account after viewing the affiliate marketer’s fraudulent 

advertising.  Once the affiliate marketers fraudulently drew investors to the 

Bloombex Brokers’ websites, the Bloombex Brokers used additional deceptive and 

misleading tactics to obtain as much of the investors’ money as possible. 

A. Deceptive Websites 
27. Opening and trading in an account at the Bloombex Brokers occurred 

through their websites.  The trading engine embedded on the websites created the 

appearance of actual market-oriented options trading that looked similar to what an 

investor would see on a legitimate broker’s website.  The trading engine allowed 

investors to place “trades,” see “live” market quotations, make deposits, and track 

their trades and balances.  The trading engine referred to binary options positions as 

“assets” or “investments” and, in the case of securities-based options, showed the 

corporate logos of the companies the positions referenced. 

28. But investors were not purchasing real financial assets from any real 

market and were not trading with other investors.  Instead, investors were actually 

trading against the Bloombex Brokers, who profited when the investors lost their 

trades.  The so-called trades and investments reflected on the investors on-line 

account statements were simply book entries reflecting positions facing the 

Bloombex Brokers.  Bloombex Brokers offered, recommended, and sold binary 

options to investors without disclosing that the brokers profited when investors lost 

money trading the binary options they offered, recommended, and sold.   

29. Additionally, information on certain pages within the websites that 

showed an investor his or her account balances falsely stated that investor funds were 

held in segregated accounts.  The Bloombex-Options website further stated: 

“Client’s funds are held in a segregated account. Funds are used only for 
trading options through our website upon client’s instructions and are never 
used for any other cause. Our liabilities and exposures are professionally 
handled and we guarantee payouts of your profits based on our terms”  

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COMPLAINT 9  
 

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In reality, investors’ deposits were comingled and used to pay the Bloombex Brokers’ 

expenses, and Bloombex Brokers seldom allowed “payouts.”   

30. The investors’ purported account balances did not reflect segregated 

accounts that could be withdrawn.  Instead, and unbeknownst to investors, these 

balances reflected underfunded financial obligations of the Bloombex Brokers.  The 

Bloombex Brokers did not have the funds necessary to cover the liabilities they owed 

to investors because, contrary to the disclosure above, the Bloombex Brokers used 

investor money to cover their expenses.  These expenses included referral fees paid to 

affiliate marketers, fees to the Bloombex Brokers platform providers, commissions 

for Call Center employees, website hosting and maintenance, and credit card 

processing fees.  The undisclosed disparity between the liabilities the Bloombex 

Brokers owed to investors and their actual bank account balances revealed that the 

Bloombex Brokers were unable to return funds to all of their customers.    

31. The Bloombex Brokers’ websites also falsely stated that trading binary 

options would be profitable, that the Bloombex Brokers were there to help, and that 

they wanted investors to succeed in making money.  For example, at various times 

the websites made the following misrepresentations: 

Bloombex Options offers access to one of the world’s most profitable 
trading solutions, accompanied by a dedicated team of financial experts 
ready to assist you at every step on your way to success. 

* * * 
Trading at Starling Capital is as simple as it can be, thanks to one of the 
most intuitive platforms on the market and a team of Account Managers 
eager and available to guide you through the best strategies and the most 
profitable techniques to get your share of the Financial Markets. 

* * * 
Over the years Morton Finance has enriched the life of thousands of 
investors, empowering them to achieve their financial goals. We don’t 
just serve customers – we create power traders.  Interested? 

Case 2:19-cv-08334   Document 1   Filed 09/26/19   Page 9 of 38   Page ID #:9



 

COMPLAINT 10  
 

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32. These statements were false and misleading because investors depositing 

funds with the Bloombex Brokers generally lost their money, the call center 

employees generally had no financial training or background, and the Bloombex 

Brokers actually wanted investors to lose their binary options trades.   

B. Fraudulent Call Center Operations  
33. Shortly after registering their binary options trading accounts on one of 

the Bloombex Brokers’ websites, customers typically heard from the Call Centers, 

which operated as boiler rooms where sales persons used high-pressure sales tactics 

to offer and sell speculative and fraudulent binary options securities to investors.  Call 

Center employees were incentivized to fraudulently induce investors to deposit 

additional funds to trade binary options and to prevent withdrawals because their 

commissions were based on the amount of net deposits they obtained from investors.    

34. The Call Centers—which at their height collectively employed as many 

as 200 people—and their employees were tasked with convincing investors to deposit 

as much money as possible into their trading accounts, getting investors to trade, and 

eventually helping investors lose those funds.  Employees received training on how to 

deceive investors from written scripts riddled with false and misleading statements, 

verbal instructions, and examples of recorded calls with in which salespersons made 

false and misleading statements to persuade investors to open trading accounts.  

These materials were intended to help salespersons build rapport with clients, learn 

about the size and location of their assets, and convince them to move those assets—

including retirement accounts—into their accounts with the Bloombex Brokers.   

35. Call Center managers who reported to Petersen or Raz Beserglik closely 

monitored the salesforce’s efforts.  Some managers wore headsets to monitor calls 

and advised salespersons in real-time how to overcome investors’ resistance to 

depositing money.  In some cases the managers instructed salespersons to hang up 

when an investor was being difficult.  Managers held meetings before shifts to 

discuss recent tactics that successfully resulted in new deposits.  The managers also 

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COMPLAINT 11  
 

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set and monitored weekly deposit targets and required some salespersons to stay at 

work until meeting those targets.  

36. Investors typically deposited money into their Bloombex Brokers 

accounts by credit card and bank wire.  Credit card payments were forwarded to bank 

accounts held by companies created by Gil Beserglik named Bloombex, Ltd. 

(incorporated in Dominica, “Bloombex Dominica”) and Chromex Capital, Ltd. 

(“Chromex”).  The Call Centers typically instructed investors to send bank wires to 

the Bloombex Dominica and Chromex accounts.  Typically, the Bloombex Dominica 

account received deposits for Bloombex Options and the Chromex account received 

deposits for Starling Capital and Morton Finance.    

i. The Conversion Desk  
37. The first calls to investors typically came from the Call Centers’ 

“conversion desk” (“Conversion”), the group of employees responsible for 

convincing new customers to make an initial deposit.  Conversion employees 

routinely initiated up to 200 calls per day, reaching 30-60 customers, and generally 

resulting in three to eight funded accounts daily. 

38. From the outset, these sales calls were replete with false and misleading 

statements.  As directed or endorsed by Petersen and Raz Beserglik, the salesforce 

used aliases instead of their real names.  Indeed, many employees in the Call Centers 

did not even know the real names of their coworkers.   

39. Call Center employees were also directed to fabricate their titles, 

choosing ones normally associated with legitimate trading and the provision of 

financial advice.  For example, even though they typically had little or no relevant 

experience, salespersons called themselves “Senior Brokers,” “Head Brokers,” 

“Analysts,” “Senior Trading Advisors” or “Senior Financial Advisors.”   

40. Salespersons falsely told customers that they had years of trading 

experience.  Additionally, with Petersen and Raz Beserglik’s knowledge and at their 

direction, salespersons lied about their locations, claiming, for example, they were 

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COMPLAINT 12  
 

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calling from Stockholm or London, instead of their actual locations in Germany or 

Israel.  The Call Centers used voice-over-Internet-protocol (VOIP) phones and 

telephone numbers local to the United Kingdom to convey the impression that the 

salesforce was located in that country.   

41. In initial calls to customers, Conversion also claimed that to generate 

meaningful profits investors needed to deposit more than the minimum amount of 

$250-$500.  Conversion often pushed investors to make initial deposits of $2,000 or 

more with statements like “the more you invest the more profits you can make.” 

ii. The Retention Desk  
42. Once investors made their initial deposit, the Call Centers’ “retention 

desk” salespersons (“Retention”) assumed the relationship.  Retention—which also 

used fabricated titles like “Broker” and “Financial Adviser”—continued the practice 

of lying about their real names, relevant business experience, and location.   

43. The Conversion and Retention salesforce also employed a “bait and 

switch” tactic with investors who opened their accounts after watching fraudulent 

affiliate marketing videos and expected to profitably trade using computer software.  

The software the campaigns advertised did not exist.  Instead, affiliate marketers used 

the promise of this nonexistent software as a lure to trick investors into visiting the 

Bloombex Brokers’ websites and registering a binary options trading account.   

44. As described below, Raz Beserglik worked directly with affiliate 

marketers using these types of fraudulent materials “make money funnels” to lure 

investors to Bloombex Brokers’ websites.  Raz Bererglik knew or recklessly failed to 

know that these marketing materials were false and misleading.  Once investors 

registered, training materials authored by Kai Petersen instructed salespersons to urge 

investors not to rely on the advertised software, but to instead let the Call Centers’ 

supposed “Brokers” and “Financial Advisers” guide their binary options trading.   

45. The salespersons often claimed the software did not work that well (or at 

all) and that investors had a greater chance of trading successfully working with the 

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COMPLAINT 13  
 

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Bloombex Brokers’ traders.  For example, one script authored, edited or approved by 

Petersen advised salespersons to “Immediately move [investors] away from the bot.,”  

Another instructed them to make the following false and misleading statements: 

“Software: Do you have any experience using this particular software? The 
reason I ask is because in my opinion, there is no such thing as a successful 
algorithm-based software for the financial market… And there will never be 
one. Understand _____? 
 
Listen _____, it’s not my job to talk bad about third party software, but they 
haven’t worked in well over a year unless you have experience in the market 
and you know exactly when to turn it on and off. Does that make sense _____? 
 
This is why I’m here; to help my clients become successful. Trading Binary 
Options requires strategic timing, knowing when to trade and when not to 
trade. I mean if you’re a surfer and there are no waves, you won’t go surfing, 
right? 
 
The problem with the software is that it doesn’t know when something is going 
on (ex: Brexit, NFP, elections) so it just keeps on placing trades all day and 
that’s what we would call unnecessary risk, wouldn’t you agree?” 
 
46. On-going personal interaction gave Retention—who were also 

compensated based on investor deposits and penalized for investor withdrawals—

repeated opportunities to earn the investors’ trust and solicit additional deposits.   

47. Retention also used additional manipulative and deceptive practices and 

additional false and misleading statements to elicit further deposits. 
(a) False and Misleading Statements to Customers 

48. Alignment of Interest.  Retention told investors, in substance, “We only 

make money when you make money.”  One script authored, edited, or approved by 

Petersen instructed salespersons to falsely state: 

Senior Account Managers at Morton Finance/ Starling Capital work on 
something called ROI. Are you familiar with the term?  No?  ROI means 
Return On Investment.  What this means is that I can see profits in my 
paycheck ONLY when you withdraw profits to your personal bank 
account or your credit card [. . . .]  Do you understand?  Can you see 
why this is good for you?  Because what this means is that I need to 

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COMPLAINT 14  
 

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support you making profits for me to get paid at the end of the month.  
Both our interests are fully aligned and we work as a team. 
 
49. In reality, Retention employees profited from investor losses, not profits.  

In addition, their commissions were based on customers’ net deposits, which 

encouraged salespersons to use deceptive tactics to obtain the largest deposits 

possible and discourage or prevent customers from making withdrawals.  This 

statement also conflicts with the Call Centers’ policy to provide investors bonuses 

(described below) to lock up their funds to prevent withdrawals. 

50. Withdrawals.  Retention falsely told investors that they could withdraw 

funds any time from their accounts.  The Bloombex Brokers’ websites also described 

the ease of withdrawing funds.  For example, the Bloombex-Options website stated: 

“Your withdrawals can be received just as efficiently.  You can transfer the funds into 

your account in the currency that you choose, and in the secured method which is 

most convenient for you.  Your funds will be received in a short time period.”  The 

Morton Finance website stated “Withdrawals can be made fast and easy.”   

51. In fact, the Call Centers rarely allowed investors to withdraw funds.  

Employees used numerous tricks—including recommending that customers enter into 

long-term trades and accept bonuses (described below)—to lock up investor funds 

and prevent withdrawals.  In other instances, Call Center employees simply ignored 

withdrawal requests or lied about why withdrawals were not received as promised.  

Only Raz Beserglik and Kai Petersen could approve withdrawal requests.     

52. Promises of profitable trades.  Retention typically urged investors to 

liquidate their other financial accounts, including retirement accounts, because they 

could achieve greater returns trading binary options.  In one script, sales persons were 

advised to state: “Most of my clients are withdrawing profits of anywhere between 

$5,000 and $9,000 every month.”  Another script told sales persons to say “Don't 

worry _____, 75% of my clients had no trading experience when they started and 

now they are ALL trading successfully.”  Such statements lacked any basis, as 

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COMPLAINT 15  
 

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salespersons knew that investors usually lost money trading and typically could not 

withdraw funds from their accounts.  

53. Elevation to “VIP” status.  Retention routinely told investors that if they 

increased their total deposits—usually to the five- and six-figure range —they would 

achieve “VIP,” “gold,” “platinum,” or some similarly-named elevated status that 

provided access to more experienced brokers, larger bonuses and payouts, and access 

to special VIP-only opportunities.  The Bloombex Brokers’ websites also described 

these tiers and so-called benefits.  In a recorded call, a salesman used this tactic and 

told one investor that increased deposits would qualify him to join a select group of 

traders making $8,000-$10,000 per month.  In reality, there were no real benefits to 

the so-called “VIP” status and it was merely a trick to lure more and larger deposits.   

(b) Deceptive tactics and manipulative devices designed to 
obtain additional investor deposits 

54. In addition to making false and misleading statements, Retention used 

deceptive tactics that tricked customers into depositing additional funds. 

55. Confidence Trades and Withdrawals.  The Bloomberg Brokers 

increased the odds of customers winning initial small-dollar trades to boost their 

confidence (including through manipulation of risk settings, as described below) and 

convince them to deposit more money to make larger trades.  The Bloombex Brokers 

also permitted some investors to make relatively small withdrawals to boost their 

confidence that they could later withdraw larger dollar amounts.  If investors asked 

for sizable withdrawals or said they had no more money to deposit, the Bloombex 

Brokers typically refused further withdrawal requests.   

56. Contrived Urgency.  To create a sense of urgency and encourage 

investors to make additional deposits, salespersons routinely told investors of 

supposed imminent market events that would result in profitable trading but only if 

they acted immediately.  Bloombex Brokers’ training materials stated “you need to 

create urgency at the beginning of the call” and defined “urgency” as “giving the 

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COMPLAINT 16  
 

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client a reason to proceed today and not tomorrow.”  Consistent with this training, 

salespersons cited upcoming earnings announcements by well-known public 

companies such as Apple or Amazon or expected public disclosures of economic 

news, such as the jobless rate.  But the salesforce knew nothing about how such 

events would impact stock prices.  Instead, citing such events was simply a high-

pressure sales tactic to trick customers to make the additional deposits necessary to 

take advantage of a contrived trading opportunity.    

57. Bonuses.  To encourage large deposits, salespersons frequently 

promised investors a matching “bonus” for every dollar deposited, e.g., investors who 

accepted a “bonus” and deposited $50,000 would see an additional $50,000 “bonus” 

deposited in their accounts.  Indeed, the “VIP” programs described above often touted 

such bonuses (and other schemes akin to bonuses like “Risk Free Trades”).  Investors 

were often not told, however, that bonuses came with attached conditions that made it 

all but impossible to withdraw any of their funds, including non-bonus money.   

58. The Bloombex Brokers required investors receiving a bonus to conduct 

trades equivalent to many multiples of the bonus amount—e.g., 27 times.   Under this 

multiple, an investor who deposited $50,000  and received a $50,000 bonus would 

need to conduct trades valued at $1,350,000 before he or she could withdraw any 

funds, including funds previously deposited that did not have any bonus attached.  

The bonuses locked up investors’ funds, forcing them to trade large amounts to make 

their account liquid.  Given the payouts on winning and losing binary options trades, 

trading profitably at such volumes was extremely difficult. 

59. Scripts discussing bonuses omitted any discussion of these withdrawal 

restrictions.  For example, one script authored or edited by Petersen stated as follows: 

Great, __________; that’s why I want to set you up with a program we 
have for beginners such as yourself. It’s called the Protected Capital 
Program. Do you know what it means? No? but the name kind of gives it 
away, doesn’t it? 

Case 2:19-cv-08334   Document 1   Filed 09/26/19   Page 16 of 38   Page ID #:16



 

COMPLAINT 17  
 

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Let me ask you this __________: when you have money in your bank 
account, what kind of interest are you receiving? Yeah, it’s pretty sad, 
isn’t it? Your money is sitting in the bank collecting DUST for you, 
while your bank makes DOUBLE-DIGIT PROFITS off YOUR 
MONEY!!! The difference between your bank and Morton Finance/ 
Starling Capital is that, as a Private Investment Institute (never use the 
word bank) you can enjoy what we call “Beginner’s Benefits”. The 
immediate interest/ bonus we give you is 100% (… Pause…) That’s a 
dollar-for-dollar match!!! Just so you understand me perfectly, when you 
start with $10,000, Morton Finance/ Starling Capital will 
IMMEDIATELY add $10,000 to your account as interest/ bonus. 
Now, in the protected capital program that we’re talking about, for the 
first 30 days, trades will only be placed using the interest/ bonus money 
to show you what kind of results we can obtain together. Basically, 
we’re putting you in a WIN-WIN situation because the trading will 
happen with OUR money, showing you some amazing result, all the 
while leaving YOUR money completely unexposed! 
You might be asking yourself “why” Morton Finance/ Starling Capital 
would do such a thing as give you an additional 10K. It’s not because we 
are nice… It’s just good business sense. We understand that in this 
business, the most important thing is TRUST. And we need to build your 
trust. We are SO comfortable in our ability to provide profitable trades 
that we are willing to put you in this WIN_WIN situation for the first 30 
days. Like this, you can see with your own eyes how good we are, and 
how much profit we can generate together.   
Once you see the results, and the profits we generate here, that’s when we will 
have gained your trust and you will become one of the happy, profitable long-
term customers of our tight-knit family. 

60. The Bloombex Brokers had the bonus conditions on their website; but, 

these disclosures were typically deeply embedded and only available if investors 

clicked the correct link and read long boilerplate disclosures.  The Bloombex Brokers 

also sometimes disclosed these bonus-withdrawal rules in written bonus agreements 

provided to investors.  But concealing the bonus-withdrawal rules from investors was 

a deliberate tactic discussed in daily strategy sessions with management.  Retention 

often failed to highlight or otherwise mention these rules to customers.  Consistent 

with the tone of the scripts above, other investors were told by Call Center employees 

Case 2:19-cv-08334   Document 1   Filed 09/26/19   Page 17 of 38   Page ID #:17



 

COMPLAINT 18  
 

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— e.g., the customers’ so-called Brokers or Financial Advisers — not to worry about 

the turnover requirement because it would be easy to meet.  Email and banner 

advertisements touting the bonuses also did not disclose these conditions.  And as 

discussed above, far from explaining these bonus withdrawal rules, salespersons often 

told investors that they could withdraw funds at any time.   

61. Risk Settings.  The Bloombex Brokers could manipulate the odds that 

particular trades would be profitable.  They put certain customers on a lower risk 

setting (which made winning trade more likely) to induce them to make additional 

deposits.  Once an investor stopped making deposits or won large amounts in trading, 

the brokers put the investor on a higher risk setting, making it more difficult to profit.   

62. For example, in one email from July 2015, a Bloombex Options Call 

Center representative emailed SpotOption, its platform provider, saying: “Client won 

last 10 trades in a row in the 60 seconds platform.  Please put this client on a high 

risk.”  In another instance, a representative wrote: “Please put trader on high risk, 

started winning big ladder trades.”  In some instances, Raz Beserglik (using his alias 

“Jack Besser”) personally requested SpotOption to change investors’ risk setting.   

63. The use of risk settings is especially manipulative when investors’ funds 

are locked up as a result of bonuses or a failure to honor withdrawals.  For example, 

investors could accept the bonus under favorable risk settings and, after their funds 

were locked up, could then be unknowingly forced to trade under higher risk settings 

that made profitable trading all but impossible. 

64. KYC:  Under the guise of “know-your-customer” diligence, salespersons 

were trained to ask investors about their financial goals.  They asked questions like:  

Did the investor seek to earn enough money from trading binary options to cover a 

mortgage payment, or pay off credit card debt or other loans or help pay down a 

deposit for a new home?  Such questions—seemingly for the customers’ benefit—

were actually designed to have the customer reveal their financial condition and the 

dollar amount and location of additional funds that salespersons then targeted.  The 

Case 2:19-cv-08334   Document 1   Filed 09/26/19   Page 18 of 38   Page ID #:18



 

COMPLAINT 19  
 

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Bloombex Brokers also used KYC rules to justify requiring customers to submit 

photos of their credit cards, drivers’ licenses, and a utility bill.  In truth, they actually 

sought these documents to dispute credit-card chargebacks and fraud allegations.  

65. Credit Loop:  Salespersons also employed a so-called “credit card loop” 

scheme, where they encouraged investors to borrow the maximum amount on their 

credit cards for short-term binary options trading.  Under the “loop,” investors were 

supposed to withdraw their profits and pay off the credit card debt before the next 

billing cycle.  Salespersons pitched the “loop” as essentially an interest-free loan to 

fund binary options trading.  When the time to repay the credit cards arose, however, 

the Bloombex Brokers typically refused to permit the investor to withdraw funds.   

(c) The “Recovery” Department 
66. Once investors lost the money they deposited with the Conversion and 

Retention desks, they were turned over to the “Recovery” department, whose goal 

was to convince investors to make additional deposits.   

67.  Training materials instructed Recovery agents to give investors hope 

they could recover their losses by working with new people at the Bloombex Brokers.  

The materials directed Recovery agents to call investors and say things like “I am 

calling today because I have a chance to recover your account.”  They were told to 

introduce themselves as a “higher authority,” such as a manager or head of 

department.  The training materials further instructed Recovery agents to express 

disappointment with the investor’s prior results or account condition, adding: “The 

key is to always explain how this time will be different.”   

68. Statements made by Recovery agents were false and misleading, as 

Recovery made no genuine effort to recover lost investor funds — indeed it was not 

in their interest to do so.  Instead, the Recovery pitch was merely another deceptive 

device aimed at stealing whatever money investors had left.  

69. The false and misleading statements and deceptive acts employed by the 

salesforce in Conversion, Retention and Recovery occurred with the full knowledge 

Case 2:19-cv-08334   Document 1   Filed 09/26/19   Page 19 of 38   Page ID #:19



 

COMPLAINT 20  
 

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of, and at the direction of, Petersen and Raz Beserglik.  Several scripts provided to 

Bloombex Brokers’ Call Center employees-in-training—including scripts authored, 

edited or approved by Petersen and/or Raz Beserglik—contained statements similar 

to those described above.  The salesforce made misrepresentations that closely 

followed the scripts and training materials. 

70. Petersen and Raz Beserglik each supervised the Call Center locations, 

interviewed and hired employees, and were responsible for seeing that employees 

were paid (in their actual names).  Petersen regularly reviewed and edited documents 

reflecting employees’ names and aliases.  Raz Beserglik regularly received email 

messages reflecting the use of fictitious names and titles.  Raz Beserglik himself used 

a fake name when conducting the business of the Bloombex Brokers.   

C. A Case Study: A U.S. Retiree  
71. The Bloombex Brokers used recorded telephone calls to train Call 

Center employees how to successfully solicit funds from investors.  Recorded calls 

between a particular retiree in the United States (“Investor A”) and a Bloombex 

Options salesman (“Employee A”) illustrate the nature of the Call Centers’ egregious 

misconduct and the type of calls that were used to train Call Center employees.    

72. Investor A had already deposited $2,000 in her binary options account 

when Employee A contacted her in about August 2015.  In a series of phone calls 

over the next approximately six months, through at least February 2016, Employee A 

persistently used fraudulent statements and deceptive devices, consistent with the 

Bloombex Brokers’ training materials, to solicit additional deposits from Investor A.   

73.   He falsely told Investor A that he worked in Bloombex Options’ 

London office and was a “financial adviser” for more than 12 years.  He falsely said 

he only trades on “major” economic events, and described the next week’s scheduled 

announcement of “core retail sales” as “one of the largest events in the U.S. 

economy.”  He falsely told Investor A that their interests were aligned, saying “I need 

my traders to be successful for me to make my money.”  Employee A falsely told 

Case 2:19-cv-08334   Document 1   Filed 09/26/19   Page 20 of 38   Page ID #:20COMPLAINT 21  
 

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Investor A that people at Bloombex Options were making “50 percent a month,” but 

that he opted to be more conservative and instead offered Investor A a 15-20 percent 

profit per month.   

74. Employee A recommended the “credit card loop” scheme, in which 

Investor A would borrow money on her credit card accounts to conduct short-term 

binary options trading.  Employee A also stated that Investor A would receive a 

dollar-for-dollar bonus for new deposits without disclosing the attached conditions.   

75. Employee A also schemed to learn about Investor A’s assets, asking if 

she had a “magic number target” for trading or “any major debts that we need to clear 

off the bat?”  Investor A eventually disclosed that she had no debt and approximately 

$600,000-$700,000 in savings.  Investor A emphasized that she did not want to invest 

all of her savings and that she was seeking to generate about $300,000 in profits to 

cover the cost of building a new home.   

76. Employee A repeatedly told Investor A she needed to deposit more 

funds to reach “VIP level,” falsely saying that such status would provide “class A 

signals on the top-tier trades.”  Employee A relentlessly pushed Investor A to deposit 

money, saying she was “close” to attaining VIP status and that she could generate 

more profits from trading binary options than she was earning in other accounts.   

77. At one point, Employee A sternly directed Investor A to liquidate an 

insurance fund and transfer those funds to her binary options account.  When Investor 

A said she needed to withdraw $100,000 from her account to cover medical expenses, 

Employee A turned the tables and instead convinced Investor A to deposit still 

additional money that would generate “a guaranteed return of 62 percent,” which 

Investor A could then use to pay those expenses. 

78. At Employee A’s urging, Investor A deposited more than $600,000 with 

Bloombex Options.  She lost most or all of these funds.  

Case 2:19-cv-08334   Document 1   Filed 09/26/19   Page 21 of 38   Page ID #:21



 

COMPLAINT 22  
 

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D. The Defendants Owned and Controlled the Bloombex Brokers 
79. Defendants are longtime business associates who shared ownership and 

control of the Bloombex Brokers.  Call Center employees understood that Petersen, 

Gil and Raz Beserglik owned the Bloombex Brokers.  The employees’ impression is 

consistent with the brokers’ actual operation and control.   

80. Each Defendant took an active role in operating the Bloombex Brokers.  

For example, Petersen and the Besergliks led regular in-person or telephonic 

meetings to discuss the operation of the Bloombex Brokers.  Among other things, 

they discussed the operation of the Call Centers, the creation of new brokers/brands, 

opening bank accounts with apparent nominees, contracting with platform providers, 

sales and marketing activities, and finances.  Petersen and Gil Beserglik also each 

loaned money to one or more of the Bloombex Brokers.   

i. Gil Beserglik 
81. Gil Beserglik admitted he was an owner of Bloombex Options (one of 

the Bloombex Brokers).  When Gil Beserglik opened a bank account for Shraga on or 

about October 15, 2015, he told the bank “[h]e now invests in real estate and is the 

owner of Bloombex Options with his son Raz Beserglik.”  Under the heading “Main 

business activity” on the account application, it reads “Gil Beserglick [sic] is a 

partner of Bloombex options [sic].”  The application’s personal information form, 

under the heading “Business activity for the owner,” identifies his business as 

“Bloombex Options www.bloombex.options.com”; his “position/function” as “co-

owner with his son”; and the “Ownership structure” as “Family business with son.”  

In the same document, Gil Beserglik also identified Raz Besrglik as the Chief 

Executive Officer of Bloombex Options.   

82. When the bank updated its documentation in early 2016, it continued to 

reflect Gil Beserglik’s ownership of Bloombex Options.  It also listed the source of 

funds going into the account as “From Business” – i.e. Bloombex Options.  Around 

this same time, as reflected on the documentation, Gil Beserglik told the bank he 

Case 2:19-cv-08334   Document 1   Filed 09/26/19   Page 22 of 38   Page ID #:22

http://www.bloombex.options.com/


 

COMPLAINT 23  
 

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“also owns ‘Chromex’ a sister company of Bloombex (same employees working for 

both companies)”.  Chromex referred to Chromex Capital, Ltd., (“Chromex”) a 

company incorporated in the British Virgin Islands that operated the bank accounts 

used by Starling Capital and Morton Finance.   

83. When Gil Beserglik opened the Shraga account in 2015, he informed the 

bank that he planned to fund the account with a $2 million transfer from accounts he 

controlled.  At Gil Beserglik’s direction, Bloombex Dominica then sent $2 million to 

of Bloombex Brokers investor funds to Shraga.  At other times, Beserglik directed 

Bloombex Dominica to transfer additional investor funds to the Shraga account and 

another account he owned in the name of Lembex.   

84. Beginning in 2016, Beserglik also directed Chromex to send investor 

funds to the Shraga account. 

85. Overall, during the Relevant Period, Gil Beserglik caused the Bloombex 

Dominica and Chromex accounts to transfer approximately $11 million in investor 

funds to his Shraga and Lembex accounts.  This $11 million came from investor 

deposits for trading binary options with the Bloombex Brokers.   

86. To hide his involvement in Bloombex Brokers, Gil Beserglik controlled 

Bloombex Dominica and Chromex through a straw person or nominee (“Nominee 

A”) who was a family relative.  At Gil Beserglik’s direction, Nominee A appears as 

the initial shareholder and Director of both companies.  At Gil Beserglik’s direction, 

Nominee A also opened the bank accounts in these companies’ names that accepted 

investor deposits for Bloombex Brokers.  Gil Beserglik, however, directly or 

indirectly controlled the bank accounts opened by both companies.   

87. In June 2018, after becoming aware of an SEC investigation and in a 

failed attempt to hide the admissions in the bank documents completed in 2015 and 

2016 discussed above, Gil Beserglik asked the bank to replace that documentation 

with new and fraudulent documentation indicating that he sold Bloombex Options in 

Case 2:19-cv-08334   Document 1   Filed 09/26/19   Page 23 of 38   Page ID #:23



 

COMPLAINT 24  
 

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2014.  In doing so, Beserglik attempted to mislead the SEC’s staff and to obstruct its 

investigation. 

88. Gil Beserglik formed a company in the British Virgin Islands also named 

Bloombex, Ltd. (“Bloombex BVI”) through which he signed the contracts and 

contract amendments with SpotOption to provide the trading platform on which 

Bloombex Options operated.  The SpotOption platform was a critical component of 

the Bloombex Options website and necessary to its offer and sale of binary options.   

89. Gil Beserglik also helped run the Call Centers.  He is listed as 

“Management” and with a job title “Advisor” on call center telephone lists.  Payroll 

records from TS Trading Services GmbH (one of the German call centers) show that 

Gil Beserglik was among its highest paid employees.  Further, Gil Beserglik’s 2017 

resume says he was a “Registered Manager” for TS Trading Service since 2009.   

90. Gil Beserglik frequently visited the German call center offices.  During 

those visits, Petersen treated him like an owner, instructing salespersons to “look 

busy.”  While in Germany, Gil Beserglik also monitored activity at Five Stones, the 

Israel-based call center.  For example, Gil Beserglik used his mobile phone to view 

activity at Five Stones.  When he saw something that he did not like, he telephoned 

the call center to correct the behavior or discipline the offending employee(s).  

ii. Kai Petersen 
 

91. Petersen was also an owner of the Bloombex Options broker.  In 2015, 

he signed documents in support of an application for credit card processing on which 

he represented that he owned the website www.bloombex-options.com and that he 

had full control and authorization over the website content.  This application said that 

“Bloombex Options is the on-line trading site for Bloombex LTD.”  The Bloombex 

Ltd. referred to in the application was Cyprus entity owned by Petersen with the same 

name as the other companies directly or indirectly owned by Gil Beserglik 

(Bloombex BVI and Bloombex Dominica).   

Case 2:19-cv-08334   Document 1   Filed 09/26/19   Page 24 of 38   Page ID #:24

http://www.bloombex-options.com/


 

COMPLAINT 25  
 

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92. Petersen also directly or indirectly (through intermediary corporations) 

owned each of the three Call Centers and directed or approved of their fraudulent 

conduct in inducing customers to deposit funds to trade binary options.   When 

creating and issuing invoices to Bloombex Dominica and Chromex for services 

performed at the German call centers, Petersen typically listed himself as “Managing 

Director” of the relevant call center.  Bloombex Dominica and Chromex each sent 

millions of dollars of investor money to the call centers owned by Petersen.     

93. Petersen maintained an office in the German call centers and regularly 

met with trading floor managers.  Petersen was only one of two people permitted to 

authorize client withdrawals from the Bloombex Brokers (Raz Beserglik was the 

other).  Petersen also interviewed and hired employees for the German call centers.  

He often sought to employ native English speakers to serve English-speaking 

countries like the United States.    

94. Petersen authored or edited numerous spreadsheets reflecting 

salespersons’ real and fake names at all three Call Centers.  These spreadsheets 

confirm that Petersen knew and approved of the Call Centers’ use of false names 

when talking to investors.  Petersen also created or edited Bloombex Brokers’ 

training materials, including scripts containing false and misleading statements as 

described above.  For example, a script Petersen authored or edited instructed Call 

Center employees to make the following false and misleading statements: 

o My name is __________, and I’m a senior account manager here at 
Morton Finance/ Starling Capital. My job here is to set financial 
goals with you on your account so we can support you to achieve 
these profits on a regular basis. 
 

o Most of my clients are withdrawing profits of anywhere between 
$5,000 and $9,000 every month. So, it seems that you’re looking to 
make about what most of my clients are making. Does that sound 
right? Perfect! 
 

o Both our interests are fully aligned and we work as a team.  
 

Case 2:19-cv-08334   Document 1   Filed 09/26/19   Page 25 of 38   Page ID #:25

file://ad.sec.gov/Projects/ENF1/HO-13001%20to%20HO-13500/HO-13010/INVESTIGATIVE%20FILES/INVESTIGATIVE%20WORKING%20PAPERS/DRAFT%20Complaint%20Materials%20-%20TO%20BE%20REVIEWED/Evidence%20by%20Brand/Bloombex/Chromex%20Invoices.pdf


 

COMPLAINT 26  
 

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95. Another script Petersen authored or edited, instructed Call Center 

employees to make the following false and misleading statements: 

o Don’t worry _____, 75% of my clients had no trading experience 
when they started and now they are ALL trading successfully.  

 

o This is why I’m here; to help my clients become successful. 
 

96. Yet another script and list of “Best Practices” that Petersen authored or 

edited, instructed employees to make the following false and misleading statements: 

o “We make the profit out of your successful trades. When you make a 
successful trade, you get 80 % of the profits, we get a commission of 
20 %”with a matching bonus” 

 

o “You are reserving yourself a seat and a call from one of our financial 
advisors” 

 

o “I don’t recommend clients just to start with the minimum as they 
will be making less money” 
 

o “My responsibility is simply to activate your account and assign you 
to a senior broker: The more you invest, the better senior broker I can 
assign to you.  They will help you to develop a trade [sic] plan.”  

  
97. These and other similar statements were false and misleading because, 

inter alia, the Call Centers jobs did not involve helping investors profit; virtually no 

clients (if any) withdrew meaningful profits from any of the Bloombex Brokers; and 

the interests of the Bloombex Brokers and investors conflicted and were not aligned.   

98. The Best Practices portion of one Petersen script gave the following 

instructions consistent with the boiler-room-like atmosphere at the Call Centers: 

o “Don’t waste any time on the small fishes” 
 

o “Immediately move away from the bot [the software systems 
fraudulently advertised by affiliate marketing campaigns]” 
 

o “Never get a ‘no’  don’t ask closed questions” 
 

o “When a client enquires about the music, ‘manager’s birthday’ or 
‘client just made 50.000 EUR’” 
 

o “You need to create urgency at the beginning at the call” 
 

Case 2:19-cv-08334   Document 1   Filed 09/26/19   Page 26 of 38   Page ID #:26



 

COMPLAINT 27  
 

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The egregiousness of the instructions in these examples confirms that Petersen knew 

(or was reckless in not knowing) and approved of the Call Centers’ use of false and 

misleading statements and deceptive devices when speaking with investors.   

iii.  Raz Beserglik 
99. Raz Beserglik also owned the Bloombex Brokers and served as the Chief 

Executive Officer of the Israeli call center, Five Stones.  In this latter role, he was 

responsible for that Call Center’s day-to-day activities.     

100. When conducting business related to binary options, he used an alias, 

Jack Besser, to conceal his involvement.  As “Jack Besser,” Raz Beserglik acted as a 

control person over the Bloombex Brokers.  He used his alias when completing credit 

card processing applications, registering the Internet domain for the Starling Capital 

and Morton Finance websites, and contracting for platform series for Starling Capital 

and Morton Finance. 

101. Raz Beserglik also represented Starling Capital and Morton Finance in 

reaching an agreement with their platform provider, and he dealt with that provider 

and Bloombex Option’s platform provider in handling day-to-day activities 

pertaining to the brokers’ operation.  “Jack Besser” also negotiated the commissions 

paid to affiliate marketers who found potential investors for the Bloombex Brokers, 

and offered to pay higher amounts in instances when marketers directed U.S. 

investors to the web sites.  “Jack Besser” also asked SpotOption to adjust the “risk 

settings” for certain investors who were winning their binary options trades.   

102. Raz Beserglik also directed or approved of the Call Centers’ fraudulent 

conduct in inducing customers to deposit funds to trade binary options.  He drafted or 

edited scripts used by salespersons at the Call Centers that contained the false and 

misleading statements, including: 

o Trading with Bloombex is easy, simple and profitable.  
 

o Bloombex is located in the UK with a local service team in Germany. 
 

Case 2:19-cv-08334   Document 1   Filed 09/26/19   Page 27 of 38   Page ID #:27



 

COMPLAINT 28  
 

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o Bloombex is an International binary trading platform that is regulated 
in Singapore and Cysec that works with customers from all over the 
world and has been working with these thousands of customers for a 
number of years now. 
 

103. These and other similar statements were false and misleading because, 

inter alia, trading with Bloombex was generally not profitable; Bloombex Options 

had no true presence in the U.K.; and it was not a regulated entity.  

E. The Bloombex Brokers’ Fraud Targeted U.S. Investors  
104. The Defendants purposefully solicited U.S. investors.  Raz Beserglik 

(operating as “Jack Besser”) worked directly with affiliate marketers to drive U.S. 

investors to Bloombex Options through false and misleading affiliate marketing 

campaigns.  In one February 2015 email, he offered to pay an affiliate marketer $400 

for each customer in the U.S. who deposited $500 with Bloombex Options.   

105. In another February 2015 email, he wrote to the same affiliate marketer: 

“We definitely want USA traffic but I would appreciate as well some 
Canadians and Australians clients as well - can you make it 70/30?  

We have several USA campaigns already using make money funnels 
and it works for us so far because we have agreed with all our partners 
(and you can check) to have a $500 minimum deposit for their clients.”  

106. Raz Beserglik knew or was reckless in not knowing that the affiliate 

marketers’ use of “make money funnels” was false and misleading.  Specifically, he 

knew or was reckless in not knowing such affiliate marketing materials drew 

investors to binary options websites with promises of making money on the Internet 

and trading software that would generate profits trading binary options.  He also 

knew or was reckless in not knowing that the investors such materials recruited to 

binary options brokers like the Bloombex Brokers were highly unlikely to ever make 

any money trading binary options.   

Case 2:19-cv-08334   Document 1   Filed 09/26/19   Page 28 of 38   Page ID #:28



 

COMPLAINT 29  
 

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107. Certain scripts prepared for the salesforce show that the Bloombex 

Brokers knowingly solicited U.S. investors.  One such script authored, edited or 

approved by Petersen, instructed salespersons to say: 

Now, _____, I can see that you're from the States; what part of the 
States are you from?  Really? Make some remark about that part of the 
states that you know or something to create rapport with the client.  I'm 
originally from …_____... Have you ever been there? It's definitely 
worth a visit. 

108. In June 2015, Bloombex Options purportedly decided to stop accepting 

customers from the U.S. until it finished setting up a new broker specifically intended 

to solicit U.S. business, but then immediately reversed its decision because of the 

high volume of U.S. investors.  In an email, the head of marketing wrote, “Due to the 

sheer volume of traders from the US, management has decided to keep accepting all 

US traders until the second brand is fully complete, up and running.:”  Defendants 

later opened Morton Finance and Starling Capital in order to target U.S. investors.   

109. Defendants each knew that many of their customers were U.S. residents.  

The know-your-customer records that the Bloombex Brokers collected from 

investors—including drivers’ licenses, copies of bills, credit card images, and 

passports — clearly identified many investors as United States residents.   

F. Defendants’ Conduct Resulted in Millions of Dollars of U.S. 
Investor Losses 

110. From 2012 through 2016, Bloombex Options received about $80 million 

from investors worldwide, including investors in the United States.  A significant 

percentage of these deposits were from investors in the United States.  Morton 

Finance records reflect that by September 2016, more than 8,000 U.S. investors had 

deposited more than $14,775,000, while Starling Capital records reflect that it had 

more than 2,700 U.S. investors who deposited nearly $3 million.  However, these two 

brokers continued accepting investor deposits for another full year and for the 

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COMPLAINT 30  
 

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remainder of the Relevant Period, until at least August 2017, earning an estimated 

$100 million or more over the Relevant Period through sales of binary options.   

111. Many investors made at or near the minimum required deposits, 

generally around $500.  Dozens of investors deposited sums reaching five, six and 

even seven figures.  These latter victims included disabled persons, doctors, farmers, 

and numerous retirees and pensioners who lost their life’s savings as a result of the 

Defendants’ fraudulent statements and scheme.   

FIRST CLAIM FOR RELIEF 
Fraud in the Offer or Sale of Securities 

Violations of Section 17(a)(1), (2) and (3) of the Securities Act 
(All Defendants) 

 

112. Paragraphs 1-111 are realleged and incorporated by reference herein. 

113. Defendants, by engaging in the conduct described above, directly or 

indirectly, in the offer or sale of securities, by the use of means or instruments of 

transportation or communication in interstate commerce or by use of the mails: 

(a) employed devices, schemes, or artifices to defraud; 

(b) obtained money or property by means of untrue statements of a 

material fact or by omitting to state a material fact necessary in order to make 

the statements made, in light of the circumstances under which they were 

made, not misleading; and 

(c) engaged in transactions, practices, or courses of business which 

operated or would operate as a fraud or deceit upon the purchaser of such 

securities. 

114. Kai Christian Petersen, Gil Beserglik and Raz Beserglik each knew, or 

were reckless in not knowing, that he employed devices, schemes and artifices to 

defraud.  Kai Christian Petersen, Gil Beserglik and Raz Beserglik each knew, or were 

reckless or negligent in not knowing, that he obtained money or property by means of 

untrue statements of a material fact or by omitting to state a material fact necessary in 

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COMPLAINT 31  
 

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order to make the statements made, in light of the circumstances under which they 

were made, not misleading; and engaged in transactions, practices, or courses of 

business which operated or would operate as a fraud or deceit upon the purchaser. 

115. By reason of the foregoing, Defendants violated, and unless enjoined 

will again violate, Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)]. 

SECOND CLAIM FOR RELIEF 
Fraud in Connection with the Purchase or Sale of Securities  

Violations of Section 10(b) of the Exchange Act and Rule 10b-5 (a) and (c) 
Thereunder 

(All Defendants) 
 

116. Paragraphs 1-111 are realleged and incorporated by reference herein. 

117. Defendants, by engaging in the conduct described above, directly or 

indirectly, in connection with the purchase or sale of a security, by the use of means 

or instrumentalities or interstate commerce, of the mails, or of the facilities of a 

national securities exchange, with scienter: 

(a) employed devices, schemes, or artifices to defraud; and  

(b) engaged in acts, practices or courses of business which operated or 

would operate as a fraud or deceit upon other persons 

118. Kai Christian Petersen, Gil Beserglik and Raz Beserglik each knew, or 

were reckless in not knowing, that he employed devices, schemes and artifices to 

defraud and engaged in acts, practices or course of business which operated or would 

operate as a fraud or deceit upon other persons. 

119. By reason of the foregoing, Defendants violated, and unless enjoined 

will again violate, Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 

10b-5(a) and (c) thereunder [17 C.F.R. § 240.10b-5]. 

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COMPLAINT 32  
 

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THIRD CLAIM FOR RELIEF 
Fraud in Connection with the Purchase or Sale of Securities  

Violations of Section 10(b) of the Exchange Act and Rule 10b-5(b) Thereunder 
(Petersen) 

 

120. Paragraphs 1-111 are realleged and incorporated by reference herein. 

121. Petersen, by engaging in the conduct described above, directly or 

indirectly, in connection with the purchase or sale of a security, by the use of means 

or instrumentalities or interstate commerce, of the mails, or of the facilities of a 

national securities exchange, with scienter: made untrue statements of a material fact 

or omitted to state a material fact necessary in order to make the statements made, in 

the light of the circumstances under which they were made, not misleading.  

122. Petersen knew, or was reckless in not knowing, that he made untrue 

statements of a material fact or omitted to state a material fact necessary in order to 

make the statements made, in light of the circumstances, not misleading. 

123. By reason of the foregoing, Petersen violated, and unless enjoined will 

again violate, Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-

5(b) thereunder [17 C.F.R. § 240.10b-5]. 

FOURTH CLAIM FOR RELIEF 
Unregistered Offer or Sale of Securities   

Violations of Section 5 of the Securities Act 
(All Defendants) 

 

124. Paragraphs 1-111 are realleged and incorporated by reference herein. 

125. No registration statement had been filed or was in effect with the SEC 

for any of the security-based binary options offered or sold through the Bloombex 

Brokers, their Call Centers and Defendants. 

126. Defendants, by engaging in the conduct described above, directly or 

indirectly, made use of means or instruments of transportation or communication in 

interstate commerce or of the mails to offer to sell or to sell such securities. 

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COMPLAINT 33  
 

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127. By reason of the foregoing, Defendants violated, and unless enjoined 

will again violate, Section 5 of the Securities Act [15 U.S.C. §§ 77e]. 

FIFTH CLAIM FOR RELIEF  
Control Person Liability Under Section 20(a) of the Exchange Act for the 

Bloombex Brokers’ and Call Centers’ Violations of Section 10(b)  
(All Defendants) 

128. Paragraphs 1-111 are realleged and incorporated by reference herein. 

129. At all times relevant hereto, each of the Defendants was a control person 

of the Bloombex Brokers and their Call Centers for purposes of Section 20(a) of the 

Exchange Act [15 U.S.C. § 78t(a)], directly or indirectly controlling those operations. 

130. The Bloombex Brokers and Call Centers, directly or indirectly, by use of 

the means or instruments of interstate commerce, or of the mails, or the facility of a 

national securities exchange, in connection with the purchase or sale of securities, and 

with knowledge or recklessness: (a) employed devices, schemes, or artifices to 

defraud; (b) made untrue statements of material fact or omitted to state material facts 

necessary to make the statements made, in light of the circumstances under which 

they were made, not misleading; and/or (c) engaged in acts, practices, or courses of 

business which operated or would operate as a fraud or deceit upon any person; and 

thereby each committed violations of Section 10(b) of the Exchange Act [15 U.S.C. § 

78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]. 

131. Defendants cannot establish that they did not directly or indirectly 

induce the acts of the Bloombex Brokers and their Call Centers that constitute 

violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, nor that 

they acted in good faith. 

132. Defendants are therefore liable as controlling persons under 

Section 20(a) of the Exchange Act to the same extent as Bloombex Brokers and the 

Call Centers would be liable for violations of Section 10(b) of the Exchange Act and 

Rule 10b-5 thereunder. 

  

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COMPLAINT 34  
 

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SIXTH CLAIM FOR RELIEF  
Control Person Liability Under Section 20(a) of the Exchange Act for The 

Bloombex Brokers’ and Call Centers’ Violations of Section 15(a) of the 
Exchange Act 

(All Defendants) 
133. Paragraphs 1-111 are realleged and incorporated by reference herein. 

134. At all times relevant hereto, each of the Defendants was a control person 

of the Bloombex Brokers and their Call Centers for purposes of Section 20(a) of the 

Exchange Act [15 U.S.C. § 78t(a)], directly or indirectly controlling those operations. 

135. By engaging in the conduct described above, the Bloombex Brokers and 

the Call Centers: (a) engaged in the business of effecting transactions in securities for 

the account of others; and (b) directly or indirectly, made use of the mails or the 

means or instrumentalities of interstate commerce to effect transactions in, or to 

induce or attempt to induce the purchase or sale of, securities without being registered 

as a broker or dealer with the SEC or associated with a broker or dealer registered 

with the SEC; and thereby each committed violations of Section 15(a) of the 

Exchange Act [15 U.S.C. § 78j(b)]. 

136. Defendants cannot establish that they did not directly or indirectly 

induce the acts of the Bloombex Brokers and their Call Centers that constitute 

violations of Section 15(a) of the Exchange Act, nor that they acted in good faith. 

137. Defendants are therefore liable as controlling persons under 

Section 20(a) of the Exchange Act to the same extent as Bloombex Brokers and the 

Call Centers would be liable for violations of Section 15(a) of the Exchange Act. 

SEVENTH CLAIM FOR RELIEF 
Aiding and Abetting The Bloombex Brokers’ and Call Centers’  

Violations of 10(b) of the Exchange Act 
(All Defendants) 

 

138. Paragraphs 1-111 and 130 are realleged and incorporated by reference 

herein. 

Case 2:19-cv-08334   Document 1   Filed 09/26/19   Page 34 of 38   Page ID #:34

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COMPLAINT 35  
 

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139. The Bloombex Brokers and Call Centers, directly or indirectly, by use of 

the means or instruments of interstate commerce, or of the mails, or the facility of a 

national securities exchange, in connection with the purchase or sale of securities, and 

with knowledge or recklessness: (a) employed devices, schemes, or artifices to 

defraud; (b) made untrue statements of material fact or omitted to state material facts 

necessary to make the statements made, in light of the circumstances under which 

they were made, not misleading; and/or (c) engaged in acts, practices, or courses of 

business which operated or would operate as a fraud or deceit upon any person; and 

thereby committed violations of Section 10(b) of the Exchange Act and Rule 10(b)-5. 

140. Pursuant to Section 20(e) of the Exchange Act [15 U.S.C. § 78t(e)], any 

person that knowingly or recklessly provides substantial assistance to another person 

in violation of a provision of the Exchange Act, or of any rule or regulation issued 

thereunder, shall be deemed to be in violation of such provision to the same extent as 

the person to whom such assistance is provided. 

141. Each of the Defendants knowingly or recklessly provided substantial 

assistance to violations of Section 10(b) of the Exchange Act and Rule 10(b)-5 

thereunder by Bloombex Brokers and their Call Centers. 

142. By reason of the foregoing, Defendants are liable for violations of 

Section 10(b) of the Exchange Act and Rule 10(b)-5 by the Bloombex Brokers and 

their Call Centers to the same extent as each of the Bloombex Brokers and Call 

Centers would be liable for their own violations and, unless enjoined, will again 

violate Section 10(b) of the Exchange Act and Rule 10(b)-5 thereunder. 

EIGHTH CLAIM FOR RELIEF 
Aiding and Abetting The Bloombex Brokers’ and Call Centers’ Violations of 

Section 17(a) of the Securities Act 
(All Defendants) 

143. Paragraphs 1-111 are realleged and incorporated by reference herein. 

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COMPLAINT 36  
 

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144. The Bloombex Brokers and their Call Centers, by engaging in the 

conduct described above, in the offer or sale of securities, by the use of means or 

instruments of transportation or communication in interstate commerce or by use of 

the mails directly or indirectly: (a) with scienter, employed devices, schemes, or 

artifices to defraud; (b) negligently or with scienter, obtained money or property by 

means of untrue statements of a material fact or by omitting to state a material fact 

necessary in order to make the statements made, in light of the circumstances under 

which they were made, not misleading; and (c) negligently or with scienter, engaged 

in transactions, practices, or courses of business which operated or would operate as a 

fraud or deceit upon the purchaser of such securities. 

145. Pursuant to Section 15(b) of the Securities Act [15 U.S.C. § 77o(b)], any 

person that knowingly or recklessly provides substantial assistance to another person 

in violation of Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)], shall be 

deemed to be in violation of such provision to the same extent as the person to whom 

such assistance is provided. 

146. Each of the Defendants knowingly or recklessly provided substantial 

assistance to violations of Section 17(a) of the Securities Act by Bloombex Brokers 

and their Call Centers. 

147. By reason of the foregoing, Defendants are liable for violations of 

Section 17(a) of the Securities Act to the same extent as each of the Bloombex 

Brokers and their Call Centers would be liable for their own violations of Section 

17(a) and, unless enjoined, will again violate Section 17(a) of the Securities Act. 

NINTH CLAIM 
 

Claims Against Relief Defendants As Recipient Of Investors’ Funds 
148. Paragraphs 1-111 are realleged and incorporated by reference herein. 

149. Exchange Act Section 21(d) provides: “[i]n any action or proceeding 

brought or instituted by the SEC under any provision of the securities laws, the SEC 

may seek, and any Federal Court may grant, any equitable relief that may be 

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COMPLAINT 37  
 

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appropriate or necessary for the benefit of investors.”  15 U.S.C. § 78u(d)(5).  

Exchange Act Section 27 gives the federal courts jurisdiction over such equitable 

claims for relief.  [15 U.S.C. § 78aa.] 

150. Relief Defendants received funds and property from one or more of the 

Defendants, which are the proceeds, or are traceable to the proceeds, of the unlawful 

activities of Defendants, as alleged in at least paragraphs 5, 14-15 and 81-90 above. 

151. Relief Defendants obtained the funds and property alleged above as part 

of and in furtherance of the securities violations alleged throughout this Complaint 

and under circumstances in which it is not just, equitable or conscionable for them to 

retain those funds and property.  Relief Defendants have thus been unjustly enriched. 

RELIEF REQUESTED 
WHEREFORE, the SEC respectfully requests that this Court: 

a) Find that Defendants committed the alleged violations; 

b) Order Defendants to disgorge, with prejudgment interest, all ill-

gotten gains they received or derived from the activities set forth in this 

Complaint, and to repatriate any ill-gotten funds or assets they caused to be sent 

overseas.  Order Relief Defendants to disgorge, with prejudgment interest; 

c) Order Defendants to pay civil penalties under Section 20(d) of the 

Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 

U.S.C. § 78u(d)(3]; 

d) Permanently enjoin Defendants from directly or indirectly violating 

Sections 5 and 17(a) of the Securities Act [15 U.S.C. §§ 77e & 77q(a)] and 

Sections 10(b) and 15(a) of the Exchange Act [15 U.S.C. §§ 78j(b)] and Rule 10b-

5 thereunder [17 C.F.R. § 240.10b-5]; 

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COMPLAINT 38  
 

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e) Retain jurisdiction over this action to implement and carry out the 

terms of all orders and decrees that it may enter, or to entertain any suitable 

application or motion for additional relief within the jurisdiction of this Court; and 

f) Grant such other relief as may be necessary or appropriate. 

 
Dated:  September 26, 2019 

 
Respectfully submitted,  
 

 /s/ KENNETH W. DONNELLY 
 
Kenneth W. Donnelly 
Attorney for Plaintiff 
Securities and Exchange Commission 

 
 

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