U.S. Citizen Extradited from Costa Rica Pleads Guilty to Wire Fraud Charges

 

Defendant Used Manipulative Computer Software to Defraud Binary Options Investors of More than $2.9 Million

 Earlier today, in federal court in Central Islip, David Butler, a United States citizen, pleaded guilty to wire fraud conspiracy in connection with a scheme to defraud investors in a form of investment known as “binary options.”  Butler was arrested in April 2022 in Costa Rica and extradited to the United States on July 14, 2022.  The guilty plea was held before United States District Judge Joanna Seybert.  When sentenced, Butler faces up to 20 years in prison.

Breon Peace, United States Attorney for the Eastern District of New York, Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Thomas M. Fattorusso, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI), announced the guilty plea.

“Butler’s guilty plea demonstrates that even when crimes are committed from thousands of miles beyond our country’s borders using the latest computer software, neither the foreign nature nor the sophistication of the scheme will shield fraudsters from being brought to justice in a U.S. courtroom,” stated United States Attorney Peace.  “This Office is committed to protecting the investing public from financial scams wherever they occur.”  

Mr. Peace thanked the Costa Rican government for its assistance with the arrest and extradition of the defendant.

“David Butler and his accomplices employed a complex, multi-million dollar con to deceive investors by using a manipulated ‘binary option’ system.  While investors waited for a surefire return on their investment, Butler pocketed the money to guarantee his own future—until he was caught.  Butler now understands that his only genuine guarantee is that he will now face the consequences of his criminal schemes,” said Thomas M. Fattorusso, Special Agent in Charge of IRS:CI in New York.

"As he admitted today, Mr. Butler defrauded his victims for his own personal gain.  This case should serve as a reminder to all those who attempt to game our financial systems from afar that the FBI, along with our global law enforcement partners, will bring you back to the United States to face justice in our federal courts," stated Assistant Director-in-Charge Driscoll.

As set forth in court filings, between approximately January 2011 and October 2016, Butler and his co-conspirators operated binary options companies, including SpotFN, Binary FN and Janus Options (Binary Options Companies) from Glen Cove, New York, Costa Rica and Kosovo.  The Binary Options Companies promised to pay investors, who were located throughout the United States, a predetermined profit based upon particular outcomes in the markets for securities, currencies and other investments.  For example, the Binary Options Companies would offer to pay customers a predetermined profit if a particular security or currency was valued at a particular price on a particular day at a particular time. 

To induce investments, Butler and his co-conspirators told investors, in telephone calls and emails, that the predetermined profits that the Binary Options Companies had promised them would be based upon the actual prices of securities, currencies and other investments at particular points in time.  Unbeknownst to the investors, however, Butler and his co-conspirators used computer software that allowed the Binary Options Companies to manipulate data associated with the investors’ binary options so that the probability of investors earning a profit would favor the Binary Options Companies.  At no time did Butler or any other employee of the Binary Options Companies inform the investors that the binary options that they had purchased from the Binary Options Companies could be manipulated to the investors’ disadvantage.  As a result of their deception, Butler and his co-conspirators stole more than $2.9 million from investors. 

In July 2022, Mr. Peace was selected as the Chairperson of the White Collar Fraud subcommittee for the Attorney General’s Advisory Committee (AGAC).  As the leader of the subcommittee, Mr. Peace will play a key role in making recommendations to the AGAC to facilitate the prevention, investigation and prosecution of various financially motivated, non-violent crimes including wire fraud, such as the fraud that the defendant committed.