Feds: Man who helped bilk investors out of nearly $3M pleads guilty to wire fraud charge

A U.S. citizen extradited from Costa Rica after defrauding investors in a financial scheme involving binary options, including through a Glen Cove company, pleaded guilty Wednesday to conspiracy to commit wire fraud, according to federal prosecutors.

The Eastern District U.S. Attorney’s Office said David Butler, 52, is facing up to 20 years in prison after he and co-conspirators bilked investors out of nearly $3 million between 2011 and 2016.

A binary option is a type of options contract in which the payout depends entirely on the outcome of a yes or no proposition, according to the U.S. Securities and Exchange Commission, which said it doesn’t give the holder the right to buy or sell the underlying asset.

“Much of the binary options market operates through Internet-based trading platforms that aren’t necessarily complying with applicable U.S. regulatory requirements and may be engaging in illegal activity,” the SEC also says in an investor alert on its website.

Federal officials said Butler, who also has an address in Costa Rica and another in Kansas, was arrested in Costa Rica in April before his extradition to the U.S. last month.

Butler and his co-conspirators operated binary options companies in Glen Cove, Costa Rica and Kosovo, that promised to pay U.S. investors a predetermined profit based on specific outcomes in the markets for securities, currencies and other investments, prosecutors said Wednesday.

They promised the predetermined profits would be based on the actual prices of securities, currencies or other investments at particular points in time, according to the U.S. Attorney’s Office.

But then Butler and his co-conspirators used computer software that let their companies manipulate data associated with the investors’ binary options so that the probability of investors earning a profit would favor the companies.

“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,” Eastern District U.S. Attorney Breon Peace said in statement.

“Mr. Butler should be commended for taking responsibility for his actions. He will accept his sentence in the near future and is looking forward to returning to his loving wife and young daughter,” Butler’s attorney, Anthony La Pinta, told Newsday.

Court records show Butler is due to be sentenced in December.