Montana man accused of running fraudulent investment scheme in Sandusky

Federal law enforcement authorities in Cleveland have arrested a Montana man who allegedly defrauded investors out of more than $10 million through an elaborate international scheme that officials say he ran out of Sandusky between 2012 and 2016.

Jared J. Davis was taken into custody early Tuesday by agents from the FBI and the IRS after arriving at Cleveland Hopkins International Airport on board an Icelandair flight, said Mike Toban, a spokesman with the U.S. Attorney's Office.

A grand jury had indicted Mr. Davis on 19 charges in early May, including wire fraud, money laundering, and obstruction of justice. The indictment was unsealed after his Tuesday arrest.

In court documents, federal prosecutors allege that Mr. Davis was the leader of a fraudulent binary options investment scheme that operated under various trade names including OptionMint, OptionKing, and OptionQueen. All were tied to a firm called Erie Marketing LLC, which was headquartered in Sandusky. 

Binary options are essentially all-or-nothing bets between two investors that a given security or commodity will go up or down.

While binary options trading is legal, authorities said Mr. Davis’ business was not registered with the Securities and Exchange Commission or the Commodity Futures Trading Commission. And rather than connecting investors to a legitimate exchange, Mr. Davis himself would take the opposite position, making money only when his investors lost money. 

“This defendant portrayed himself as a legitimate investment broker when he was really no better than a simple con man,” First Assistant U.S. Attorney David Sierleja said in a statement. “He fleeced his victims out of $10 million by manipulating trading conditions, falsely telling investors his salespeople were financial analysts and using offshore companies to spend money as fast as it came in.”

Authorities said Mr. Davis, who formerly resided in Columbus but now lives in northwest Montana, found his victims through Internet marketing campaigns and call centers that he operated out of Sandusky, Costa Rica, and the small Caribbean territory of St. Maarten. The indictment alleges Mr. Davis enlisted the help of others in the United Kingdom, Belize, Anguilla, Costa Rica, St. Vincent, the Grenadines, and St. Maarten to set up foreign corporations to receive and launder the victims’ deposits.

Mr. Davis has pleaded not guilty to all 18 charges. He is being held in the Lucas County jail. A detention hearing is scheduled for Thursday.