Less than two months after the United States Securities and Exchange Commission (SEC) filed a complaint against binary options schemee Spot Option and its owners Malhaz Pinhas Patarkazishvili (Pini Peter) and Ran Amiran, the regulator has made it clear that it will seek alternative service on the defendants.
On June 7, 2021, the SEC filed a motion for alternative service at the Nevada District Court. The document, seen by FX News Group, states that the SEC requests a Court order authorizing alternative service of process on all of the defendants, who reside in Israel.
Although the defendants (a) received a copy of the Complaint through counsel they retained in connection with the SEC’s investigation, (b) publicly admitted that they are aware of the Complaint, and (c) have a duty to avoid the unnecessary expenses of serving the summons, they have declined to waive formal service or to authorize their counsel to accept service on their behalf.
Consequently, pursuant to Fed. R. Civ. P. 4(f)(3), the SEC seeks permission to serve the defendants via international Federal Express to physical addresses registered with the Israel Population and Immigration Authority and the Israel Corporations Authority and via email on their U.S.-based counsel.
The touchstone for effective service is notice sufficient to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections, notice the defendants already have. These proposed means are therefore reasonably calculated to provide notice and to satisfy any requirement of formal service.
In its complaint, the SEC alleges that defendants Malhaz Pinhas Patarkazishvili (“Pini Peter”) and Ran Amiran (“Amiran”) owned and controlled a company called Spot Option, Ltd. (“Spot Option”), now known as Spot Tech House, Ltd. (collectively, “Defendants”), and that through Spot Option, the Defendants carried out a scheme that involved the fraudulent and unregistered offer and sale of “binary option” securities to retail investors worldwide, including in the United States.
Spot Option, with the close involvement of Pini Peter and Amiran, deployed a multitude of fraudulent practices, deceptive acts, and false and misleading statements to cause investors to lose money trading the options offered by Spot Option. Defendants’ activities resulted in many investors losing most of their money trading these “binary options,” including oftentimes hundreds of thousands of dollars meant for retirement.
The Israel Corporations Authority maintains a registry of addresses for corporations located in Israel. The SEC has obtained such registered addresses for all three Defendants. Israel itself, which has filed a criminal indictment against Pini Peter and Spot Option in connection with their alleged failure to pay certain taxes, has deemed these to be valid addresses for Pini Peter and Spot Option.