United States v. Elbaz, 332 F. Supp. 3d 960

Background

Defendant Lee Elbaz, an Israeli resident and CEO of Yukom Communications, is indicted for one count of conspiracy to commit wire fraud (18 U.S.C. § 1349) and three substantive wire fraud counts (18 U.S.C. § 1343, § 2) based on conduct involving internet binary‑options businesses (BinaryBook and BigOption) from May 2014–June 2017.
The Indictment alleges Elbaz trained/supervised sales representatives who used scripted misrepresentations (commissions, returns, education/location, ease of withdrawals) and deceptive account features (bonuses, ‘‘insured’’ trades) to induce investor deposits; some communications were with victims in Maryland.
Counts Two–Four identify three Maryland victims (Victims A, B, C) and allege specific wire communications to those victims caused or aided by Elbaz.
Elbaz moved to dismiss (failure to state an offense, extraterritoriality, Commerce Clause, improper venue), moved to strike Paragraph 10 of the Indictment, and sought a bill of particulars; the Court heard the motions and reserved some discovery rulings.
The court accepted the Indictment’s allegations as true for Rule 12 purposes and denied dismissal motions, denied the motion to strike Paragraph 10, and granted the bill of particulars in part (ordering identification of Victims A–C and a list of allegedly false statements by Elbaz the government will introduce at trial).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Sufficiency of indictment (failure to state an offense)	Gov't: indictment tracks statute and provides essential facts and means, enabling defense preparation.	Elbaz: indictment lacks facts linking her to perpetrators, knowledge of fraud, and facts showing she caused or made false statements.	Denied — indictment adequately alleges elements and essential facts for conspiracy and substantive wire‑fraud counts.
Extraterritoriality	Gov't: statute applied domestically because wires to U.S. victims were alleged; U.S. interest present.	Elbaz: scheme and agreement occurred abroad; single or incidental U.S. wires insufficient; due process concerns.	Denied — focus of §1343 is misuse of wires; alleged U.S. wire transmissions to Maryland victims establish a permissible domestic application; no due process violation.
Commerce Clause (authority to prosecute foreign conspiracy)	Gov't: Congress can regulate instrumentalities of foreign commerce; scheme targeted U.S. victims via interstate/foreign wires.	Elbaz: Congress lacks Commerce Clause authority to criminalize a foreign conspiracy among foreign nationals not directed at U.S. commerce.	Denied — allegations involve use of wires implicating foreign commerce and fall within Congress’s regulatory power; foreseeable U.S. contacts suffice.
Venue	Gov't: venue proper in Maryland because wires were received there and overt acts in furtherance occurred there.	Elbaz: Indictment fails to allege overt acts in Maryland caused or foreseeable to her; specific Maryland nexus missing.	Denied — paragraph alleging transmissions to Maryland victims and overt acts suffice for venue on conspiracy and substantive counts.

Key Cases Cited

United States v. Engle, 676 F.3d 405 (4th Cir. 2012) (standard for pretrial indictment challenges and accepting indictment facts)
United States v. Perry, 757 F.3d 166 (4th Cir. 2014) (heightened scrutiny for indictment sufficiency; must state elements and essential facts)
United States v. Jefferson, 674 F.3d 332 (4th Cir. 2012) (wire fraud’s essential conduct element is misuse of wires)
Pasquantino v. United States, 544 U.S. 349 (U.S. 2005) (wire fraud punishes fraudulent use of domestic wires)
United States v. Kim, 246 F.3d 186 (2d Cir. 2001) (foreign defendant convicted where faxes/wires to U.S. produced domestic application)
United States v. Day, 700 F.3d 713 (4th Cir. 2012) (venue for conspiracy proper where overt acts in district were committed by any conspirator)
RJR Nabisco, Inc. v. European Cmty., 136 S. Ct. 2090 (U.S. 2016) (two‑step framework for extraterritoriality: statutory intent then focus analysis)
United States v. Lopez, 514 U.S. 549 (U.S. 1995) (limits on Commerce Clause authority)
Pinkerton v. United States, 328 U.S. 640 (U.S. 1946) (co‑conspirator liability for reasonably foreseeable acts)
United States v. Ebersole, 411 F.3d 517 (4th Cir. 2005) (wire transmissions establish venue where sent or received)