He’s been buying and selling stocks on online platforms such as E-Trade for about 15 years.

So when he saw ads for a binary options trading platform, they caught his attention. He had dabbled with options trading through his E-Trade account, but he liked the opportunity that binary options trading offered to make money quickly. “You can do very well if everyone’s on the up and up,” Roger said.

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But the website he chose to trade on wasn’t on the up and up. It was a sophisticated scheme that stole more than $1 million from thousands of investors, including Roger. By the time he realized he’d been scammed, Roger had lost about $14,000.

With binary options, you make a prediction about whether a particular market or security will go up or down by a certain time or date. You don’t actually buy the underlying asset. If your prediction about the asset is correct, you get a fixed return — or you get nothing if your prediction is wrong.

“You have to have patience with trading,” Roger said. But with binary options trading, you can make a prediction about whether the price of an asset will go up or down over the next few minutes. As a result, you learn quickly whether you’ve made or lost money, can settle your trade, go back and trade again, he said.

Binary options can be legally traded on registered exchanges, said Dan Rutherford, director of the Office of Customer Education and Outreach at the Commodity Futures Trading Commission. In the U.S., there are only three designated contract markets where binary options can be traded: Cantor Exchange, Chicago Mercantile Exchange and the North American Derivatives Exchange (NADEX). “The problem is that there are a lot of offshore entities — companies that commit fraud — that use the same sort of financial product as a scam,” Rutherford said.

What impressed him most was the real-time market data the site featured, which matched the scrolling ticker information he saw on his E-Trade account. “To me as a trader, there’s nothing more important than real-time trade information,” Roger said.

The site also had several training videos that explained how to use its platform to trade binary options. It had https:// in the URL, indicating that it was secure. It even had copyright information. “Those little things you look at [to tell if a site is legitimate], they looked good,” Roger said.

The site allowed investors to start with a small investment of as little as $100 and use a credit card to fund trades. Roger used his debit card because he said he rarely uses credit and opened an account with $250. He lost his first trade but then started winning. So he put $1,000 into his account.

“If you’re savvy, you can really start to win these trades and do very well,” Roger said. In fact, he started placing trades one night around 7 p.m. and had made $7,000 by 11 p.m. One of the cons of online trading can be its addictive nature.

He then decided to cash out $1,000 from his account and got the money within three to four days. But he also started getting calls from a broker at that point. “That’s when everything started getting crazy for me,” Roger said.

The broker who called Roger praised his investing skills and offered him the opportunity to take advantage of the trading platform’s silver, gold or platinum packages. Roger opted for the gold package, which required an investment between $5,000 and $10,000. In return, he was guaranteed six insured trades — which meant he wouldn’t lose any money on those trades even if his market prediction was wrong.

Roger invested $7,500 because he thought he had nothing to lose. He actually made enough correct predictions that his account balance grew to more than $20,000.

But then he got a call at 11 p.m. one night from a broker overseas telling him about an opportunity to make money with a binary options trade on gold. The broker told Roger that it was a hot deal and he had to get in on it right then. Roger agreed to invest $2,000 and told the broker he wanted to use one of his insured trades for the transaction.

However, the broker changed the trade to $5,000 and didn’t insure it. And Roger lost that money. Then, another broker called and offered him an opportunity to get five insured trades with a $10,000 investment and a $10,000 matching investment from the company. “Luckily, that night I decided against it,” Roger said.

The next morning, Roger realized he didn’t like the high-pressure sales tactics of the company, so he decided to start taking money out of his account. He then started getting calls every 10 minutes from brokers pressuring him to invest $10,000 to get the insured trades and the $10,000 matching investment. “These guys would not leave me alone,” Roger said.

Then his bank called to say that a $10,000 withdrawal had been requested from his account and wanted to confirm whether he had authorized the withdrawal. “I was like, ‘Absolutely not,'” Roger said. “These guys tried to ping my debit card. The bank was about to take money out of my savings.”

So Roger tried to reach the primary broker he’d been in contact with but was told he was unavailable. When he said he wanted to withdraw the money from his account, he was told he had to talk to his managing broker. Whenever Roger called, the managing broker was supposedly busy. Yet, he continued to get calls from other brokers trying to get him to invest more.

“Looking back, I feel like it was … all fake,” Roger said. “There was never a platform. They were never placing trades. It was like a play — a production — and they were very good at it.”

When he realized he was never going to get back the $14,000 he invested, Roger gathered as much information about the phony platform as possible. He got names of brokers and even promised to wire more money to get account information for the operation.

Roger provided the information he collected to Covery Experts, which launched an investigation into the phony trading platform. Covery recently filed a complaint against two people for operating the fraudulent binary options scheme and was able to recover 72% of Roger's Loss back to him.