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Lyin’ to Zion: Israel Is Haven for Fraudsters From France
Efforts to attract Diaspora Jews have made Israel a haven for a few who are trying to escape the long arm of the law.

Hagai Amit

Jun 24, 2016 9:40 AM

In a recent article on the connections between alleged French fraudster Arnaud Mimran, currently on trial in France, and Prime Minister Benjamin Netanyahu, the French newspaper Liberation featured a headline calling Israel a “paradise” for French swindlers.

“Six of the 12 junior defendants in the Arnaud Mimran case were not in court, because they were in Israel, including Eddie Abittan, Michael Haik, Gabriel Cohen, Jeremy Grinholz and Frederic Sebag,” the French daily reported.

“Others involved in the ‘sting of the century’ also found sanctuary in Israel before being extradited to France. That’s the case with Cyril Astruc, alias Alex Khan … who found sanctuary in Israel and was arrested in January 2014. If the vast majority of French Jews who emigrate to Israel are honest, hundreds of others choose to immigrate to Israel to evade legal proceedings in France or use Israel as a base for fraud that they plan to carry out abroad,” the newspaper wrote.

The coverage was prompted by a series of fraud cases that have surfaced involving French Jews. And that is even before Haaretz reported that the star witness in the “sting of the century,” Eithan Liron, is hiding in an apartment on Tel Aviv’s Nordau Boulevard.

In early May, seven Netanya residents with French citizenship were arrested on suspicion of committing massive fraud against several foreign companies. They allegedly hacked the email accounts of senior executives at the targeted multinationals in order to impersonate them and persuade company employees to transfer large sums into bank accounts under their control, ostensibly in order to pay suppliers.

In April, French media outlets reported that five Israeli foreign currency firms were at the center of a French investigation of a 105-million-euro ($118 million) alleged fraud against investors. Fifteen suspects were detained on suspicion of involvement in the case. And in January, five suspects of French origin were arrested for allegedly impersonated corporate executives for the purpose of fraud.

Liberation reported that the instigator of the alleged scheme was Gilbert Chikli, who it said was living in a home with a pool and Jacuzzi in Ashdod, protected by armed guards, “even though he had been sentenced [abroad] to seven years in prison and a fine of a million euros.”

Reports from recent months also allege connections with other cases from the last two years, including one reported at the beginning of last year involving two Jewish suspects of French origin who are accused of systematically collecting information about executives at hundreds of French companies that they were said to be seeking to defraud.

The reports claimed that the two, who live in Tel Aviv and Herzliya, impersonated lawyers and business people and approached the companies demanding that funds be transferred to the pairs’ bank accounts.

If international investigators in Israel perceive crime from Central and South American as relating to drugs, and crime from Russia and Ukraine as fraud-related, in recent years, crime from France has related more and more to sophisticated technology-related crime, in their view.

Bilateral cooperation

Some 7,500 Jews immigrated to Israel last year, compared to 6,700 in 2014 and 3,300 in 2013.

Most are at least middle- class individuals and families who come to Israel in order to escape religious tensions and anti-Semitism in France, and because they want to live in the Jewish state. But for a small minority of these immigrants, Israel is a haven of another sort.

The criminal ties between the two countries have for some years accounted for a significant amount of the workload in the international investigation units of the Israel Justice Ministry and its French counterpart. Cooperation between agencies is close and includes annual meetings to review outstanding cases. The number of extraditions from Israel to France rises every year.

It’s not only legitimate Jewish immigration from France that worries Israeli officials. The Law of Return, which gives Jews and their extended families the right to immigrate to Israel and become citizens, has also been a subject of the authorities’ attention. When there is a new wave of immigrants from a particular country, there is frequently also a rise in the number of people who try to “hitch a ride” at their expense, in order to settle in Israel and exploit their knowledge of the language and customs of their country of origin to engage in criminal activity from their new Israeli base.

The French immigrant community is not thrilled about the reports of criminal links between Israel and France.

“There are a few French Jews who have done things that are not good in France and Israel has taken them in,” says Ouriel Boubli, a lawyer who works with French immigrants. “Apparently that was a mistake. It causes problems and the French community in Israel is angry at these people who have tainted it.” The recent cases have also made it difficult for “good folks” who want to come to Israel to invest, he added.

People of means are choosing to immigrate, Moti Morad, the CEO of the Rishon Letzion branch of Mati, which works with French immigrants, confirms. “People who used to come here just on visits and would count the number of days that they could remain without paying taxes have become citizens, but I don’t see a trend involving the transfer of black [market] money to Israel. There is always a certain percentage.”

An article in Newsweek in late March reported data from the group New World Wealth, which seeks to estimate the flow of capital around the world. The data included an effort to survey international migration by people of means and it reported that a quarter of the 10,000 millionaires who left France in 2015 were Jewish.

This year, the report claims, 4,000 new immigrant millionaires have come to Israel, half of whom have settled in Tel Aviv, but Herzliya, Netanya and Jerusalem were also mentioned as cities that have attracted new immigrant millionaires. The figures reflect the fact that in recent years, Israel has become a magnet for wealthy Jews from around the world and not just from France.

Italy, too

“There is an extensive Italian community that is currently transferring a lot of money to Israel out of concern over steps that the government there would take, but we know that there are also a lot of French people coming and buying property in Israel,“ says Arik Gruber, a lawyer.

One possible reason for Israel’s attractiveness for some is the fact that in 2008, the law was amended to give new immigrants and returning Israelis who had left the country a 10-year tax exemption on income produced outside of Israel or generated from assets outside the country. The amendment also exempted them from reporting overseas income and assets. That’s no small attraction for someone seeking to bring black market assets into the country, but Israeli government authorities have no data on the extent to which such assets have been transferred here.

Avichai Snir of the Netanya Academic College, who conducts research on the subject of black market capital in Israel, says: “The phenomenon exists of money laundering by Jews from around the world in Israel. Historically, the Israeli view was that Jews were to be pitied even under those circumstances and that we needed to help them smuggle their capital. That’s a view from the early years of the country, that persisted for a long time.”

Gruber says a lot of black-market money has come into the country through a variety of means. And a former senior staffer in the Israel Tax Authority’s investigation department added: “Israel has always supported Jews bringing their money here. As a result of legislation, they come here, and for their first ten years here, they have almost no contact with law enforcement authorities.”

Suspicion over money laundering is sometimes the only grounds on which the Israeli police can deal with crime committed abroad. To open a money-laundering investigation in connection with activity committed abroad, the activity has to be significant not only from an Israeli standpoint, but also where it is committed, Israel Police sources say.

If it involves gambling money that is sent to Israel, in a place like the Czech Republic, for example, gambling is legal. If the law is broken in the country of origin, when the property comes into Israel, it is coming in as part of an effort to remove it from where the offense was committed. In such a situation, the money laundering is a separate offense that is divorced from the original offense, according to law enforcement officials.

The officials add that if the profits from fraud are brought into Israel, Israeli law enforcement addresses only the economic aspects of the case, attempting to prosecute the alleged offender for money laundering.

That still requires the cooperation of officials in the country where the initial offense was committed to prove that the motive was to hide the assets in Israel.

“The moment that parties with illegal funds enter Israel, they look for cash-rich transactions through which in one fell swoop they can launder a lot of money,” said a knowledgeable source.

“Investment in real estate is the last stage in the process, after I’ve put the money into the system. Leaving the money in the bank is more problematic, because it’s much more exposed. In real estate, you can register the property in the name of an aunt or sister or a straw man, whereas an account with several million euros in it is something that is usually reported and that could arouse suspicions,” said the source, who asked to remain anonymous.