As Israel Based Financial Fraud Soars, Police Swoop On 20 Suspects As Part Of Global, FBI Led Investigations

Israel Police arrested 20 people this week in conjunction with a global FBI sting against an international crime ring that has allegedly scammed tens of millions of dollars from individuals and companies over the Internet.

Among those detained on March 1 were Harry Meir Amar of Netanya, Shimon Ben Shitrit of Ashdod, Tamzi Bebershvili of Netanya, Ori Saadon of Beit Shemesh, Stanislav Nazarov of Or Akiva, Timur Kardanov of Netanya, Rabia Abdel Hai of Tira, Ahmad Abu Naji of Nazareth, Husam Hariri of Umm el-Fahm and Moshe Hazan of Ramat Gan.

They are suspected, variously, of fraud, aggravated fraud, conspiring to commit crimes, threats, extortion, money laundering and running a criminal organization.

The arrests are part of an ongoing investigation by police fraud officers, in conjunction with the FBI, that the Israel Police has dubbed “Case 278: Social Engineering.”

In the information security world, the term “social engineering,” refers to the psychological manipulation of people into performing actions or giving away secret information.

The suspects allegedly approached companies, including insurance companies, banks and pension funds abroad, and impersonated senior executives of those companies.

They spoke to mid-level employees of the companies and led them to believe they were being entrusted to handle a large financial transaction on behalf of the company, but one that had to be treated with the utmost secrecy.

The mid-level employees were then instructed to wire money from the company’s corporate bank accounts to bank accounts controlled by the alleged fraudsters.

This money was then rapidly wired to bank accounts in China and elsewhere, and then transferred on to the alleged fraudsters and their co-conspirators.

Among the organizations targeted, according to Israel Police, were companies in Poland, Finland, India, France and the United States.

According to Israel Police, the alleged fraudsters hired the Israeli-Arab Hariri crime organization, one of Israel’s most powerful and dangerous organized crime groups, to provide protection through the use of threats and extortion, in exchange for a percentage of the proceeds.

Police seized luxury cars, cash and documents during the raids, which took place at multiple locations throughout Israel.

Later the same day, police also arrested Meir Cohen, a business owner from Modiin, as well as Swiss citizen and Tel Aviv resident Jonathan Maman.

Both were arrested for alleged Internet fraud through impersonation, although the court protocols do not indicate if these arrests were connected to Case 278 or relate to a separate investigation.

Two of the suspects arrested on Wednesday, Harry Meir Amar and Shimon Ben Shitrit, had also been arrested by Israel Police in November 2016 as part of a crime ring of about 35 individuals who operated out of apartments in Ashdod, Netanya and Ashkelon.

This ring allegedly committed a variety of scams against companies and individuals abroad, including selling fictitious products and services, fictitious diamonds, fraudulent binary options and forex investments, as well as what is popularly known as the “fake CEO scam,” a scam that involves impersonating the CEO of a company and asking an employee to wire money somewhere.

The CEO scam closely resembles what the Israel Police have dubbed “social engineering.” When asked if the arrests on Wednesday were connected to the arrests last November, however, an Israel Police spokeswoman told The Times of Israel that despite the fact that the two cases involve some of the same individuals and methods, they are separate.

In a press release dated March 1, Israel Police said that although the crime ring is international in scope, it is centered in Israel.

“These international fraudulent schemes involving social engineering are growing in scale and doing unprecedented damage to the reputation of Israel, which is perceived as a center that exports this kind of fraud,” the police warned.

This kind of language echoes that now being used by the Israel Securities Authority to describe the vast, largely untackled binary options fraud that has flourished out of Israel for the past decade, involving over 100 firms fleecing victims worldwide out of tens of billions of dollars.

“That is why it is a priority of the Israeli police to tackle this phenomenon.”

Indeed, one of the individuals arrested in last November’s raids was Simon Dov Chikli, who together with his brother Gilbert pioneered the fake CEO scam more than 10 years ago.

Both Chikli brothers were extradited to France in 2008 but later found their way back to Israel. Gilbert Chikli was tried in absentia and remains a wanted man in France, but lives freely in Israel, a situation that Israeli police have refused to explain, according to media reports.

In fact, Gilbert and his brother Simon were the subjects of a 2015 feature film in France, “Je Compte Sur Vous” (“Thank You for Calling” in English), which made many Jews worldwide uncomfortable, fearing it could stoke anti-Semitism with its portrayal of two French-Israeli fraudsters stealing from people in France while the Israeli police sat idly by.

Underlining the cooperation between the FBI and Israel Police, the US domestic intelligence agency announced on March 1 that it had indicted 19 individuals taking part in various international fraud and money laundering conspiracies, 16 of whom had been arrested overnight or that morning.

The arrests, the FBI said, took place in New York and Los Angeles, as well as Hungary, Bulgaria, Germany, and Israel. Seven of these 19 individuals are Israeli, and three of them — Harry Amar, Ori Saadon and Stanislav Nazarov — are among the 20 suspects also listed as having been arrested by Israeli police.

In the FBI press release, the organization hinted that it does not limit its interest to criminals that target Americans, but seeks to crack down on anyone who uses US financial infrastructure to launder their funds.

“Transnational criminal organizations attempt to exploit financial institutions and money service businesses and their anti-money laundering programs by moving illicit funds obtained in various scams perpetrated against businesses and citizens across the United States and the world that use the financial infrastructure of the United States to launder their illicit proceeds,” the FBI press release said.

Four of the other Israelis named by the FBI as being detained are Itzhak Salama, 40, an Israeli-born resident of Los Angeles; Golan Chkechkov, 39, born in Israel and a resident of New York; Michael Admon, 50, born in Israel and a resident of New York, and Haviv Arazi, 27, a citizen of Israel and a resident of New York.

They were indicted for running an unlicensed money transmitting network, or Hawala (an Arabic term), in the United States, Europe and Israel.

Hawala is a means of transferring money internationally without actually moving it, based on a trust system among brokers situated in different countries.

Despite the fact that Hawala is an ancient practice rooted in mutual good faith, the system is often used by criminals who seek to launder money.

Another of those indicted by the FBI, Israeli citizen Stanislav Nazarov, was accused of generating “hundreds of thousands of dollars in proceeds from various fraudulent schemes and engaging in international money laundering.”

The FBI also unveiled indictments against eight Hungarians who sold fictitious vehicles over the Internet, as well as against Sabina Selimovic, a resident of Germany and citizen of Serbia, and Cristian Flamanzeanu aka “Christiano Flamanzeano,” 32, a resident and citizen of Romania. Selimovic and Flamanzeano are suspected of committing fake CEO fraud alongside Amar.

“These indictments and today’s arrests followed an international investigation into an interconnected web of money launderers, fraudsters and individuals that aided and abetted their criminal activities,” said US Attorney for the District of Columbia Channing D. Phillips.

“The defendants in the cases being unsealed today are accused of taking part in schemes in the United States and abroad, costing victims millions of dollars.

The investigation demonstrates the importance of international cooperation amongst law enforcement in combatting fraud and money laundering on a global basis.”

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