19 Israelis Arrested In Fraud and Money Laundering Probe

Nineteen people were arrested by the Israel Tax Authority on Monday on suspicions they were involved in fraud, tax violations and money laundering to the tune of 200 million shekels ($51.8 milion).

Those detailed included Adi Zim, a principal in the public traded checking clearing company SR Accord and a former partner in the Kimat Heinam supermarket chain.

In addition, Tax Authority investigators conducted searches of the SR Accord’s offices as well as those companies associated with Zim and the home of the other suspects.

Zim’s remand was extended for seven days.

Investigators allege that some of the suspects, among them employees of temporary-help agencies, inflated the costs of employing workers and issued fake invoices with the intent to defraud the National Insurance Institute and the Economy Ministry.

They used check-clearing services to launder the money, investigators said.

In response to the arrest, the Israel Securities Authority ordered trading on the Tel Aviv Stock Exchange in SR Accord to be suspended briefly for the company to issue a statement.

With trading resuming, its share price plunged more than 41% to close at 11.51 shekels.

Zim is a well-known figure in the capital market. In 2010, he took Kimat Heinam public at a 340 milion-shekel valuation before selling the retailer two years laser.

Two years ago, he listed SR Accord on the stock exchange by merging it with a shell company.

Since then the company has shown storng growth, with income from financing operations jumping to 49 million shekels last year from just 4000,000 in 2014. It posted a 34.4 million-shekel profit in 2015, turning around from a 2.7 million-shekel loss the year before.

“I was surprised at the company’s pace of growth and level of profitability.

For a company new in the industry with just a few years of operations behind it, it showed phenomenal results compared to leading players in the sector that have been operating for years.

The numbers didn’t seem logical,” said one source in the industry, who asked not to be identified.

1 reply
  1. Joe Levin
    Joe Levin says:

    Nineteen people were arrested Monday on suspicion of fraud and money laundering of about NIS 200 million in state funds, according to an investigation by Israel Police’s financial unit and the Israel Tax Authority.

    One of the major suspects was a businessman who lives in a luxury villa in Savyon, and who drives a car valued at about NIS 2m, while a second major suspect was businessman Adi Zim, 46, who at the age of 15 opened a grocery store and became a multi-millionaire.

    Among the allegations against all the suspects are tax fraud, forgery, fraud and money laundering. The investigation revealed that several employment agencies in various fields such as security, nursing, cleaning and agriculture inflated the number of their employees, reported on the alleged salaries paid to fictitious employees, issued false invoices, and inflated various expenses on invoices. As a result, they received tax returns from the state and paid less taxes.

    The employment agencies are suspected of having transferred approximately NIS 200 million earned by fraudulent means to check-clearing companies such as SR Accord- who laundered the money.

    Most of the money was then transferred to employment agencies. It is suspected that the check-clearing companies cashed checks despite being aware of their fraudulent nature.

    Investigators on Sunday raided the homes and offices of the suspects, confiscating documents and property, including a luxury BMW car.

    The Israel Securities Authority stopped SR Accord’s trading on the Tel Aviv Stock Exchange. As a result its share price plunged more than 40%. Sources close to the company said that this represented “an earthquake in the check-clearing market” .

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