Crime family accused in billion-shekel fraud.
Over 20 suspects were arrested yesterday morning in a huge tax fraud scandal. The suspects allegedly took control of several failing companies by violent methods and then used the firms to collect tax refunds by means of about NIS 1 billion worth of fake invoices.
Police say the suspects used the businesses to obtain some NIS 160 million in fraudulent value-added tax refunds.
Among those arrested were known criminals allegedly linked to Shalom Domrani's organized crime ring, which operates in the south.
"This is just the beginning of the affair," a prosecution representative told the Tel Aviv Magistrate's Court yesterday. "There are plenty of other [people] involved to investigate."
All the suspects were brought for a remand hearing yesterday evening in front of Judge Yuval Gazit.
Police say the scam worked by having the suspects, or their straw men, approach a business in financial trouble and offer the owners a loan from one of their companies. Along with the loan, the business also received fake invoices for about two and a half times the amount of the loan. These were for supposed purchases of products, materials or work that were never supplied. Thus if, for instance, the loan was for NIS 1 million, the fake invoices would be for NIS 2.5 million.
The VAT refund due on NIS 2.5 million is NIS 400,000, so the business would receive this amount back from the Tax Authority. This also happened to be the amount of interest the suspects would charge on a NIS 1 million loan. The business owners were allegedly forced to give the suspects post-dated checks for the amount of the interest - or in other words, the amount of the VAT refunds.
In addition, the fake receipts enabled the businesses to lower their income tax payments, since they showed much higher expenses.
In cases where the owners could not pay back the loans at the rates the criminals demanded, the lenders took over the business and its bank accounts themselves, said the police. The criminals then wrote fictitious invoices from the business and emptied its bank accounts.
The charges against the suspects include money laundering, fraud, tax fraud, false reporting to the tax authorities, forgery, extortion, illegal loan sharking, conspiracy, fraudulent receiving and import and export violations.
Two of the main suspects, Ronnie Baranes and Aharon Azran, were remanded for six days yesterday, after the judge concluded that there were reasonable grounds both for suspecting the accused of the crimes and for fearing that they might seek to obstruct the investigation if left free. However, the six-day remand he ordered is less than the 15 days the prosecution sought.
The hearings for the other suspects were still continuing when TheMarker closed.
The investigation started a few months ago, after the investigative department of the Tel Aviv VAT office and the police fraud squad began seeing large number of fraudulent tax invoices. The police's financial crimes unit then opened an undercover investigation.
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