‘Israeli Madoff’ to face 96 charges, ‘conned his own aunt’

The state prosecutor indicted investment banker Eran Mizrahi on 96 counts, including aggravated fraud, writing bad checks, document forgery, money laundering and theft from clients, on Monday. Mizrahi is accused of swindling approximately 100 clients out of NIS 45 million ($11.5 million) and laundering an additional NIS 250 million ($64 million) from 2007 until his arrest in May of this year.

The media and some of the alleged victims have been referring to the 40-year-old resident, of Savyon, an uper-class suburb of Tel Aviv, as “Israel’s Madoff.”

According to Globes, two of Mizrahi’s victims were his aunt, Sophia Azeri, whom he allegedly convinced to sell her apartment and transfer NIS 600,000 to him, and a 68 year-old retiree, Ita Gelbert, who suffers from Parkinson’s disease, whom he allegedly swindled out of her entire savings, totaling NIS 590,000.

Mizrahi reportedly promised his clients returns of 1% to 1.5% on their investments and then disappeared when the money did not materialize.

In May, the fraud division of the police searched several days for Mizrahi, who they believed fled his home after accumulating large debts to his investors. One day after his father, Joseph Mizrahi, was arrested in connection with the affair and subsequently released to house arrest, the younger Mizrahi turned himself in to police.

On May 31, the day Eran Mizrahi was arrested, Zion Levy and Daniel Idelson, two of Mizrahi’s alleged victims, filed a petition requesting that Mizrahi be declared bankrupt by the court and that a receiver be appointed to oversee Mizrahi’s assets. According to the petition, Mizrahi introduced himself to them in 2009 as the manager of “Eran Mizrahi Investments and Finance Ltd.,” later changing the name to “Citadel Finance and Investments Ltd.” Mizrahi convinced the two to invest their money with him, promising no substantial risk and the potential to reap monthly returns of at least 1% to 1.5%. Mizrahi told the investors that he had opened a trustee account at Bank Hapoalim in Givatayim where they should deposit their money.

Referring to the case as “very reminiscent of the exploits of the international swindler Bernard Madoff,” the petitioners said that Mizrahi told them that he personally guaranteed their money.

According to Levy and Idelson, Mizrahi said that he had also opened a trustee account at a Swiss bank, Heritage Bank. He explained that Heritage Bank was investing the money from the account in Givatayim before transferring it back into the account with returns.

Furthermore, the petitioners claimed that Mizrahi promised that they could withdraw any or all of their money at any time, with 30 days’ notice.

In August 2009 Levy invested money with Mizrahi, as did Idelson in December 2010. In November 2011, the two approached Mizrahi asking to withdraw from their accounts but received only excuses about “cash flow” difficulties. The stories continued for several months until March 2012, when Mizrahi, according to the petition, “disappeared off the face of the earth” without having enabled the withdrawals.