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30 arrested in massive tax graft said to involve hundreds of millions of shekels

Suspects allegedly filed false paperwork declaring takeover of hundreds of companies, then issued fake invoices, laundered money in their names; some also sold diluted gasoline

Stuart Winer is a breaking news editor at The Times of Israel.

Screen capture from video of stamps seized by police during an investigation into a large-scale tax offenses and money laundering case. Image blurred to protect the identity of victims of the scam. (Israel Police)
Screen capture from video of stamps seized by police during an investigation into a large-scale tax offenses and money laundering case. Image blurred to protect the identity of victims of the scam. (Israel Police)

Thirty people were arrested Monday as police revealed they had cracked an allegedly massive graft plot involving hundreds of millions of shekels in tax evasion and money laundering.

The scam involved the fraudulent takeover of hundreds of companies in the fuel sector that were then used to issue fake financial paperwork to “outwit” the country’s registrar of companies, the Israel Police said in a statement.

In addition, police suspect that some of those involved were operating gas stations that sold diluted fuel, damaging thousands of vehicles.

Officers raided suspects’ homes and places of work, seizing property, cars and trucks. In addition, the suspects’ bank accounts were frozen.

“This is a serious affair in which criminal elements joined professionals and freelancers, including lawyers and accountants,” the tax authority said in a statement.

Screen capture from video of police checking the quality of fuel at a gas station as part of a major fraud investigation. (Israel Police)

The developments came as a six-month undercover joint investigation by police, the Justice Ministry’s Corporations Authority, and the Energy Ministry was made public.

More arrests are expected in the coming days.

Police said that an organized gang operated across the country, allegedly filing false paperwork to take over hundreds of officially registered companies. Under the guise of ownership of those companies — and unbeknownst to the actual owners — they are suspected of having opened bank accounts, obtained credit, issued fake invoices and laundered money amounting to hundreds of millions of shekels.

Investigators are trying to determine if other companies may have been involved amid fears the number of exploited could run into the thousands. The statement urged owners to check their details with the corporations authority. Any irregularities should be reported and a complaint filed, police said.

Some of those involved also operated gas stations in various cities and allegedly mixed in other chemicals to illegally dilute the fuel. Police said that after monitoring tanker deliveries, six gas stations were found to have suspected diluted fuels.

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