Having spent 14 and a half years behind bars for running one of the biggest banking scams in Israel’s history, Etti Alon will be released after a parole board granted her request for early release from prison at a Thursday hearing.
Alon, who was serving a 17-year sentence for embezzling more than NIS 250 million ($65 million) from the now-defunct Trade Bank to cover her brother’s gambling debts, had the last two and a half years of her sentence commuted by the Israel Prisons Service parole board, and was to be released from Neve Tirtza Prison to house arrest later in the day.
The parole board assented to Alon’s request for early release after the state prosecution reversed its opposition to her bid for a commuted sentence.
She is still required to pay a NIS 5 million fine for masterminding the scheme, which led to the collapse of the bank, where she worked as the deputy chief of investments.
In February, the Central District Court rejected Alon’s request for early release, citing the objections of the State Attorney’s Office, which claimed her crimes had caused irreparable damage to Israel’s banking system. The Prisons Service then recommended her request be reconsidered in six months time.
In 2002, Alon confessed to stealing a quarter of a billion shekels from Trade Bank customers over a five-year period in order to help her brother, Ofer Maximov, pay off the NIS 100 million gambling debts he owed to various organized crime groups.
Maximov, who received the majority of the stolen money, was sentenced to 15 years in prison for his part in the scheme.
Not only did Alon’s theft trigger the collapse of the bank, which cost the state half a billion shekels in deposit insurance, but officials say the vast sums of money involved redrew the map of organized crime in Israel.
According to police, the millions of shekels circulated through the hands of various underworld loan sharks, gamblers and crime bosses, who fought over who would have dibs on collecting Maximov’s debts. The scandal sparked a number of gang wars between rival crime bodies that lasted years.
In the wake of the scandal, the Bank of Israel revamped banking regulations, introduced new protocols to prevent money laundering and required employees in sensitive positions to rotate positions regularly.