Securities regulators on Tuesday raided the offices of an Israeli lending firm on suspicion that it defrauded customers, falsified documents, and stole millions from clients.
Unet Credit, a non-banking finance company, had as a member of its board former finance minister Moshe Kahlon, who resigned last month when news broke of the alleged criminal activities. Kahlon is expected to be questioned as part of the investigation.
The company has been involved in a series of scandals over the past year surrounding repeated discrepancies in its funds, which attracted the attention of authorities.
Four senior company figures were arrested on Tuesday — former CEO Yitzhak Ezer, Nazareth branch head Yitzhak Eviatar, and controlling shareholders Shlomo Isaac and Shai Penso. They were released by a court under restrictive conditions, including a restraining order barring them from leaving Israel for 180 days.
The Israel Securities Authority alleged the suspects committed fraud and hid their activities from the company and the public by “falsely registering the company’s documents and forging documents.”
The authority also charged that Ezer used his private account to make transactions in the company’s shares, and together with Isaac “paid into the account of the private company that they control” while using inside information.
Eran Shaham-Shavit, Shlomo Isaac’s attorney, said that his client has cooperated with investigators and that he “continues to believe in the company, and is convinced the company can return to a successful and profitable direction.”
Over the past year Unet lost millions of shekels in funds, including NIS 10.6 million ($3 million) worth of missing checks and a loan of NIS 37.5 million ($10.8 million) given to Zoabi Holding in Nazareth that it is unable to collect.
Unet also revealed on Tuesday it had discovered another inconsistency in its books, which included a transaction of up to NIS 50 million ($14.4 million) made to a private company that was “not approved as required by law and not reported to the public,” the Israel Hayom daily reported.
In May, robbers disguised as food deliverymen stole NIS 3.5 million ($1 million) from the company’s main branch in Holon. They were suspected by former company executives of being aided from within.
Finally, an internal audit last month found a discrepancy of NIS 7.7 million ($2.23 million) in the company’s books.
Kahlon resigned two weeks after the audit, noting that “the company may have significant financial exposure, which was caused by events that occurred before I joined the company.”