State prosecutors on Thursday notified Israeli supermodel Bar Refaeli, as well as her mother and brother, that they are planning to press criminal charges against them — pending a hearing — on suspicion of tax offenses involving tens of millions of shekels.
Refaeli’s mother and father, Tzipi and Rafi, are also suspected of money-laundering offenses, the Justice Ministry said in a statement.
“In accordance with the law, the suspects have the option for a hearing in the State Prosecutor’s Office, before a decision is made on whether to indict them,” the statement said.
Later on Thursday, Rafaeli’s lawyer categorically denied any wrongdoing on her client’s part, and said the supermodel’s defense team was optimistic that a judge would throw out the case.
The development came two days after Hadashot television news reported that tax authorities had retroactively tracked the model’s movements and those of her two brothers for two years to gather evidence on suspected tax offenses.
Authorities suspect that Refaeli lied in saying she lived mostly abroad, and failed to report the pricey gifts and celebrity discounts that she received to Israel’s tax authorities.
In addition, she allegedly set up companies abroad and opened foreign accounts around the world where she stored her earnings to conceal them from Israeli tax authorities. At the same time she gave US tax authorities documents saying she is non-resident of the US and lives in Israel.
In 2009-2012, Refaeli hid an estimated NIS 23 million ($6.1 million) of her earnings, according to the Justice Ministry.
During those years, she allegedly rented apartments in Israel but her parents kept her name off the paperwork to conceal her country of residence.
Tzipi Levin-Refaeli is also suspected of failing to report some NIS 3 million ($800,000) in commissions she received as Refaeli’s agent, and of depositing the kickbacks in bank accounts abroad registered to the model’s name or to companies she owned.
Tax authorities requested the foreign account bank details, which were only handed over two years later, and then only after a court order, the ministry said.
Tzipi Levin-Refaeli and Rafi Refaeli are also accused of money laundering by declaring to authorities they were the beneficiaries of some bank accounts, even though in practice, Bar Refaeli was the beneficiary.
Last June, Refaeli appealed a massive bill handed to her by the Tax Authority, which had determined that she had hidden tens of millions of shekels of income in several cases of tax evasion, including falsely claiming to not have lived in Israel in 2009-2010.
Tuesday’s Hadashot television news report said that authorities tracked Refaeli’s phone to determine where she had been throughout those two years, as part of their effort to prove she had been based in Israel. They also similarly monitored the phones of her two brothers.
Refaeli has two younger brothers, and an older half-brother.
The report quoted experts as saying they couldn’t recall such a tactic being previously employed by authorities in tax offense cases, adding that it is commonly used in investigations of serious crimes.
Refaeli claimed that during the period covered by the tax bill, she was living abroad with her then-boyfriend, Hollywood star Leonardo DiCaprio.
The Tax Authority was reportedly unswayed by the claim, saying that because the couple was never married, and their relationship apparently “had its ups and downs” during that period, her claims of tax exemption were invalid.
When investigators followed up on her claims that her life was centered in the United States at the time, US tax authorities revealed that she was registered there as a “non-resident.” The investigators also established that during that period, Refaeli owned no assets outside Israel, and had not rented a home or even a car abroad.
Israeli authorities said she was actually living in two luxury apartments in Tel Aviv, which were rented in the name of her brother and mother.
An investigation into the model’s taxes also reportedly found that Refaeli had received a Range Rover vehicle in exchange for doing publicity and public relations for the British car company. Later, she allegedly received a Lexus car, which was registered in the name of the importer as a “demonstration vehicle,” but which was actually used by her.
Investigators found that the car companies had a contract with the model, according to which they would provide her with a vehicle, including maintenance expenses, repairs, and fuel. In exchange Rafaeli would advertise the vehicle and be photographed with it.
The contracts also allegedly stipulated that the parties would keep the agreement secret. The taxable value of the benefit of those vehicles is estimated to be hundreds of thousands of shekels.
Reportedly, there were many other benefits that Refaeli received as a celebrity.
The case began in December 2015 when Refaeli was questioned for 12 hours at the Tax Authority offices in Tel Aviv, and was initially said to be suspected of failing to report over NIS 1 million (then some $250,000) in celebrity benefits. Later, the sum was increased to tens of millions of shekels as more information came to light.
After Thursday’s announcement by the Justice Ministry, Refaeli’s lawyer denied her client had done anything wrong.
“Bar Refaeli has not committed any offense,” attorney Ruth Litvak said in a statement. “We are convinced that after hearing our arguments, [the court] will decide there is no justification for criminal proceedings in this case.”
The model, whose many campaigns for various companies have made her one of Israel’s most recognizable faces on the world stage, has also been a mainstay of celebrity websites and gossip rags in Israel and the US.