Police Move to Prevent Alleged Real Estate Fraudster From Leaving Israel

Police have opened a criminal investigation against a real estate firm in Tel Aviv, accusing the ex-real estate magnate of running a pyramid scheme, in which the CEO took cash from customers and sold them non-existent apartments. Police have been collecting testimony from customers, workers, and other members of the real estate business, and are likely to question the CEO on Tuesday, officials were quoted by Globes as saying.

The scandal has had a profound impact on the Israeli real estate investor community, as the fraud may have affected dozens, if not hundreds of people. In many cases, clients had deposited NIS 100,000 as a prepayment for eligibility in a new project being designed by the firm, until recently one of Israel’s most prestigious real estate developers. In February, the CEO was arrested on charges of tax evasion and fraud involving numerous deals handled by the firm. Also arrested was the CFO of the group, for allegedly assisting the CEO in covering up the fraud.

According to police, the firm was collecting deposits from numerous people – as many as four or five – for each unit, hoping apparently to pay off debts that the company had accrued. In March, a near riot broke out outside the company’s offices as dozens of people demanded a refund – which the company said in a hearing it did not have.

The manager, who was arrested last month, is currently free on her own recognizance, but according to Yediot Achronot, police are considering taking her into custody for fear that she will flee the country. With the opening of the investigation, the report said, she will be prevented from leaving the country.