https://www.timesofisrael.com/nothing-to-declare-two-french-israelis-indicted-on-money-laundering-charges/

In a rare money-laundering-related indictment, Israeli prosecutors have charged two French-Israelis, Adam Ivgi, 33, and Yonatan Yehuda Sisley-Chikli, 34, with violating the income reporting clause of Israel’s anti-money laundering law after an associate allegedly smuggled millions of Euros into Israel on their behalf.

The indictment, filed late last month, highlights how some new immigrants and returning residents to Israel have smuggled money of unclear origin into the country, how they have allegedly used their wealth to purchase luxury real estate, and how some immigrants have claimed to be exempt from taxes under the Milchan Law.

According to the prosecution’s complaint, an associate of Ivgi and Sisley-Chikli, a third French citizen named Ariel Journo, 33, allegedly served as a courier for the two suspects. On December 16, 2014, Journo allegedly smuggled 300,000 Euros into Israel and on December 26, 2014, he smuggled a further 1,220,000 Euros into the country. He allegedly carried the money on his person and walked through the “nothing to declare” queue in the arrivals hall at Israel’s Ben Gurion International Airport, according to prosecutors.

Journo then gave each of the accused men 500,000 Euros, which was their part of the cash he had carried into Israel, according to the September 24 complaint. In exchange for his services, Journo allegedly received a three percent commission. Journo was indicted in a separate complaint on June 30, 2019.

The complaint does not specify the source of the 500,000 Euros each of the accused men allegedly received.

Court documents from an earlier hearing alleged that the money, in Ivgi’s case at least, had been obtained through carousel VAT fraud in connection with the trading of shares of an Italian energy company.

VAT fraud, according to Europol, is “the theft of value-added tax (VAT) from a government by organized crime groups.”

Ivgi was arrested on May 31, 2016. The arrest request stated that “the suspect, together with others, established a sophisticated and organized network for transferring the proceeds of crime to Israel.” Sisley was arrested two days later on the same suspicion.

Gilad Barone, Ivgy’s lawyer told The Times of Israel that after a pre-trial hearing that occurred behind closed doors and with no publicly available protocol, many of the original charges against his client were dropped.

“The indictment against our client was filed after a comprehensive pretrial hearing in which we raised objections to the original charge sheet. The big discrepancy between the suspicions at the beginning of the investigation and the indictment that was ultimately filed, which includes a technical-regulatory crime [of failing to report income] derives from the evidence, which shows that my client did not carry out the crimes that were attributed to him in the beginning.”

At the time of their arrest, both men had millions of shekels worth of their property seized by police, in anticipation of a future forfeiture should they be convicted. This property included luxury apartments in Tel Aviv and Ashdod, luxury cars, bundles of cash and bank accounts.

Both suspects appealed the seizure of their property.

Shortly after his arrest, Ivgi’s attorney claimed that the value of the property seized was higher than the amount of the alleged crime and also argued that Ivgi was a “returning resident” to Israel and therefore not required to pay taxes or report his income under the provisions of the Milchan Law.

In his July 18, 2016 decision to deny Ivgi’s appeal, Judge Aviv Sharon said: “During his questioning the suspect confessed to committing tax crimes abroad involving fraud in the acquisition of shares using the ‘carousel’ method.”

The judge added, “Ivgi admitted during his questioning that he was a partner in the buying and selling of shares of a company in Italy without reporting or paying tax on the profits. He claimed that each of the people involved earned a profit of 600,000 Euros.”

Barone told The Times of Israel that he successfully persuaded prosecutors during the pretrial hearing that Ivgi was not connected to these crimes. Barone said that Ivgi never confessed to any such crime and that the indictment that was ultimately filed was over a mere technical matter of failing to report income.

The judge who had rejected Ivgi’s appeal in 2016 also claimed there had been an additional 1.3 million Euros Journo allegedly sent to Israel by wire transfer, but the September 24 indictment does not mention this additional sum.

“[Ivgi] and another person used Journo to bring the money to Israel,” the indictment states. “In this way, Journo transferred 3 million Euros, 1.7 million through the airport and 1.3 million via wire transfers using money service providers, from September 2014 and onward, Journo said in his confession.”

In a separate July 11, 2017 court hearing relating to Sisley’s appeal, prosecutor Dafna Abramovich explained how Sisley came to be arrested.

“In May 2016 we investigated a big case that involved a sophisticated network of scammers who were cheating companies abroad. They would call commercial companies abroad and identify themselves as the owners of the company and cause employees to transfer money to them. We filed indictments in this case. In the course of this investigation we reached a man named Ariel Journo. When we started investigating him, we discovered that Journo had transferred 3 million Euros to Israel to [Ivgi] and [Sisley]. This was fraud money that was obtained in several European countries. There was VAT fraud in France, Italy and other countries,” she said.

Sisley’s lawyer Sason Bar Oz did not immediately respond to the Times of Israel’s requests for comment.

Journo’s former lawyer, Sarit Slominsky told The Times of Israel she no longer represents him and does not know who does. The Times of Israel was unable to find his contact information. On July 7, 2019, prosecutors claimed they were unable to locate the defendant in order to serve him with documents.

The September 24 indictment against Ivgi and Sisley-Chikli charges them with failing to report the money they received from Journo, but does not charge them with VAT fraud.

Prosecutors also requested that if they are convicted, the government be allowed to forfeit an apartment in Ashdod from Ivgi as well along with 1,305,249 Euros and NIS 6,500.

The government also requested the forfeiture of an apartment in central Tel Aviv and an apartment in Ashdod from Sisley-Chikli, as well as 5,050 Euros and NIS 100,000.

Real estate and art

The government originally seized an apartment in the White City luxury apartment complex in Tel Aviv’s Neve Tzedek neighborhood from Ivgi, an apartment that he had claimed was worth over NIS 10 million ($2.86 million). The government has not requested its forfeiture in the September indictment. The majority of apartments in the White City Tower are owned by French or Russian citizens, with some apartments owned by foreign companies.