The Tel Aviv District Court today sentenced Emblaze Ltd. (LSE: BLZ) founder Eli Reifman to four years in jail and a one year suspended sentence. Two months ago, the court convicted him of aggravated fraud, forgery, and use of forged documents.
The court also ordered Reifman to pay Wilton Capital Holdings Ltd. and Double U Trading $6.3 million in compensation. The court ruled that he defrauded the companies by making false presentations to them, claiming that he owned nine million Emblaze shares in order to obtain $6.3 million in loans.
"Reifman committed acts of fraud by exploiting his reputation as a skilled and successful businessman. He used great skill in exploiting lawyers, and the management of a successful company with an honorable reputation in Israel and abroad," Judge David Rosen said in sentencing Reifman.
When he convicted Reifman in July, Rosen ruled that Reifman did not own Emblaze shares at the relevant time of the indictment, and that JM Finn & Co. did not own the shares on his behalf.
"The only logical conclusion," said Judge Rosen, "is that Reifman, or someone on his behalf, forged the documents on the basis of which the companies gave Reifman millions of dollars. The court found that, in early 2009, Reifman decided to defraud the foreign companies through false representations and forgery. To execute his plan, Reifman held talks with Wilton Capital to obtain a $3 million loan. Wilton Capital demanded nine million Emblaze shares, which Reifman claimed he owned, as collateral. The court ruled that to obtain what he wanted, Reifman made a false representation to Wilton Capital that he owned the shares, which were held by a trustee. He claimed that he could not disclose the trustee's name, which was known only to him and Adv. Doron Afik, who served as trustee of the loan agreement."
Reifman was subsequently convicted of forging a document bearing the signature of a representative of UK broker JM Finn & Co., as proof of the existence of the shares.
Reifman was also convicted on the charge that, during 2009, he signed, in the office of Adv. Afik, a document for the sale of ten million Emblaze shares for $3.3 million to Double U, even though he did not own these shares. To persuade the buyers that owned the shares, Reifman forged an e-mail sent by JM Finn, changing the content to claim that the company held the shares on his behalf.
Reifman is also the respondent in a civil suit. In March 2009, the court issued an order of receivership against his assets. After the order, Tel Aviv District Court Judge Varda Alshech ordered Reifman to hand his Emblaze shares over to a special manager, Adv. Eitan Erez. Reifman refused, saying that he no longer owned the shares in question, which were held by trustees on his behalf. Alshech therefore sentenced Reifman to prison three times for contempt of court.
Reifman claimed that he was the ultimate beneficiary of 39 million Emblaze shares held in blind trust for him. Emblaze's current managers say that he has no right to any Emblaze shares because of his legal troubles, which began in 2006, and that the shares held in trust listed in the company's books are not held on Reifman's behalf, but for other beneficiaries.
After the sentencing, Reifman told "Globes", "I had never entered a courtroom in my life before these problems. Now that I have a rich court experience, I can say that although I do not accept the judge's decision, and will appeal against it to the Supreme Court, I believe that the Judge David Rosen is one of the most amazing judges I have encountered, and I feel honored to be judged by him."
Asked about his Kabbalah studies, Reifman replied, "I will study Judaism in jail."
Published by Globes [online], Israel business news - www.globes-online.com - on September 19, 2011
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