Eran Mizrahi (40), owner of an investment company from Savyon, who is allegedly involved in defrauding dozens of customers who invested millions of shekels with him, surrendered himself to Tel Aviv District police today. The search for Mizrahi, who is suspected of accumulating heavy debts to investors and then absconding, lasted for several days. All attempts to locate him failed, but it seems that the many reports yesterday had their effect, and this morning, Mizrahi turned up at the police station and told the officers, "I'm the man you're looking for." The police have begun to question Mizrahi.
Yesterday, it was reported that the fraud division of the Tel Aviv police was investigating complaints filed by several investors, among them business people and lawyers, claiming that they had fallen victim to a sting operation by Mizrahi in the millions of shekels. Enquiries by "Globes" revealed that Mizrahi does not hold an investment license. Meanwhile, two of Mizrahi's alleged victims, Zion Levy and Daniel Idelson, filed a petition n the Tel Aviv District Court this morning petition for the appointment of a receiver for Mizrahi's assets and a declaration of bankruptcy against him.
"Eran Mizrahi defrauded many investors in a hair-raising affair highly reminiscent of the international con man Bernie Madoff," the petition states. Levy and Idelson detail how Mizrahi persuaded them and dozens of others to deposit tens of millions of shekels with him, in return for his promise to invest the money and achieve high returns for them. They state that his fraud left many average families and ordinary people destitute. According to the petition, Mizrahi owes Levy over NIS 1.2 million and Idelson over 1.3 million, sums that were invested with him.
According to the pair, in 2009, Mizrahi introduced himself to them as manager of an investment house called "Eran Mizrahi Investments and Finance Ltd.", which later changed its name to "Citadel Finance and investment Ltd.", and persuaded them to invest the money with him, claiming that there was no substantial risk.
They say Mizrahi told them that he could obtain returns of at least 1-1.5% monthly, or even more, and that he personally stood guarantee for the money. According to the petition, Mizrahi told Levy and Idelson that they should deposit their money in a trustee account he had opened at a Bank Hapoalim branch in Givatayim.
The petitioners say that Mizrahi explained to them that he invested via a trustee account at Heritage Bank in Switzerland, and that their money would be transferred back to the bank account in Givatayim, plus returns. Mizrahi also assured Levy and Idelson, as was later stated in agreements with them, that they could withdraw all or part of their money at any time on 30 days notice, and Mizrahi would be obliged to transfer the withdrawal to them.
Levy signed a contract with Mizrahi in August 2009, under which he invested with Mizrahi all his savings, amounting to over NIS 600,000, which Levy estimates would be worth double today. Mizrahi gave Levy a personal guarantee, undertaking to cover at least 93% of the assets in the account he would manage, i.e., Levy's downside was supposed to be limited to 7%.
In December 2010, Idelson also signed a contract with Mizrahi, and invested all his saving with him. Mizrahi gave Idelson a guarantee covering 95% of the assets in the account. Mizrahi sent the petitioners regular reports detailing returns and balances.
In November 2011, the investors began to detect the first warning signs, after they approached Mizrahi with requests to withdraw money from their accounts and Mizrahi evaded the requests with various excuses about "cash flow difficulties", "organizational changes" that had just started, rebranding, and even claimed that transfers had been delayed. Later on, the petition states, Mizrahi sent correspondence through a woman named Ula Novizon "and thus through lies and cunning he played for time until March 2012, when he disappeared from the face of the earth."
Published by Globes [online], Israel business news - www.globes-online.com - on May 30, 2012
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