The police says it has arrested the “brain” behind the Investec Israel fraud affair. Beer Sheva resident Yoram Hirsch was detained yesterday morning in a hideout, having evaded police investigators for a week.
The investigators suspect that Hirsch, who operated the other two suspects - Ophir Hazan and David Barham - cheated Investec Israel and Union Bank out of millions of shekels by misleading them about his financial capabilities. The police is not saying that Hirsch made any economic profit from his deals, but claims that he could have profited if he had correctly calculated the Maof Index’s movements.
The police is investigating a possible connection between the suspects and Adv. Yosef Lilof of Beer Sheva, who has been involved in legal proceedings vis-a-vis Mizrahi Bank and Union Bank over extensive Maof activities without appropriate guarantees. Police sources say that the examination covers only Lilof’s ties with Union Bank.
The Tel Aviv police fraud squad special team conducted a manhunt for Hirsch in the past week. Yesterday morning, the team raided a hideout in Beer Sheva and arrested the suspect. The Tel Aviv Magistrates’ Court last night remanded him in custody for ten days.
The police suspects Hirsch of aggravated fraud. The special team leader told the court: “The suspect and his collaborators misled financial institutions into believing that they have the financial ability to back up huge deals, that were made online. They caused tremendous losses to these institutions and disappeared.”
The institutions in question are apparently Investec Israel and Union Bank. As first reported by “Globes”, Union Bank lost NIS 4 million. The damage suffered by Investec Israel amounted to NIS 15 million, the equivalent of the bank’s average quarterly profit.
The investigation has so far not elicited any prima facie evidence of financial profit made by the suspects. The investigators attribute this to the suspects’ miscalculation in predicting the Maof Index on the day they bought the options. According to the investigators, had the Maof Index fallen below 480 points on that day, Hirsch and his collaborators would have made a profit. Had the Index gone up above 480 points, they would have lost the entire sum. The Maof Index closed at 474 points, and the bank lost NIS 15 million.
The investigation revealed that David Barham, who has already been detained for 15 days in connection with the affair, operated vis-a-vis Investec Israel and the Tel Aviv Stock Exchange. At the same time, the police says that the whole operation was masterminded by Hirsch.
The counsel for the defense argued that the affair was strictly economic and did not involve fraud. He added that the bank slipped up by not checking and discovering that transactions involving millions of shekels were being carried out in the account.
Published by Israel's Business Arena on 11 February, 2001