Six years after "Globes" published the first in a series of investigative reports about ICC-Cal and suspected fraud and bribery by its executives, two of the seven people involved have now been convicted. In a plea bargain, the Tel Aviv District Court today convicted businessman and startup entrepreneur Shay Ben-Asulin, an owner and partner in a number of companies engaging in online credit merchant acquiring, and Adv. Dganit Basha-Segev, among other things Ben-Asulin's partner in online market acquiring companies. They were charged with fraud and abetting fraud by clearing gambling websites, which is forbidden by international credit organizations.
As part of the plea bargain, following the conviction, the parties will jointly petition the court to give Ben-Asulin a five-month sentence, to be served through community service, and one year of probation, a NIS 1.5 million fine, while requiring him to post a NIS 500,000 guarantee. The indictment to which the defendants admitted also includes allegations against the chief suspects in the affair: Boaz Checik, former ICC-Cal CEO and former chairman of ICC-Cal subsidiary ICC International, and Steve Greenspan, former ICC-Cal VP trade and former ICC International CEO. The indictment against Ben-Asulin and Basha-Segev indicates that Chechik and Greenspan developed online merchant acquiring in e-commerce at ICC-Cal and its subsidiary in 2006-2010. According to the indictment, Chechik and Greenspan made this sector into ICC-Cal's main growth engine, but "also led the company into large-scale criminal activity that generated substantial profits for both the company and them personally." According to the indictment, Chechik and Greenspan, with the help of Basha-Segev, were able to conduct merchant acquiring for gambling websites amounting to billions of shekels, while pocketing the resulting commissions.
Risks of online crime
The indictment states, "Under the management of Chechik and Greenspan, ICC-Cal specialized in merchant acquiring for questionable high-risk trading websites in order to rapidly and substantially boost ICC-Cal's international merchant acquiring volumes and profits, while substantially deviating from acceptable market norms. The defendants ignored regulations and the terms of the merchant acquiring license granted to ICC-Cal by international credit organizations." The indictment also states that Ben-Asulin and Basha-Segev were among the owners of OT Platforms, which provided services to a German corporation called Retiarius, which was an umbrella for online gambling websites. According to the indictment, as part of Retiarius's merchant acquiring contract for businesses in ICC-Cal, Chechik and Greenspan made false representations to the international credit organizations in order to clear illegal businesses. and it alleges that Chechik and Greenspan deliberately misled these organizations in order to record and clear businesses in violation of the latters' rules. "At the instruction of Chechik and Greenspan, as part of their large-scale fraud, ICC-Cal conducted merchant acquiring for many gambling websites used by US gamblers, and concealed the merchant acquiring transactions for gambling by portraying them as business in legitimate areas of commerce. A large proportion of those gambling websites were transferred for merchant acquiring at ICC-Cal with a false code by Ritiarius through defendants Ben-Asulin and Basha-Segev," the indictment states. In this manner, ICC-Cal, Chechik, Greenspan, and Ben-Asulin were able, with the help of Basha-Segev, to fraudulently perform merchant acquiring for gambling websites amounting to billions of shekels.
"The criminal actions by Israel Credit Cards-Cal (ICC-Cal), Chechik, Greenspan, Ben-Asulin, and Basha-Segev severely damaged the image of international credit card brands Visa and Mastercard. Their deeds exposed the Israeli financial and merchant acquiring markets to the risk of online crime, credit card fraud and exploitation of the Internet for purposes of money laundering," the indictment against Shay Ben Asulin and Dganit Basha-Segev states.
Fines by international credit card companies
This affair was first reported a number of years ago in "Globes." The Boaz Chechik investigation began following a complaint made by Israel Discount Bank (TASE: DSCT) to the police, after a series of articles by Moshe Lichtman were published in "Globes," investigating deviations in the company’s risk management - primarily in online credit card processing for gambling, pornography, and food supplement (over-the-counter-drugs) websites. Following the reports, Visa and Mastercard investigated ICC-Cal’s risk management, and fined the company: Visa issued a fine of €9 million, and Mastercard issued a fine of $3.6 million. In parallel, the Bank of Israel launched a discreet investigation of the policies and the ties between the Israeli credit card companies and online e-commerce merchant acquiring platforms. The Bank of Israel investigation was held after the banks were given guidelines, including a warning regarding the entry of criminal organizations to the online payment clearing business. The Bank of Israel even personally approached the CEOs of the banks at the time: First International Bank CEO Smadar Barber-Tsadik, Bank Hapoalim CEO Zvi Ziv, Mizrahi-Tefahot CEO Eli Yones, Leumi CEO Galia Maor, and Discount Bank CEO Giora Offer - and demanded that they should not honor online transactions suspected of being illegal. At the end of the investigation, the Bank of Israel fined ICC-Cal NIS 6 million.
In December 2011, the Israel Police Lahav 433 National Fraud Investigation unit, with help from an online gambling task force from the Lahav 433 National Economic Crime unit, began a public investigation of ICC-Cal, Chechik, Greenspan, and other suspects. Additional indictments are expected. In December 2015, the police sent the investigative findings to the State Attorney's economic department with a recommendation to indict ICC-Cal, Chechik, and other suspects in the affair for aggravated fraud, recording false information in corporate documents, bribery, and money laundering.
The investigation indicates that the suspects conducted merchant acquiring for transactions by gambling websites under false codes for the purpose of showing that the business was providing non-gambling services and closed down and reopened pornography and pharmaceutical websites in order to conceal the volume of canceled transactions at these businesses, while committing money laundering, bribery, and fraud amounting to billions of shekels.
The case was handled by Attorneys Yohay Ben Shmuel, Eran Banai, and Nir Waintraub from the State Attorney's economic unit, which is due to file additional indictments in the case. A year ago, the unit notified seven suspects in the case that an indictment against them for a series of crimes in three separate cases was being considered, subject to a hearing.
Published by Globes [online], Israel business news - www.globes-online.com - on February 25, 2016
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