Mike Ben-Ari charged with NIS 550m Ponzi scheme fraud

Mike Ben-Ari credit: Niv Kantor
Mike Ben-Ari credit: Niv Kantor

The suspected fraudster allegedly scammed 960 investors out of NIS 550 million through a pyramid scheme.

Mike Ben-Ari who was last week extradited from Bosnia to Israel was today indicted of defrauding NIS 550 million from 960 investors. Ben-Ari was charged with aggravated fraud, forging documents, and money laundering offenses. Together with the indictment, the prosecutor requested that he be held in detention until trial.

The Tel Aviv District Court extended Ben-Ari's remand until January 17, when there will be a further hearing to discuss the motion to maintain his detention until trial.

In today's hearing Adv. Dr. Eitan Finkelstein who represents Ben-Ari, said, "He is being held in sub-human conditions, in a cell with no toilet paper, with stale food that is not fit to eat." Ad. Finkelstein added that while there was a decision to allow Ben-Ari five phone calls per day, this is not being allowed.

According to the indictment filed by Advs. Stav Ginat and Yossi Zadok, Ben-Ari raised over NIS 550 million from 960 investors through false promises of exceptional returns in low-risk investments while giving false presentations about the nature of the investments and the immediate liquidity of the investors' money.

The main investment option presented to investors by Ben-Ari was the US Blue River Fund, which was portrayed to investors by Ben Ari as a fund that invests in high-rated US municipal bonds. Even though investors were shown that their money would be invested in the Blue River fund, Ben-Ari has had no connection with the fund since 2008 at the latest, and after that stopped transferring clients' money to it.

The indictment also charges that Ben-Ari presented forged documents to investors and in practice, in contradiction to the presentations given, Ben-Ari used the investors' money he had taken from them and used it according to his own needs and desires

The charge-sheet also claims that Ben-Ari operated a "pyramid scheme", by paying some of the investors the periodic interest or repaying the principal when it was required using the funds of other investors.

Ben-Ari is also accused of transferring the funds raised from the investors to bank accounts under his control and investing them in assets and ventures that exceeded the presentations presented to the investors, and even registered some of them under his own name.

It is also claimed that Ben-Ari used the investors' funds for a wide range of personal uses, including buying real estate assets and extending loans to his associates. Over the years, funds amounting to about NIS 265 million were returned to investors.

Ben-Ari is also charged with forging a passport with the intention of receiving something under aggravating circumstances. In May 2021, Ben-Ari was questioned under caution, and even though he knew that a criminal investigation was underway against him, Ben Ari left Israel using the fake passport of his friend Nahum Eisenstadt, impersonating him and violating the restrictive conditions imposed on him by the court (among them an order not to leave the country and a bank guarantee of NIS 2 million). Eisenstadt has since confessed and was convicted on the matter.

The district attorney asked to confiscate property worth NIS 6 million found on Ben-Ari and NIS 10.5 million in the bank account of EGFE, which Ben-Ari owns, as well as insurance policies with Migdal and Altshuler Shaham worth NIS 1 million.

Adv. Dr. Finkelstein said, "Contrary to the impression that was created in the media that there was a Ponzi scheme backed by nothing, and also according to the indictment the investors' money was transferred to various investments in Israel and abroad, the main reason for Mike Ben-Ari's departure from the country was his desire to continue developing the huge investments he made on behalf of the clients in the mines in Montenegro, which as they are realized will generate sums that will be used to return all the clients their money. Although the extradition to Israel hurt Mike Ben-Ari's efforts to promote the projects in Montenegro, he will continue to make the maximum effort in order to allow all customers to receive the full amount of money invested."

Presumption of innocence: Mike Ben-Ari has not been convicted and has the right to be presumed innocent

Published by Globes, Israel business news - en.globes.co.il - on December 27, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

Mike Ben-Ari credit: Niv Kantor
Mike Ben-Ari credit: Niv Kantor
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