Israel says con men stole millions from global companies

AP News
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Posted: Jun 07, 2016 1:37 PM
Israel says con men stole millions from global companies

RISHON LEZION, Israel (AP) — The scam had all the trappings of a major con. Working from a dingy office building just a short drive from the glittering Mediterranean Sea, eight immigrants from Europe formed an unlikely team that allegedly conspired to dupe major multinational companies out of millions of dollars.

Most of them spoke French, the others Italian. Using their language skills and familiarity with European business practices, they telephoned employees at some of Europe's biggest companies, identified themselves as top executives and tricked workers into transferring large sums of money to bank accounts in their control, police said. Among the companies targeted, according to police and suspects' lawyers: Kia Motors, Hugo Boss and Chanel.

It was a classic "fake CEO" or "fake president" scam, a scheme used by various criminals worldwide that has robbed companies of some $1.8 billion in just over two years, according to the FBI. Most of the eight suspects in the latest case are either jailed or under house arrest.

But not the man who boasts of pioneering the scam years ago, inspiring copycats like these around the globe: French-Israeli con artist Gilbert Chikli. He mysteriously remains a free man, living in luxury in his villa in a seaside Israeli city as French authorities try to bring him to justice over a massive con for which he was previously convicted.

"If they have a problem, they can come see me. They know my address. I am not fleeing," Chikli told The Associated Press by telephone. "Send them my regards."

The case illustrates how financial crime has globalized faster and more efficiently than the law enforcement that is trying to fight it.

Israel extradited Chikli to France to stand trial in 2008 for defrauding HSBC, Thomson, Accenture and other companies out of 6.1 million euros, and attempting to extract over 70 million euros from at least 33 others. But in 2009, Chikli says he chartered a private plane and flew back to Israel.

A French court in May 2015 sentenced him in absentia to seven years in prison. Instead, he's been sipping coffee at a portside café in Israel and hanging out at his private swimming pool.

France issued two requests to Israel for Chikli's arrest, the French Justice Ministry said. The first request came the year after he escaped prosecution in France.

The second came this January, according to a copy of the Interpol notice obtained by The Associated Press. It was issued just two weeks after the release of a new heist-thriller film based on Chikli's life story, starring Julie Gayet, the companion of French President Francois Hollande. Chikli's wife, Shirly, attended the Paris premiere.

Still, Israeli officials show no signs of going after Chikli, even as they prosecute his alleged copycats for similar crimes. Israel's police and Justice Ministry declined to explain why, saying they do not discuss individual cases.

France's Justice Ministry said the Interpol notice issued against Chikli, called a "diffusion," is the equivalent of a provisional arrest warrant, with an aim to extradite a criminal to France. Interpol cannot force a country to comply with arrest notices and some countries routinely ignore them. Israeli Justice Ministry spokesman Noam Sharvit said Israel adheres to extradition requests when warranted.

French Justice Ministry spokesman Olivier Pedro-Jose said Israeli-French cooperation on such cases comes with delays. "The execution of requests for help from French officials by their Israeli counterparts often relate to extremely complex financial affairs, which demand long and considerable investigations," he said.

Irit Kohn, a former director of the Israeli Justice Ministry's international department, said the countries' differing legal systems has held up cooperation on criminal cases.

Criminals, in contrast, have been far more nimble at running their cross-border activities, keeping a step ahead of the law.

In the case of the eight immigrants in Israel, police began tracking them in November, secretly videotaping them from inside their office in an old building housing a car-repair shop in Netanya, a Mediterranean city north of Tel Aviv that is home to a large French immigrant community.

On May 2, police raided the suspects' office. Suspects tried to destroy computers and telephones, police say, in an effort to get rid of evidence.

Defense lawyer Liya Felus said indictments in the case are set to be issued Wednesday, though she did not know how many would be charged. Police investigated the case together with Belgian authorities, requesting legal assistance from France, Italy, Poland, Czech Republic and Slovakia, according to court documents.

In the meantime, police are keeping most of the details secret.

In court hearings over the past month in the Israeli city of Rishon Lezion, a police investigator repeatedly handed thick binders of classified evidence to a judge, as suspects wearing leg cuffs sat behind a glass panel and the suspects' relatives and lawyers looked on.

Posing as company executives, the suspects telephoned employees in charge of finances, presented themselves as the CEO, sought information about vendors owed money, and convinced the company representatives to send money to bank accounts in Europe, according to police.

They are suspected of defrauding or attempting to defraud companies in France, Belgium, Italy and elsewhere in Europe out of 10.5 million euros ($12 million). A police investigator said in court that between January and April, they'd managed to persuade an employee of Kia Motors in France to transfer 462,000 euros ($520,000) to a bank account they controlled.

A lawyer for one of the suspects said police confronted his client with documents pertaining to luxury fashion companies Hugo Boss and Chanel. Police would not comment on the companies involved, or say how they linked the suspects to the accounts.

A representative for Chanel declined comment. Repeated messages to Hugo Boss went unreturned.

A spokesman for Kia Motors France, Xavier Domenech-Cabaud, would not comment on the case. "Like all big companies, we're confronted with cybercrime," he said in an email. "Our processes are constantly analyzed and reinforced."

According to police, each suspect played a unique role in the scam. Two Italian speakers were allegedly in charge of telephoning Italian companies and persuading them to transfer hundreds of thousands of euros to their bank account. Others allegedly did the same to companies in France and Belgium.

Two French speakers formed the "creative team," police said, faking documents, signatures, emails, company logos and bank statements. An additional French speaker handled bank accounts and money transfers, police say.

Police also offered few details on how the con artists laundered their stolen money. They are investigating the source of 20,000 euros found in a safe deposit box in a synagogue — which one suspect claimed were merely donations.

Another suspect was found with Chinese bank account information written on a piece of paper tucked away in his passport cover, a police investigator said in court, without offering further details.

Western intelligence documents obtained by the AP describe scam artists based in Israel who target European companies and use underground Chinese money transfer systems to launder their stolen funds.

Chikli, who is not suspected of involvement in the latest alleged con, told the AP he laundered most of the money he stole in his scam through bank accounts in China, which is emerging as an international hub for money laundering.

One suspect's lawyer says his client has confessed to his role in the scam, while others say their clients are innocent or invoking the right to silence. One lawyer said his client told him from jail that it was unfair that he, who professes innocence, was in Israeli custody while Chikli, who had confessed to his scam, lived free. The lawyer spoke on condition of anonymity to discuss a private conversation with his client.

Chikli's first victim, the manager of a bank whom he convinced to hand over a cash-stuffed bag in the bathroom of a Paris café in 2005, is shocked that Chikli has escaped his prison sentence, according to her lawyer.

"She is absolutely scandalized by the fact that this decision is not enforceable, that he is still at large," said Sylvie Noachovitch, a lawyer for Madame G., whose name cannot be printed due to French privacy laws. "For France, this seems not to be a priority issue."

Israeli police said they work with law enforcement from around the world to clamp down on the phenomenon.

"The Israeli police regard with severity the criminal involvement of Israelis in scam cases," police said in a statement.

Israel's proximity to Europe, its educated, tech savvy population and large numbers of immigrants fluent in so many languages would seem to provide some of the tools necessary to carry out such schemes. Some scammers, including Chikli, seem to believe that Israel provides a safe haven from prosecutors overseas.

It touches a sensitive nerve in Israel: Police are concerned about such fraud tarnishing the reputation of Israel and Jews living abroad.

"Due to the seriousness of the crime, it has led to displays of anti-Semitism, also in local French press," a police investigator said during a recent hearing, citing previous examples of French Jews convicted of fraud.

One suspect's lawyer cited anti-Semitism in France as the reason his client moved his wife and three children from France to Israel in the first place.

Chikli told the AP he believed French Jewish copycats use the scam to rebuild their lives in Israel after fleeing anti-Semitism in France.

Most of the suspects and their families are devout Jews. In successive hearings over the past month in a courtroom in the central Israeli city of Rishon Lezion, many suspects wore skullcaps and some murmured prayers as their lawyers pleaded their case.

The suspects' wives — one of them eight months pregnant — and relatives sat in the courtroom, mouthing words of encouragement. Some recited prayers. A woman wailed and ran out of the courtroom. A man in a dark V-neck shirt clasped a mezuzah — the small case holding a parchment prayer that is affixed to the doorposts of Jewish homes — like an amulet.

Sammy Ghozlan, a former French police commissioner and founder of France's National Bureau for Vigilance Against Anti-Semitism, who now lives in Israel, said scams carried out by French Jewish immigrants give French Jews and Israel a bad reputation in France.

He said fraudsters believe they can get away with scamming French companies while in Israel, and claimed Israel was not doing enough to fight the phenomenon.

"These people feel protected in Israel," he said.

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Associated Press writer Tia Goldenberg in Jerusalem and Raphael Satter and Philippe Sotto in Paris contributed to this report. Kinetz reported from Shanghai.