The Jerusalem Magistrates Court has sentenced Rafael Ben to ten months in jail, a year’s probation, and a fine of NIS 550,000, after he pleaded guilty to concealing income amounting to over NIS 5.5 million. The money was generated at an online virtual mall he operated. Rafael Ben is an Israeli citizen and resident of Jerusalem.
Ben is the first Israeli to be convicted of tax evasion from Internet activity conducted overseas. The Israel Tax Authority investigation found that his company, AGM International, registered in Delaware, operated the website money4u.net.
The revised indictment filed by the senior deputy Jerusalem District prosecutor Rivka Alkobi says that Ben operated a central website where he offered to sell surfers sites to operate as e-commerce websites by buying special software he would supply, which installed the e-commerce website on the customers’ computers.
A customer buying the website received commissions from businesses for purchases of their products through the website. Ben received payment from buyers of the e-commerce websites via credit companies or bank transfers. They money was paid directly into his private bank accounts in Israel.
Ben was charged with deliberately concealing at least NIS 5.6 million in revenue in 2000-02, not reporting business, not filing reports, and not maintaining invoices, all with the intent of evading taxes.
Ben’s defense attorneys asked the court to accept the plea bargain because of his personal and medical situation. The prosecutor asked the court to send a message of deterrence to “all Internet businesses and anyone who thinks that in the case of an Internet business, it is easy to conceal from the authorities the business and size of profits made from it… In order to deter others and stamp out the phenomenon.”
Judge Abraham Tennenbaum said the plea bargain “may be lenient” but that in view of Ben’s health, he would not intervene.
Published by Globes [online], Israel business news - www.globes.co.il - on December 26, 2006
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