Pixel owners suspected of huge tax evasion

Rami Weitz and Guy Poran were arrested and released on bail. Two Kost Forer & Gabbay partners were also arrested.

Rami Weitz (45) of Savyon and Guy Poran (48) of Maccabim, shareholders in a number of high-tech and multimedia companies, have been arrested by Income Tax on suspicion of concealing tens of millions of dollars of income in 2000. Two partners from the accounting firm of Kost Forer & Gabbay were also arrested, on suspicion of having assisted in setting up a false corporate structure that made evasion of tax possible.

The representatives of Income Tax claimed in the Tel Aviv Magistrates Court today that Weitz and Poran set up Pixel, which owns the Gogo Club interactive games channel broadcast by the Hot cable television company. In August 1998, Dutch company Toga bought 45.6% of Pixel, so that the company was owned by Weitz, Poran, and Toga. In March 2000, Weitz and Poran reported an agreement whereby they sold their holdings (54.4%) in Pixel to Toga at a company value of $7.5 million for Pixel. It is suspected that Weitz and Poran are the owners of Toga.

Two days later, the pair reported to Income Tax an agreement for the sale of Toga to US company Take-Two, traded on Nasdaq at a market cap the same as that of Toga (whose only asset was its holding in Pixel) for $50 million. In other words, Weitz and Poran reported the sale of Pixel at a value of $7.5 million, when two days later the Pixel shares were sold at a value of $50 million.

It is alleged that the suspects held all the shares in Toga through trusts registered in tax havens, and that, as a result of the deal, $40 million went to a foreign company, such that Weitz and Poran avoided paying tax.

By agreement, Weitz and Poran were released on bail totaling $1.5 million.

Weitz and Poran are part of a group of investors being formed to invest $10 million in the Channel 10 television channel. The consortium includes McCann-Kesher-Barel general manager and partner Ilan Shiluach and film producer Arnon Milchan.

Published by Globes [online] - www.globes.co.il - on November 23, 2004

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