Interpol probing French, UK Jewish immigrants

Police believe that fictitious invoices were part of a pan-European tax evasion scheme worth $5 billion.

Following the "Globes" exposé on Monday that the Israel Police was cooperating with Interpol in an investigation into tax evasion and money laundering by French Jews, which included raiding homes in Herzliya Pituah, "Globes" has obtained exclusive details about the international case, which is apparently large in scale. Sources inform ''Globes'' that, in the past few months, French police officers have been in Israel to monitor wealthy new immigrants from France, recorded conversations at cafes and exclusive restaurants in central Israel, bugged phone calls, and ultimately raided homes in luxury neighborhoods. Israeli police officers participated in the raids, but most of the detective work in Israel was carried out by undercover French police officers.

Last week's raids were not the first carried out as part of the international investigation. The sources said that, in recent months, there have raids on the homes of wealthy immigrants who were suspected of involvement in tax evasion and money laundering, documents were seized, and the French police questioned some of the suspects. One of the officers involved in the raids told "Globes", "French-speaking investigators arrived at the house together with Israeli police officers and turned it upside down. They left total chaos behind them."

The sources added that the worldwide tax evasion and money laundering allegedly was carried out in several European countries, and was not limited to France. The tax evasion is estimated at $5 billion.

The operation, called "Carousel" by the investigators, focuses on tax evasion by issuing inflated or fictitious invoices. Foreign investigators believe that various suspects, including large numbers of French, British and other nationals, established large dummy European import-export companies, passed invoices between themselves collected VAT, paid the lower VAT, and pocketed the difference.

A source involved in the case said, "They stole from almost every European tax authority. This case was named 'Carousel' because fictitious invoices and goods were passed around and around. It began with the import and export of mobile phones and computer processors and spread to other areas. Hundreds of companies were set up here to file the same request for a VAT refund. These guys simply set up a lot of companies, and requested refunds. It began with mobile phones and computer processors, and spread to air pollution trading rights (which can be traded on the German and other European stock exchanges - E.L.W.) This is where the big money was."

The Carousel case raises serious questions about the authority of foreign police officers, whether they are French, British, or from another country, to come to Israel to investigate Israeli citizens suspected of committing crimes in other countries' jurisdictions, and about raiding the immigrants' homes and seizing documents.

"According to the details presented in the letter, there has been a breach of the tax convention between Israel and France in that local police assisted in collecting taxes by seizing and foreclosing assets in Israel on behalf of another country. The Israeli-French tax convention does not allow this. We have a tax convention with Denmark, which has a clause for assisting in tax collection, but there is no such clause between Israel and France," says Adv. Arie Leibovitz, as expert in international tax law and money laundering. "On the other hand, you should know that Israeli law allows the police to cooperate with foreign police forces to allow the foreign police forces to carry out surveillance, wiretapping, questioning, and so forth, subject to approval and a request filed with the Israeli government."

Leibovitz concludes that Diaspora Jews believe that Israel is a tax haven. "You should realize that someone who brings 'suspicious' money to Israel and records it in his name has no protection. Israel is not a tax haven or money laundering haven. If you transfer money or assets here and register them under your name, in future, this money could be seized and sent back to its home country. The idea among foreign Jews that Israel will be their tax haven is mistaken. It was true once, but no longer."

Published by Globes [online], Israel business news - - on November 5, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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