Israel arrests forex company owner on charges of tax evasion

A 49-year-old man from Kafr Qara in northern Israel was arrested by Israeli police earlier this month on suspicions of hiding at least 3 million euros’ worth of income from six forex companies he owned that were targeting investors abroad.

Nizar Alimi, a member of the Labor Party Central Committee and adviser to former Labor Party chairman Isaac Herzog, was arrested on September 11 and has been released on bail. His arrest was initially under a gag order at his request due to the fact, he said, that he is a public figure, but the Rishon Lezion Magistrate’s Court ordered the gag order lifted on Monday.

Alimi is suspected of hiding the fact that he is the owner of several companies abroad which he controlled through the use of front men, according to a press release issued Wednesday by the Israeli tax authority. He allegedly operated six companies, each of which had employees who transferred money to three bank accounts he held abroad, and is suspected of hiding this fact from tax authorities.

Lee Elbaz (LinkedIn)

A spokeswoman for Israel’s tax authority refused to confirm or deny that the arrest was related to the arrest of Israeli binary options CEO Lee Elbaz at JFK airport in New York on September 14. Sources who know both Lee Elbaz and Nizar Alimi told The Times of Israel they worked side by side at Forex Place, a now-defunct Israeli forex company, some of whose senior brokers went on to found their own binary options brokerages. Alimi, according to this source, worked on the Arabic-language desk, telephoning investors in Arabic-speaking countries.

The tax authority spokeswoman refused to name the six companies controlled by Alimi. However a search through Israeli court databases reveals the name of at least one such company. In 2011 and again in 2015, Alimi registered the company name “Investment House Limited” in the Republic of the Seychelles. Numerous offical warnings issued by regulators worldwide confirm that this offshore company owned the ihforex.com website. In addition, a local Israeli company that operated the ihforex website, Logo Peace Ltd (formerly known as Forex Peace Ltd), is registered to a person named Sami Alima or Sami Alimi, who shares a home address with Nizar Alimi.

Former employees of ihforex.com have stated online that ihforex and ihoptions, a binary options brand, were both created at the same time from the same office. Ihforex has been the subject of multiple investor warnings from Spanish, French and Belgian regulators in recent years. Meanwhile, ihoptions appears on the United States Commodities and Futures Trading Commission Red List of online investment companies that have solicited Americans without a license.

Israel’s fraudulent online trading industry is estimated to earn $5 billion to $10 billion a year. A draft law introduced earlier this year to ban Israel’s entire binary options industry, as well as forex and CFD companies that operated from Israel without a license, was subsequently watered down to apply narrowly to binary options. Critics have charged that this creates a loophole and that, if and when the law is passed, fraudulent binary options companies can simply tweak the product they offer and continue to operate.

Participants in a July 31 Reforms Committee meeting on binary options (Times of Israel staff)

Having passed a first reading in the Knesset, and then been approved by the Knesset Reforms Committee on August 7, the bill is awaiting its final approval in the Knesset.

Fraudulent Israeli binary options companies ostensibly offer customers worldwide a potentially profitable short-term investment. But in reality — through rigged trading platforms, refusal to pay out, and other ruses — these companies fleece the vast majority of customers of most or all of their money. The fraudulent salespeople routinely conceal where they are located, misrepresent what they are selling and use false identities.

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