Reifman creditors seek NIS 86m in lawsuit filed against Emblaze
Petition also cites Ernst & Young, claiming auditors were 'severely negligent.'
Several creditors of the bankrupt Eli Reifman are suing his firm, Emblaze Ltd., for about NIS 86 million.
The suit, filed in the Petah Tikva District Court, charges that Reifman obtained loans from the creditors on false premises - namely, "direct or indirect representations, official documents and financial statements that indicated we were dealing with a very wealthy man, the president of Emblaze and one of its largest shareholders."
The plaintiffs are a group of foreign companies and Israeli and foreign businessmen, including Winston Capital Management Company; businessman Assaf Barzani; Eitan Eldar, who is one of the owners of Gibor Sport Group Ltd.; and some of Reifman's relatives.
The creditors are also suing Emblaze's accountanting firm, Ernst & Young (Israel ), accusing the accountants of being "severely negligent, in that they didn't even verify the identity of the shareholders who appeared on the balance sheets and in the reports."
In September 2011, Reifman was sentenced to four years in prison and ordered to pay compensation of $6.3 million, after being found guilty of forgery, using forged documents, and fraud for the purpose of obtaining a loan.
About a year ago, he was declared bankrupt, after running up debts of about NIS 300 million. Attorney Eitan Erez, who was appointed to be the receiver of Emblaze's assets, was authorized by the court to be the trustee of Reifman's assets as well.
The creditors, via Erez, are claiming that in 2006-2009, Reifman borrowed hundreds of millions of shekels in order to roll over debt that he incurred for acquiring shares.
The creditors say in their petition that they "gave Reifman tens of millions of shekels, after seeing with their own eyes official statements from the company and confirmation by his representatives regarding Reifman's share holdings."
However, the suit continues, "when Reifman collapsed financially and it became clear that there were no shares in Reifman's name, and never had been since 2006, they faced a hopeless situation, especially since, in the context of the legal proceedings that Erez conducted against Emblaze, the company disclosed it had no knowledge of shares belonging to Reifman. In fact, its records, showed that Reifman has held no shares whatsoever since 2006."
Emblaze responded that "The lawsuit has no basis, and its sole purpose is to attempt to take money from the company unlawfully. Eli Reifman's creditors, who include shady characters, friends and relatives, did not at all rely on Emblaze in their private transactions with Reifman."
Ernst & Young refused to comment on the suit.