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Yossi Milstein, Arcadi Gaydamak's former media advisor, was arrested yesterday by the Israel Tax Authority for allegedly evading payment of NIS 1.2 million in income taxes.

Milstein, 31, was released to house arrest after a short hearing in the Tel Aviv Magistrate's Court, and was asked to post bail of NIS 600,000 in guarantees and NIS 30,000 in cash.

Milstein allegedly did not file tax returns from 2001 to 2007 or submit statements listing his assets, and also apparently filed false returns. It seems he filed returns in the past, but only reported a fraction of his income. A tax authority investigation has revealed that he deposited about NIS 1 million in the bank in 2006, but reported no income whatsoever.

Milstein and his lawyer said the person who lodged the complaint is an attorney who has been conducting a legal battle against Milstein.

Milstein was Gaydamak's right-hand man for years, until the Russian businessman fired him three months ago at the height of an Israel Securities Authority investigation into Gaydamak's dealings. Milstein found out he was fired only after securities authority investigators informed him of it, and after he heard about it in the media.

He told the court he now makes his living consulting on international projects overseas.