U.S. lawsuit: Gilad Sharon got $1.8 million in illegal proceeds
Gilad Sharon, son of former prime minister Ariel Sharon, has been named in a lawsuit alleging that he fraudulently received $1.8 million two years ago from profits on a real estate deal in Canada, through two entities he controlled - Sycamore Ranch Ltd. and Lerner Manor Trusteeships. The charge is included in a lawsuit brought last week by Dalia Genger, ex-wife of businessman Arie Genger, in a New York court.
The purported payments were transferred while Ariel Sharon was prime minister.
Dalia Genger is suing her ex-husband, Gilad Sharon and a number of other individuals, claiming they fraudulently withdrew funds from the couple's joint property before their divorce, thereby reducing the amount she and her children were entitled to get.
The Gengers are also taking part in an arbitration process. Gilad Sharon, meanwhile, declined to comment.
In the lawsuit, the plaintiffs accuse Gilad Sharon of assisting to violate another's fiduciary duty, and acquiring wealth illegally. The suit was filed in Manhattan Supreme Court last Monday by Dalia Genger, two investment and real estate firms as well as a partnership owned by the Genger children's trust funds.
"The $1.8 million transferred to the Sharon entities in 2005 did not relate to any substantial investment or other legitimate business purpose," the suit says. "Rather, as [one of the defendants, attorney] Klimerman stated, those payments to the family of the Israeli Prime Minister were in violation of federal law."
Gilad Sharon's associates said they have known for some time about these allegations, which they say are "furiously rejected" and are orchestrated by Sagi Genger, son of Arie and Dalia.
A request several days ago for Arie Genger to comment through his associates has yet to be answered.
The lawsuit also claims that Arie Genger has in his possession - through a company he controls - a promissory note from Sycamore Ranch for $600,000, at least since 1994. The due date for the note was extended from time to time.
Dalia Genger claims that the debt was part of the couple's joint property, but the defendants excluded it from the list of Arie Genger's assets included in the divorce settlement.
Arie Genger, who left Israel for the United States in the 1960s, was one of Ariel Sharon's closest friends. Genger heads a business empire centered on Trans-Resources, Inc. - a manufacturer of fertilizers and chemicals. He also owns the Haifa Chemicals plant in Israel. Sharon sought in 1981 to appoint him director-general of the Defense Ministry, but gave up under public pressure.
In 2001, as prime minister, Sharon appointed Genger his personal emissary to the Bush administration. Genger's post was terminated because of opposition by then attorney general Elyakim Rubinstein. Genger was a major contributor to Sharon's political campaigns, and was even investigated in connection with the case on funding for Sharon's campaigns in primary elections.
The Canadian deal
According to the lawsuit, in 2001 and early 2002 Arie Genger bought two real estate projects in Montreal through AG Properties, a company he controlled in practice, but was not registered as its owner.
The plaintiffs claim that $2 million were invested in the deal by TPR Investments, which was owned jointly by the Genger family. Ownership of 49 percent of the company was held by D&K Limited Partnership, whose owners were Dalia Genger (as general partner, with 4 percent of the capital) and the trust funds of the couple's children, Sagi and Orly Genger (as limited partners, with 96 percent of the partnership's capital). The remaining 51 percent of TPR was owned by Arie Genger and was considered joint spousal property, the suit maintains.
According to the lawsuit, the company and limited partnership invested the capital in the deal, while AG Properties was the project's registered owner, but did not take part in the financing. The investment funds, the suit claims, were partly joint property of Arie and Dalia Genger, and partly owned indirectly by their children's trust funds.
The Gengers began divorce proceedings on February 14, 2002. Since then, the suit charges, Arie Genger (aided by his lawyers), Gilad Sharon and Lerner Manor Trusteeships created a false pretense of forged and backdated documentation, with the object of presenting TPR's investment in the project as a loan rather than as capital investment. By these means, the plaintiffs claim, the defendants reaped the deal's profits and paid the real investors only the return of the loan plus interest. The suit cites in detail the documents that were allegedly falsified.
The Canadian projects were sold in 2005 for a large profit, according to the suit, and $1.8 million of the sale proceeds were transferred to Sycamore Ranch Ltd. and Lerner Manor Trusteeships in Israel. Guy Lerner and Gaby Manor are two Tel Aviv lawyers. Manor was convicted along with Gilad's brother, Omri Sharon, for raising illegal campaign contributions for Ariel Sharon's Likud Party primary in 2001, and received a nine-month suspended sentence.
According to the lawsuit, Lerner Manor Trusteeships held 50 percent of the shares of AG Properties, the registered owners of the project in Canada. Arie Genger testified in his divorce proceedings that "a company indirectly owned by Gilad Sharon" owned 50 percent of the shares of AG Properties. The plaintiffs concluded from this that Lerner Manor Trusteeships acted on Gilad Sharon's behalf.
TPR Investments, which the lawsuit says financed the project, received only the sum of the purported loan - $1.385 million - plus interest of 6.35 percent and additional sums described as consulting fees. The plaintiffs claim that the money that went to Gilad Sharon belongs to them, but that "the immediate beneficiaries of this fraud were entities controlled by Sharon, the son of the then prime minister of Israel."