Buyer Beware!

The only problem with the arrest of Boaz Yona is that the warrant was issued a week after the bird had flown. Yona is now somewhere in a country that doesn't have an extradition agreement with Israel, padded with the tens of millions he had stolen and transferred there in advance.

Justice has been done.

The police issued an arrest warrant for Boaz Yona, Heftsiba owner and CEO, on suspicion of committing severe offenses: fraud, money laundering, breaking the securities and real estate laws and pocketing the money of people who purchased apartments.

The only problem is that the warrant was issued a week after the bird had flown. Boaz Yona is now somewhere in a country that doesn't have an extradition agreement with Israel, padded with the tens of millions he had stolen and transferred there in advance.

A day and a half before Yona fled, buyers invaded and occupied the unfinished apartments. The police could have issued an order banning Yona from leaving the country a day after the squatters' invasion, but they were resting. So who is the target of police revenge? The one who didn't run away, company CFO Zeev Tenenbaum. Even if he was involved in illegal acts like depositing buyers' money into private accounts, he did so with Yona's knowledge and at his instruction. Tenenbaum is now in custody because in Israel the sentry is always to blame.

It is astonishing to learn that the banks also fell asleep on the job. They knew the company was working on minimal profit margins of 4 percent to 5 percent, compared to the customary 15 percent to 20 percent. They knew that a court order prohibited the company from letting the purchasers move into the large housing project in Modi'in Illit.

The banks also knew that the Hadera project was stuck, and they heard on the news that the purchasers were squatting in the apartments. Why didn't they rush to request a court order forbidding Yona from leaving Israel? Now it will be much harder for them to collect the large debt.

If this weren't enough, the banks apparently also did not know that a considerable part of the tenants had paid Yona with personal checks to his order, while the Real Estate Law requires depositing the checks in the banks. The banks' credit managers and CEOs must pay for this managerial blunder.

The apartment purchasers themselves also fell into the trap Yona had laid for them. They are innocent people who were offered a significant reduction in the apartment price. They took their rabbis' advice and waived the bank guarantee, in exchange for the lowered price. They trusted a veteran company that had recently received a positive citation in Dun and Bradstreet. The latter also owes the public an explanation.

The fraud was facilitated by the fact that the Yona family owns publicly traded and privately traded companies, all dealing in real estate. This enabled transferring properties and funds from a supervised public company to an unsupervised private one. Indeed, NIS 70 million was transferred recently from this public company to a private one. Therefore the law must be amended to prevent control owners from owning both a public and private company. Everything must be either private or public.

Jerusalem Gold, one of the three public companies owned by the Heftsiba group, released a prospectus saying that the Bezeq building it has on Jerusalem's Hatzvi street would serve as security for bond owners. But Bank Hapoalim held a lien on the building for private family debts.

The trustee asked Heftsiba to transfer the lien to the benefit of the bond owners, but the company ignored the request for eight months, until it collapsed. What good is the trustee then? And where was the Israel Securities Authority (ISA)? The ISA began investigating only after the collapse. But its duty is to protect investors before the downfall, not after.

And what about the company's accountants? How did they sign the balance sheets? And where were the directors? They are clearly responsible for the goings on in the company.

So there we have it: The banks failed, the trustee was negligent, ISA fell asleep and the directors failed to do their duty. The lesson is, "buyer beware." Anyone buying a property from a contractor should check his reputation and honesty, and the health of the company. The buyer must personally deposit funds in the bank and demand an on-the-spot guarantee, in accordance with the Real Estate Law.

The client should also know that when he is offered an especially low price plus a reduction, on condition that he pay cash and waive the guarantee, he should see this as a warning light.

He must stop and resist temptation. Because he can trust no one but himself.