PARIS – He’s dubbed “the key witness,” or “the main witness.” The judge describes him as “the penitent who saw the light”; the prosecutor, as “a member of the conspiracy who expressed contrition and is ready to help justice to be done.” Everyone is talking about him – the defense lawyers in their presentations, the accused in their declarations, the journalists in their background conversations.
Everyone is talking about him, even though no one has seen him. The major witness in the “sting operation of the century,” a French-Israeli man whose identity is being revealed here for the first time, is in hiding in an apartment on Nordau Avenue in Tel Aviv. His name is Eithan Liron, defendant No. 8 in the trial centering around the largest fraud case in the history of Europe. Liron’s affidavits made it possible for the French police to indict defendant No. 1, Arnaud Mimran, a companion of Israel’s prime minister on extravagant vacations on the Riviera, in the Alps and in luxury clubs in the City of Light.
Benjamin Netanyahu is the most senior politician to date to have been sucked into this affair. His name crops up in three contexts. First, because of Mimran’s direct ties with a Netanyahu confidant and Likud figure, Meyer Habib. Mimran and Habib established an Israeli company that was registered by Netanyahu’s personal law firm, E. S. Shimron, I. Molho, Persky & Co. Second, because of Mimran’s testimony, under oath – “I funded Netanyahu at the level of one million euros” – a money transfer whose existence the prime minister admits to but whose size he contests. And third, because of Netanyahu’s social friendship with the Mimran family, documented in a photograph from their vacation in Monaco, which was published in Haaretz on March 25 and brought the Israeli connection with the affair to the fore.
But after three months of probing the case, in conjunction with the French online investigative journal Mediapart, after conducting 45 interviews, reading myriads of pages of documents and deconstructing the crime mechanism that enabled at least 1.1 billion euros to disappear – one’s conclusion is that the by now the well-known image of Netanyahu with Mimran is not the heart of the matter but merely part of its cover. The flashy side of Mimran, flaunted flagrantly to the point of parody – the cars, the vacations, the models, the celebs, the bankrolling, the private plane, the distribution of cocaine in clubs – are all intended to hide the truth.
“I want you to remember one thing,” prosecutor Patrice Amar said in his summation, earlier this month. “I want you to remember that the glittering baroque sides of this crime organization are only one more means for concealing the darkness in which it exists.”
Tel Aviv origins
As befits an affair that is ostensibly French, but unfolded almost entirely in Israel, the “sting operation of the century” had its genesis on Hayarkon Street in Tel Aviv. In March 2005, a huge instance of money laundering was uncovered in branch 535 of Bank Hapoalim there. One of those questioned in the case was Samy Souied, a French Israeli with a rich past of fraud offenses. Souied’s bank accounts were frozen and his savings confiscated. On that day he vowed never to trust banks again.
Indeed, the “sting operation of the century” can’t be understood without trying to estimate the astounding amount of money that Souied kept at home. “He had so much money in his house that he didn’t know where to hide it anymore. You would open a kitchen cupboard to look for a clean glass and bundles of currency notes would fall on you,” one of the minor players in the affair testified in his interrogation. Souied’s partners were well aware of this habit of his, and he was often robbed.
Thus it happened, according to the Haaretz-Mediapart investigation, that in 2010 the fraud funds were being hidden in three villas in Herzliya Pituah: one rented by Souied at 114 Haeshel Street; another rented by another French-Israeli defendant, Mardoche “Marco” Mouly, on Hanassi Ben-Zvi Street; and also in Souied’s house on Wingate Street. One day, when the partners returned to Herzliya from a vacation in Morocco, they discovered that in their absence someone had broken into the Ben-Zvi house and torn up the right floor tiles in the living room: 18 million euros had vanished overnight. Yet, even after this incident, Souied preferred to absorb a few small losses rather than do business with a bank.
What kind of person takes the loss of 18 million euros in stride? Answer: a person who deals with hundreds of millions of euros in cash. Shortly after the end of the trial for money laundering in Bank Hapoalim, Souied found a way to launder money without banks. This time, it happened on an El Al flight.
In August 2008, Souied met another French-Israeli traveler, Michel Keslassy. The two got to talking, and on the plane asked a flight attendant to switch their seats so they could sit together. Souied told Keslassy about his troubles at Bank Hapoalim. Keslassy told Souied that from his offices in the Ramat Gan Twin Towers, he was able to send money at lightning speed around the world – first to Cyprus, then to Tunisia and from there to Hong Kong – until it returned to Israel pure as the driven snow, for withdrawal in cash. The two decided that they were destined to link their business fates.
At the same time, Souied heard from an accountant in Marseille, a woman whom the French police have not yet been able to locate, that very soon an opportunity would arise to implement a classic VAT scam on a monumental scale. “Money is about to fall on us from the sky,” she put it.
Souied, then, had an accountant and he had a money launderer. He then turned to a loyal confidant, Eithan Liron, to act as manager. All he needed now was an investor.
A classic VAT fraud exploits the time gap in Europe between the collection of value-added tax from a transaction and its transfer to the tax authorities, usually 90 days. A skilled gang can take advantage of this period to declare the collector’s bankruptcy, and to disperse the VAT already collected among hundreds of bank accounts around the world, making it impossible to connect the money to the source.
But that’s small-time fraud. First, because it’s difficult to create enough transactions, even fictitious ones, to justify the investment; and second, because the tax authorities are likely to notice in short order the sudden swelling of trade in a particular commodity if it has no concrete cause.
But just such a concrete cause was about to surface. In that same year, France decided to impose VAT on trade in carbon-emission quotas. Thus the French financial authorities would not be surprised if large-scale transactions of this sort were suddenly reported to them simultaneously.
Souied and Liron started to drum up business from a rented office on Hahashmonaim Street in Tel Aviv. Things went well. According to conservative estimates by Haaretz-Mediapart, already in its first quarter of operation, in 2009, the group made a profit of 400 percent. Souied made four million euros immediately. That wasn’t bad, but he wanted more. He looked for an investor with money and connections, someone sufficiently extroverted to draw attention away from the organization behind him. Of all the Jews in France, he found none other than the vacation pal of the prime minister of Israel, Arnaud Mimran.
Al Pacino style
Arnaud Mimran is a charismatic figure, one of the glitterati, with free access to rich people, above all to the late billionaire Claude Dray, the father of his first wife. During breaks in the trial, Mimram often addresses journalists, sometimes with jokes, generally provocatively. He tends to dress like Al Pacino in “Scarface” and is good at quoting from the film’s repartee.
He met his second wife, Claudia Galanti, a model, in the Ken Club in Paris’ 16th arrondissement, to which he often took Netanyahu. As someone who witnessed the spectacle recounted to Haaretz-Mediapart, Mimran, attired in a suit, was on his way to the club’s cigar room when he saw Galanti swimming in the pool. Mimran jumped into the water fully dressed and swam over to her in order to ask if she would join him for dinner.
This was exactly the person Samy Souied was looking for, with his models and his cars and his clubs and his wealthy father-in-law. His friendship with Netanyahu certainly couldn’t hurt, either. Mimran was a big name in French and Italian gossip columns, and was a good bet to get the maximum punishment if anything went wrong.
“Write this down, write this down,” Mimran told us in court last month during a break, charming as always, if a bit more uptight than usual. “Write down what is really going on here: I am about to be sent to prison for 10 years only because I like to swagger.”
Eithan Liron was the only witness to the acquaintanceship between Mimran and Souied, the lone manager who knew about all the group’s bank accounts, the only partner who agreed to tell all to the French authorities. His testimony, which extended across four days, and took place in May 2014 in the headquarters of Israel’s International Crime Squad, conducted by a French-speaking Israeli interrogator and in the presence of two officers from the French financial police.
Liron’s statements to the police, whose content has been made available to Haaretz, shed light on the Israeli-French organization that made it possible for its members to snatch at least 1.1 billion euros from the public coffers in France.
Liron was born in France in 1973 to an Ashkenazi father and a Tunisian mother. He dropped out of school after 10th grade, and by the age of 20 was already a scam wizard in the group that Samy Souied had gathered around him.
When Souied’s gang was arrested in France in 2003, following a previous though far smaller VAT fraud, Liron was the only one who did not do jail time. He founded a fictitious firm and started to take loans. “My idea was to take as much money as possible in loans from banks and suppliers, and to flee with it to Israel,” he explains simply in his testimony.
In 2006, leaving behind his wife and his two daughters, he immigrated to Israel and quickly changed his original name, Jeremy Jacques Grinholz, to evade lawsuits. “There were two arrest warrants against me in France in that name,” he apologizes in the testimony. He opted for “Eithan Liron.” He proceeded to bring to Israel a Ukrainian model, with whom he lives in Tel Aviv. “I falsified a bank affidavit from Canada in order to prove to the Israeli Interior Ministry that I had sufficient income to arrange a visa for her.”
After Arnaud Mimran joined the team, Liron’s pace of work increased tenfold, he testified: “We couldn’t work out of that office. I started to rent hotel rooms madly, every two days we would switch places. There wasn’t a minute when a buy order for CO2 emission quotas didn’t go out, hundreds a day. Before Arnaud joined, I had a turnover of about a million euros a day; after he came on board, I reached 10 million euros a day.”
Because of the nature of fraud, what’s important is the number of transactions and their size. The group made 20 percent on every purchase deal – two percent in trader’s commission, 18 percent from the VAT. Liron bought quotas on the stock exchange in Holland, where there is no VAT on them, and sold them immediately in France. The French treasury waited for the VAT to arrive after 90 days, by which time it turned out that the company had already changed ownership hundreds of times, before vanishing.
Liron managed at least eight companies that engaged in this form of trade, most of it fictitious, as the whole point was to generate volume for VAT purposes. The scale of the group’s success can be gauged from the fact that the French authorities demanded VAT of 1.2 billion euros from one of the companies within half a year. “It was all insane,” Liron told the interrogators.
When Souied asked his nephew to take a donation of five percent of the monthly activity for his synagogue, the nephew found himself riding his bike to the synagogue with two million euros in cash.
In early 2009, Souied, Mouly, Mimran and Liron were running an operation that was far larger than the money-laundering capability of Michel Keslassy, Souied’s El Al buddy. (Keslassy, who from Souied’s point of view had also started to draw unwanted attention, would later appear – as having engaged in institutionalized money laundering in 2009 – in memoranda relating to the battle over the sale of IDB to Moti Ben-Moshe.)
His former partners replaced Keslassy with defendant No. 5, Alexander Bernshtein, who owned Albercom, a money-changing chain in Israeli cities. He had only six branches of his own, but more than 40 stores cooperated with him in exchange for commissions. He thus had the perfect alibi for being in possession of large amounts of cash: He was offering services to tourists. According to reports from the French investigation, Bernshtein laundered 38 million euros in cash for the group in the first half of 2009.
That’s nothing, though, compared with Bernshtein’s true expertise: money laundering by means of rolling transfers. “He made sure to do a transfer of 9,999 euros every second, so that no side would be obliged to report,” Liron explains. In that period, in addition to the cash, Bernshtein laundered 68 million euros via bank orders from and to Israel.
“All told, Samy Souied personally made something like 200 million euros,” Liron testified.
The second partner, Mardoche Mouly, raked in 70 million euros. Mimran, in contrast, found himself with only 10 million euros after eight months. It was a situation that an Al Pacino fan could not abide. According to Liron, Mimran offered Souied the opportunity to make a substantial investment in an insider-trading operation with a guaranteed return, and Souied agreed to give him 30 million euros – in cash, of course. Mimran flew to Israel in his private plane, which was registered in the name of the French clubber Jean-Yves le Fur, and loaded the money on the jet.
In view of the strict customs control of private planes on international flights, certainly those arriving from Israel, Mimran developed a method that he repeated any number of times. He reported on the flight from Ben-Gurion International Airport to Le Bourget, and made a brief stopover in the airport at Nice. There, claiming a technical problem, he stayed the night, sleeping on board the plane. The next morning he filled out a new form for a domestic flight to Paris, which is not subject to international customs checks. Once, twice, three times.
Mimran did not return the investment to Souied, who in 2010 began to grow impatient. Mimran finally invited him to Paris for a conversation “between friends.” Disastrously, Souied agreed to come for a day from Herzliya. He left from Ben-Gurion airport early on September 14, 2010, and met with Mimran twice in different cafes in Paris. The two arranged to meet a third time that evening, before Souied’s return flight to Israel. The meeting was set for 8 P.M. at Porte Maillot, near the Arc de Triomphe. Mimran decided to give Souied a ring designed by the jeweler Meyer Habib, Benjamin Netanyahu’s confidant in France. The rose-gold ring was embossed with a skull.
Souied arrived for the meeting on time, Mimran was three minutes late. He had started to walk toward Souied, the ring in his hand, when a motor scooter with two riders suddenly pulled up. The man in the back pulled out a pistol with a silencer and fired six shots at Souied, who died instantly. Mimran dropped the ring next to the body and waited for the police.
Pending murder cases
In the ruling that is due to be handed down on July 7 in Paris, Mimran, if convicted, is expected to get a 10-year prison term, the maximum for fraud offenses. Meanwhile, the French police have been trying desperately for the past two years to indict him for two murders in which he was allegedly involved, including the assassination of Samy Souied. Even though the financial prosecutors have felt quite confident about the fraud case, the criminal prosecution cannot conduct a murder trial in which all the testimony were provided in written form and from afar. Accordingly, contacts have begun between Israel and France for the extradition of both Alexander Bernshtein, who continues to live in his Givatayim apartment – and of course of the key witness, Eithan Liron.
Israel and France have an extradition treaty, namely the European Convention on Extradition. Many people have been extradited between the two countries in recent years, including for very similar fraud cases. In February 2014, while the initial indictment was being drawn up, the discussions about Eithan Liron to France were upgraded a notch when a joint working committee for that purpose was established. Israel’s justice minister at the time was Tzipi Livni. However, on April 2, 2015, the French jurists responsible for the talks left Israel, and reported to the court that Liron and Bernshtein would not be coming to testify and should be tried in absentia. Since then, the prosecution has decided not to move ahead with the suspicions of murder against Mimran. The justice minister at the time the talks broke down was his vacation buddy, Benjamin Netanyahu.