Nice Little Store You Have There. Wouldn’t Want It to Get Robbed

Not long ago, at a hair salon in a small town in Israel, a little girl sat on the barber chair while her dad monkeyed with his smartphone. Three young men entered the shop. They obviously hadn’t come for a haircut.

They also obviously made the hairdresser nervous. “Is she your last customer today?” one inquired, leaving no doubt that the correct answer was “Yes.”

Actually, the hairdresser didn’t answer — just a moment before, he’d been grousing about how busy his day was, because of the imminent High Holy Days. The four entered into a brisk dialogue, with the three treating the salon like their own living room. Once the father and daughter were gone, the hairdresser remained alone with the trio.

Then what? Maybe he took cash from a drawer, or the register, and gave it to his unsolicited guests. That is what hundreds, even thousands, of small-business owners do week after week, month after month, when their “silent partners” show up and demand their dough, or else.

“Merchants have gotten used to living in fear,” says one such from Tel Aviv, who suffered from threats of the kind and heard not a few stories from his peers. “Crooks show up from nowhere just because your shop is in their turf.”

It doesn’t end with money, either. These criminals may decide to take over your life, says our source. “They’re like a cancer. Once they start with you, you can’t make it stop. I know produce stores in Ramat Gan that were completely taken over — the crooks used them to launder checks, to roll over loans.”

It isn’t that they necessarily rob you of millions, our source continues. “Some stores they may tap for maybe 2,000 to 3,000 shekels ($518-$778) a month. It’s not something you can’t handle, but the money isn’t the only thing. A kid may walk into the store and help himself to snacks, a soda for his boss, without paying of course. It’s humiliating.”

2b shekel squeeze

According to people in the know, each year Israeli crime organizations pocket a cool 2 billion shekels from the protection racket, not including the construction business. It happens everywhere there are businesses and people, but most markedly in the development towns, says a police source.

Beauty salons, groceries, clothing shops, restaurants, night clubs — really, any business with a cash register — pay for “protection.” The construction industry is a whole other category. Building sites have no cash registers to rob, but they do have expensive equipment. During the last decade, extortion of building contractors has become a national plague, from the smallest of bricklayers to the big boys.

A business owner may encounter crooks in two basic cases. One is when a gang decides his shop is in its territory.

Another is when the merchant taps the “gray market” for a loan, which has been happening more and more, especially in the last year, says Dikla Abutbul, chairwoman of the Small Businesses Society in Israel. A loan can lead to protection fees, she adds: Not only do the criminals gain knowledge about their victim’s business — they realize the store owner is weak and vulnerable to extortion. Knowing a shop’s turnover, they can calculate how much they can sustainably extort, she adds.

Of course, when they see a business is in trouble the crooks will scale back their payment demands, says an adviser to small businesses. They don’t want to starve the golden goose to death.

One snag is that the extorted sums cant exactly b e claimed for tax purposes — there have even been court cases about this. So the money comes off the company’s bottom line. That in turn influences business decisions. For instance, the owner of a successful clothing store decided to move it from the street to an indoor mall, even though it meant higher rent plus management fees to the mall, in order to gain peace of mind: The security guards can keep the thugs out (theoretically, at least). Also, points out the owner, his high rent is tax-deductible.

Some businesses find themselves trying to do more and more business off-book (which is illegal), less to dodge taxes and more in order to build up cash for their extortionists.

But some extortionists have come up with clever gambits, says Yaron Gindi, president of the Tax Consultants Bureau.

Some years ago, one of his customers, a merchant, was overpaying his supplier for bottled drinks, which Gindi noticed because the gross profit figures were out of whack. The merchant should have been making a profit on selling bottles; but he didn’t, because he sold them at normal prices but was overpaying himself. The supplier of the bottles was, simply, extorting “protection,” not in cash.

Earlier this month, a Be’er Sheva court convicted one Ilan Ben-Sheetrit, head of a crime gang in Eilat, and some of his “soldiers,” of offenses that included extorting protection fees. A state’s witness described squeezing the owners of a club, Riviero, in Eilat in 2010-11. The Riviero had opened after a different club, the Clara, owned by crooks associated with Ben-Sheetrit, had closed. Thing is, two guys who had worked at the Clara found jobs at the Riviero, which is how Ben-Sheetrit came to choose the Riviero as his next target, explained the state’s witness — he had these two people inside who could influence the Riviero’s owners — “explain to them exactly who Ilan Ben-Sheetrit is.”

Keeping the peace

In exchange for weekly payments, Ben-Sheetrit kept the peace at the club, stopping the fistfights that could cause the police to shut the joint down for 30 days — which could ruin a club through loss of income. In winter he showed consideration because of the drop in the club’s income, explained the witness.

Ben-Sheetrit demanded up to 5,000 shekels extra for parties, and there were three or four a week. Over a year and a half the Riviero handed over half a million shekels to the crime gang and in summer, 50,000 a month.

Even behemoths traded on the Tel Aviv Stock Exchange have to pay protection money.

Take the case of Rami Levy Shivuk Hashikma, a supermarket chain that, according to a ruling by the Jerusalem District Labor Court, paid a “guard” for protection at its branch in the industrial zone of Sha’ar Binyamin, north of Jerusalem.

Protection from what? Theft from its warehouse and store. The affair blew up in 2012 after the guard sued Levy for overtime and extra pay for working on Shabbat and holidays.

Levy told the court, defending himself against the claim that the guard had offered his services — in exchange for a lump sum on a monthly basis — explaining that none of the people in the area, who knew him well, would dare to come close to the supermarket.

The ruling was handed down a about a year ago. The judge decided that even though the guard had received proper pension provisioning and a pay slip, he was not in fact an employee of Rami Levy. “We have gained the impression that the defendant [Rami Levy] did not need guard services at all, but reacted to the solicitation of the complainant,” wrote the judge, adding, “Witnesses clarified that the Binyamin industrial zone has security services for the whole region.”

The chain had no other such “guards,” the judge noted, and cast doubt on the legitimacy of the whole employment arrangement with this one — and wondered whether the chain had any choice in the matter.

Before offering his guard services, the guard had “worked with sheep” and had no training in security, the judge noted.

The ruling begs questions, not least how a company the size of Rami Levy Shivuk Hashikma, which is worth 2.4 billion shekels on the Tel Aviv Stock Exchange, handles threats by a former shepherd. A company executive dismisses concerns about violence. “This person comes along and says, if I don’t guard, you’ll get robbed. There is no need to intimidate with blows. You just know that if he’s there, then he and his friends won’t rob you. That’s it.”

The fact that a business the size of Rami Levy feels it can’t report protection threat should be regarded as a badge of shame for the police. Businesses are afraid to complain because they are justifiably scared that the criminal will take revenge. The fear is so .great that no businessperson approached for an on-the-record interview by TheMarker would agree; most wouldn’t consent even if their name wasn’t mentioned.

“What’s so sad in my opinion is that so many business owners are willing to live with the situation,” says Abutbul, from the Small Businesses Society in Israel. “In some places when there’s a crime wave, there are businesspeople who prefer to turn to the criminals to protect their businesses than to call the police. They’d rather have one thief protect their business from other thieves.”

Police have failed victims

“The police have failed in everything connected with personal security of the average citizen,” says attorney Ram A. Gamliel, who has represented several clients in protection racket cases. “A business owner who’s been robbed knows there’s no one to protect him. With all due respect to the war on drugs, the police have to invest more in protecting businesses because the phenomenon [of protection] harms the national interest. In the end, the price rolls over to the consumer.”

The story, whoever, is a little more complicated than that. Police sources that protection is a tough circle to break into: People don’t file complaints and in the absence of information there’s nothing for the police to do and then the public complains that the police don’t do anything. In many cases, the sources say, investigations begin on the basis of intelligence work by detectives, but the victim then fail to appear in court to testify.

The affair at the Riverio nightclub in Eilat was first revealed due to police intelligence work. Guy Avraham, the victim, had never gone to the police and when investigators came to him he denied that Ben-Sheetrit, had extorted or threatened him, or that he had ever given him money. Only when they approached him a second and third time did he begin to tell his story. In court, when Ben-Sheetrit was present, he refused to talk.

“We’re talking about a normal person who became entangled in a difficult and scary situation when he was ordered to pay money so he could continue operate the Riviero,” the court’s ruling stated.

“The anxiety he felt when he committed the offense didn’t leave him even when he testified in court. As a result, in court from the beginning he tried to avoid alleging that Ilan [Ben-Sheetrit] was connected with the extortion and said he had only heard rumors to that effect. Only after the prosecutor sought to declare him a hostile witness ... despite stress and anxiety he was suffering as a witness in the presence of Ilan in the courtroom, did Guy Avraham repeat the incriminating things about Ilan he had said at the time of the police investigation.”

Ben-Sheetrit’s attorney insisted that his Avraham’s initial statement to the police — the denial — was the correct one and attacked inconsistencies in the police investigation. The judge rejected the claim. “We know from experience that ordinary prosecution witnesses, fearing renowned criminals, are reluctant to cooperate with police and help convict those extort them,” he said.

“We need to destroy the myth that ‘the police don’t do anything,’” says a senior police officer, who asked not to be named. “The minute someone reports a crime, we get to work on it and we succeed. People who report crimes benefit. Yes, we are aware about the difficulties’ of filing a complaint so we also work based on intelligence. But to really succeed we need to break the circle of silence.”

He say that to the best of his knowledge it’s very rare for a criminal to hurt a witness who files a complaint.

As an example, the police cite the case of the Yad Sarah industrial zone in Be’er Sheva. Seven years ago, the area was badly affected by protection rackets. Massive enforcement significantly reduced the problem, although law enforcement officials admit that protection continues in the south. In 2014, 24 cases of protection were solved nationwide; in the first half of this year the number was 11.

Still, it is difficult to collect intelligence. Police collect data according to the categories of the national penal code, which classified protection threats in the same category as all other threats.

“I completely understand the position of my business colleagues who are afraid to complain because the minute you’re exposed you risk your business, you family. The police can’t protect you,” says Dror Atari, a member of the Federation of Israeli Chambers of Commerce’s management committee. “We need to find a way to change the procedure connected with protection rackets so that a business owner can file a complaint anonymously so that the police can at least check the allegation.”

Spreading crime

Protection rackets in the construction sector was widespread a decade ago, especially in the south and has since spread to the rest of the country. Today there is almost no business engaged in building and roadwork that has encountered criminal who offer guard services — with the implied threat that equipment will be stolen or employees hurt.

In fact, few construction sites have guards, but the criminal gangs know which of them is “protecting” which site and don’t dare try to steal equipment. The cost of the protection runs from as little as 5,000 shekels to 10,000 shekels a month to hundreds of thousands of shekels for a single building project.

“It starts by their stealing valuable mechanical equipment, valuable parts,” says one senior executive in the building sector, who asked to speak anonymously.

“They can’t operate the equipment, and that means works has to stop for long periods, which entails heavy costs. Every delay in delivering a home to a buyer costs the contractor money in compensation. The contractor can complain to the police about the theft, or he can pay. The minute he pays, the part he needs is returned. Why not hire a security company? The problem starts with the fact that many of the companies that serve the construction sector are controlled by criminals.”

One of the most prominent cases in recent years involved the Abu Mor brothers, who controlled a security company called Mor Civil Defense. Majdi, Khalid and Majid Abu Mor were at the helm of one of the country’s biggest criminal gangs in the construction sector, earning by police estimates 150 million shekels between 2006 and 2013 for “protecting” building sites.

The brothers reached a plea bargain a year ago and were convicted of issuing fictitious receipts, tax evasion, fraud and one count of extortion; a charge of membership in a criminal organization was dropped. Each received a sentence of three to four years in prison, whose severity they unsuccessfully appealed.

According to the indictment, the Abu Mors provided security services to hundreds of construction sites, despite being ineligible for a license to offer the service on account because they had a criminal record. In each area, the brothers would appoint a “ra’is,” head or leader in Arabic, to supervise local activities. These included explaining to contractors that only the Abu Mors could provide guard services, with explicit and implied threats that failing to hire them would result in equipment being stolen or damaged, accorded to the indictment.

The protection fees were split between the Abu Mors and the local ra’is. Payment was collected in cash, without reporting to the tax authorities, with each ra’is earning as much as 6 million shekels over the years, the indictment asserted.