Tel Aviv Court Extends Remand of 'The Israeli Madoff'

Investment manager Eran Mizrahi accused of defrauding clients out of tens of millions of dollars by promising them high yields on investments in foreign currency markets.

The detention of an investment manager, suspected of defrauding clients out of tens of millions of dollars, was extended by a Tel Aviv Magistrate's Court judge on Thursday by another two weeks. Eran Mizrahi, 39, is suspected of money laundering, aggravated fraud and aggravated forgery.

Mizrahi was arrested 10 days ago after voluntarily turning himself into police. The fraud squad had searched for him for several days in the wake of complaints filed against him. Mizrahi, who lives in the posh Tel Aviv suburb of Savyon, reportedly had tens of millions of funds under his control, but may not have had a license to manage investment portfolios.

Magistrate Court Judge Ido Druyan said that Mizrahi was accused of perpetrating "a chain of highly sophisticated offenses committed over an extended period of time," which led to financial losses for his clients of more than NIS 35 million, and possibly as much as NIS 80 million.

"As long as it is not known exactly where all his property is and all the money that could be at Mizrahi's disposal, it can be taken for granted in this regard that there is a genuine risk that he could flee abroad," said the judge at Thursday's hearing.

Mizrahi is suspected of raising tens of millions of shekels from clients by promising them guaranteed high yields on investments in the foreign currency market. Apparently many of his investors were friends and relatives who heard about him through word of mouth and trusted him.

"This is a hair-raising con job over the course of which the defendant defrauded the plaintiffs and many other investors," stated Zion Levy and Daniel Idelson, two plaintiffs who filed charges against Mizrahi. "It is a scandal that is very reminiscent of the misdeeds perpetrated by the international swindler Bernard Madoff. It pains us greatly that such a scandal occurred here and left many average families as well as Savyon residents with next-to-nothing."

The plaintiffs charged that Mizrahi misled them into thinking their investments had generated substantial returns, issuing periodic investment reports. However, when they asked to withdraw their money, Mizrahi became evasive and eventually all attempts to contact him failed. "It was impossible to get hold of him," the plaintiffs stated. What's more, conversations with some of Mizrahi's relatives "revealed that he had defrauded vast sums of money from his own family as well, that his financial position had collapsed completely and that he had fled in fear from his creditors," the plaintiffs told the court.

Police say Mizrahi is suspected of losing most of his clients' funds and of using some of the money for his personal needs.

Mizrahi denied the charges, saying the money was lost in foreign trade deals.