AG holds pre-indictment hearing for Deri on tax fraud charges

Mandelblit dropped bribery at earlier stage.

INTERIOR MINISTER Arye Deri at the Knesset
Attorney-General Avichai Mandelblit held a pre-indictment hearing for Shas Party leader and Interior Minister Arye Deri on three counts of tax fraud totaling potentially more than NIS 1.5 million on Wednesday.
On January 9, Mandelblit announced his likely intent to charge Deri, though he also dropped the most serious charges of bribery which the police had probed.
Deri does not need to step down as interior minister until a final indictment decision, which likely will not take place until after the March election and possibly even six months from now.
The consequences for Deri depend on the final indictment and any potential conviction. It could put a possible end to his political career, and potentially even carry jail time.
“After over five years of a difficult investigation, I thank the Creator of the World for the decision to dismiss all the false accusations against me, and I am convinced that at the hearing it will also be decided to close the case regarding tax offenses, after all the facts are presented to the attorney-general,” tweeted Deri back on January 9.
He added: “I intend to continue to focus on the role of interior minister and concern for the weak who need assistance, especially during the coronavirus period and the preservation of the Jewish identity of the state.”
In the first of the three counts of tax fraud in the Justice Ministry’s January 9 statement, Deri sold real estate in Givat Shaul to his brother Shlomo Deri in order to perpetrate tax evasion.
The price of the sale, documents relating to reporting taxes on the sale, and characterizing the real estate as empty when it was a residence were all done with fraudulent purposes.
In the second count of fraud, Deri was paid for his investment activities by the company Green Oshen dating to 2011 when he was out of politics. He later directed the fund to make those payments to his brother Shlomo to avoid paying taxes.
From 2013-2015, Shlomo issued NIS 630,000 in fraudulent invoices for consulting activities that he had not really provided, in order to cover-up the tax evasion.
In the third count of tax fraud, Deri received a payment dating back to 2012 for marketing and consulting activities to a subsidiary of Egged and businessman Moshe Habah. Deri directed NIS 180,000 of his fees be paid to a close associate, Yehuda Azrad. He did not report those fees for tax purposes, nor did he report NIS 100,000 additional fees paid directly to his account.
The Justice Ministry statement emphasized that Deri had intent to defraud the tax authorities, and that this was not a simple case of a civil misunderstanding that would result in a mere fine.
After a nearly three-year probe, the police recommended indicting the interior minister in November 2018.
In August 2019, former state attorney Shai Nitzan recommended indicting Deri for tax crimes, fraud, money laundering and some unspecified obstruction crimes.
The delay since then to reach a decision was highly unusual, but times have not been normal. In August 2019, the country was in the midst of holding multiple elections, which only led to forming a government in May 2020.
By then, the entire world was engulfed by the coronavirus crisis, which drained the Justice Ministry’s ability to focus on other issues.
And yet, with all of those qualifications, The Jerusalem Post reported first in November 2020 that Mandelblit recognized that Deri’s case probably should have been decided sooner, which turned out to be less than two months later. He was also cognizant in November that a new election could be around the corner, and that it would be controversial to issue the Deri decision in the midst of a new election season.
One source of delay of which the public may be less aware was that the case itself evolved substantially after the 2018 police recommendation.
Most of the more serious bribery charges did not pan out under scrutiny, and the charge against him morphed into a less serious, though still criminal, tax fraud case.
Aspects of the tax fraud case were only recently discovered in the middle of 2019, and this required bringing in new experts to delve into the case.
Deri served 22 months in jail from 2000-2002, from a prior bribery conviction as interior minister in the 1990s. This prevented him from returning to politics for over a decade.
He retook control of the Shas Party from Eli Yishai shortly before the 2015 Knesset election.