Gregory Lerner, who had already served six years in prison for fraud, has been arrested in Paraguay after fleeing from Israel two weeks ago following a second conviction for embezzlement, forgery and money-laundering, the police said on Monday. Investigators at the Serious and International Crimes Unit traced Lerner (Zvi Ben-Ari) to South America after receiving intelligence information. In cooperation with the Israel Police's representative in the region, the local authorities tracked Lerner to a hotel in the Paraguayan capital, Asunci n. He is believed to have escaped from Israel under an assumed identity. According to Asunci n reports, Lerner was drunk when apprehended and had to be hauled off to hospital before being formally arrested. Cash and a forged passport were found in his hotel room. Israel is to seek Lerner's extradition. However, since there is no extradition treaty with Paraguay, it is unclear how long this process could take. About a month ago Lerner was convicted of cheating two businessmen out of $1 million and then laundering the money by depositing it in bank accounts, registered in the names of his friends, but which he controlled. Under a plea bargain, Lerner had confessed to the crimes in return for the state agreeing to drop charges of obstruction of justice. He also agreed to serve time in jail, although the sides hadn't settled on just how long. As part of the arrangement, Lerner was to hand over money he had embezzled. The court had agreed to hold the next hearing in May to give him time to come up with the money. Lerner, 54, immigrated in 1990 and soon after his arrival, Russian authorities sent Israel Police information and evidence regarding his criminal activities. He was arrested in 1997 on suspicion of having been sent here by the Russian mafia to launder their money and he was also suspected of commissioning several murders. The following year, Lerner was sentenced to six years in jail for fraud against Russian banks. Police are still waiting for the extradition of Moshe Ben-Ivgi from Argentina, which also has no treaty with Israel. Ben-Ivgi was arrested in Buenos Aires in October 2004 after skipping the country during a furlough from prison in May that year. Ben-Ivgi and an accomplice were convicted of murdering taxi driver Derek Roth in 1994.