Haifa's Sephardi Chief Rabbi Shlomo Chalouche was questioned Thursday by the northern department of the National Fraud Squad on suspicion of involvement in an insurance fraud scandal. The rabbi, who is also head of Haifa's rabbinical court, is being investigated by an NFS team led by Dep.-Cmdr. Robert Goldstein. He is suspected of having received "a donation" from a prominent businessman who wanted him to advance his interests in a case that Chalouche was judging. The rabbi was released on bail following his questioning. Attorney Tami Ulman, who represented Chalouche, said the rabbi was questioned about two separate cases. One had to do with allegations that Chalouche had received a bribe for performing a conversion 20 years ago, a claim the rabbi rejected. He said that he had disqualified himself from sitting on the panel of religious judges who performed the conversion and had nothing to do with the conversion. The second case involved insurance fraud. Chalouche's daughter, Pedut Margi, had an accident while driving her father's car. Margi allegedly lied about the accident and said that Chanan Chazan, Shalush's former driver, was driving. But Ulman said that Chazan was a "pathological liar." According to Ulman, Chazan was the one who tipped off the police about the two cases. Chazan, who was at one time employed by the Haifa Religious Council as a kashrut supervisor, had close ties with Chalouche before a recent falling out between the two. Ulman also represents Shimon Frye, Chalouche's former rabbinic court secretary, who has been accused of accepting bribes to expedite rabbinic court cases involving divorce and conversion. Following media reports of Chalouche's interrogation, a flurry of allegations were directed at the Sephardi chief rabbi by a senior Ashkenazi source in the religious council. The source claimed that Chalouche received bribes on numerous occasions over the past several years for everything from kashrut supervision to expediting conversions and divorces. But the source could not explain why he had not come forward until now. Ulman called the rumors "vicious lies." "If somebody has evidence against the rabbi then he should come forward," said Ulman. Moshe Shtatman, administrative head of the religious council who said that he has worked with Chalouche for 16 years, first as deputy mayor of Haifa and for the last four years in his present position, believes Chalouche is an honest man. "In every bureaucratic apparatus there are tensions from time to time," said Shtatman. "But I have never come across incidents of corruption or intentional mismanagement. If I had I would have filed a complaint."