Israeli Contractor Sentenced to Prison for Fake Invoices

A contractor in Israel has been sentenced to nine months in prison and fined for his role in a fictitious invoice scheme. Daoud Elhai, owner of a construction company, received the sentence from the Petah Tikva Magistrate's Court for serious tax offenses committed in 2017. Between June and November of that year, Elhai's company received eight fake invoices totaling approximately NIS 2 million from a legitimate company, despite no actual transactions taking place. Elhai then deducted the input tax credit, amounting to about NIS 300,000, from these invoices.

Elhai collaborated with Mordechai Plotzer, who was convicted last year for distributing the fake invoices. Plotzer had taken control of a company without its owner's knowledge and used it to issue the fraudulent invoices to Elhai's firm. In return, Elhai paid Plotzer 3% of each invoice's value. To conceal the fraud, Elhai's company issued checks to the company Plotzer controlled, which were recorded in the company's books. Elhai also had Plotzer sign as a personal guarantor for these checks.

According to the verdict, Plotzer cashed some checks, kept NIS 60,000, and returned the rest in cash to Elhai. Elhai gave most of the checks to his purchasing manager, Nader Elhai, who cashed them in the city of Tayibe. A small portion was cashed by another individual who used the funds to pay workers from the territories employed at one of Elhai's event halls and to pay a professional for repairs at the same venue. Consequently, all the money Elhai's company allegedly paid to Plotzer's controlled company was returned to Elhai in cash.

The court considered that the defendants did not take responsibility and engaged in a lengthy trial. Elhai's prior criminal record, though not for tax offenses, and the company's previous settlements involving fines were also taken into account. The court also noted the full rectification of the offense. In addition to Elhai's nine-month prison sentence and a NIS 50,000 fine, his company was fined NIS 50,000. Nader Elhai received 100 hours of community service and a NIS 10,000 fine.