A class-action request filed with the Tel Aviv District Court seeks about NIS 1 billion in compensation and restitution from Mizrahi Tefahot Bank, while the six named plaintiffs are claiming NIS 30 million personally. The petition centers on allegations that the bank failed to monitor trust and deposit accounts used by attorney Israel Hadad, who had been entrusted with money for a land purchase and development project in Tzofim in the Samaria region.
According to the filing, the plaintiffs joined the project in 2006 and hired Hadad to manage the funds and legal work. The relevant accounts were held at Mizrahi, including a dedicated trust account and a general deposit account. The plaintiffs say a prior civil case already found that Hadad committed embezzlement, forgery and theft worth millions of shekels, and now ask what the bank was doing while the money passed through its systems.
The petition alleges that Hadad received preferential treatment at the bank’s Netanya business branch, in part because his wife had previously worked there, and was allowed to operate with little oversight despite repeated bounced checks and failed standing orders in his personal account. It says the bank let him carry out hundreds of suspicious transactions over years, including transferring trust funds to relatives, issuing checks on clients’ names, forging endorsement signatures, and depositing the proceeds into his personal accounts or a general deposit account. A court-appointed expert reportedly concluded that about NIS 10.3 million disappeared and was stolen in this way.
The plaintiffs also claim the bank ignored anti-money-laundering duties, including reports that should have been triggered by splitting sums below the NIS 50,000 reporting threshold and by transfers to third parties without economic justification. They say the failures reached across branch staff, risk management and internal audit. The proposed class includes beneficiaries of trust or general deposit accounts handled by Mizrahi in the seven years before the suit was filed. Mizrahi Tefahot said, “We will respond to the allegations in court.”
