Crane Operator Sentenced to 22 Months for Sophisticated Tax Fraud Scheme

A Jerusalem District Court has sentenced Matzliach Zaken to 22 months in prison, along with a 12-month suspended sentence and a NIS 10,000 fine, for his role in a sophisticated criminal scheme involving fictitious invoices and money laundering. Zaken, who pleaded guilty as part of a plea deal, was involved in a scheme that utilized fake invoices and illicit assets totaling tens of millions of shekels.

The court found the scheme significantly harmed public funds, tax fairness, and economic activity. Despite deeming an appropriate sentence to be between 20 and 45 months, the judge opted for a lighter sentence due to Zaken's rehabilitation efforts, his limited role in the scheme, and his family's difficult financial situation.

Zaken was one of 11 individuals arrested in April 2021 following a covert investigation by the Tax Authority and Israel Police. They were suspected of tax offenses and money laundering totaling tens of millions of shekels within the crane operator industry. The investigation alleged that the suspects, along with two manpower companies, distributed and offset fake invoices and employed crane operators without proper permits, using low wage slips and fraudulent tax invoices. Funds were laundered through currency exchange businesses in the West Bank and Israel.

The revised indictment, to which Zaken confessed, detailed a series of tax and money laundering offenses committed between late 2018 and December 2020. The scheme aimed to reduce tax liabilities and employment costs for crane operators, increase the profits of group members, and launder money while presenting a facade of legitimate business operations to state authorities. Fictitious tax invoices totaling over NIS 38 million were used, with payments recorded at over NIS 42 million.

Under the scheme, Zaken's company, Migdalor, contracted with clients to supply crane operators. Some operators were directly employed, while others were provided by co-defendants. A portion of wages was paid in cash, with the remainder issued on reduced wage slips to appear legal. To minimize Migdalor's tax burden and facilitate cash withdrawals, fake invoices for "crane services" were issued to various businesses, falsely representing real transactions. Bank transfers and checks were made to these businesses against the fake invoices, and the funds were then withdrawn in cash through check discounting and bank withdrawals to pay wages, distribute profits, and cover undeclared expenses. The money laundering offenses alone amounted to at least NIS 42 million.