Man Sentenced to 22 Months for $11 Million Fake Invoices Scheme

Moshe Zaken has been sentenced to 22 months in prison for his role in a large-scale fraud involving fake invoices totaling NIS 42 million (approximately $11 million) between 2018 and 2020. Zaken, the owner of the manpower company Migdalor Human Resources, which supplied crane operators to construction sites, admitted to participating in the scheme. The prosecution had sought a 42-month sentence, but the Jerusalem District Court judge, Ram Winograd, reduced the penalty due to Zaken's confession and the commencement of his rehabilitation process.

The scheme involved paying crane operators partly in cash and partly through reduced salary slips. To minimize tax liabilities and extract cash payments, Migdalor issued fake VAT invoices for "crane services" to various businesses. Bank transfers and checks were made to these businesses against the fake invoices to create a facade of legitimate activity. The funds were then withdrawn in cash, through check discounting and bank withdrawals, to pay the operators, other group members, and for undeclared purposes.

As part of a plea deal, Zaken pleaded guilty to numerous severe tax offenses, including income tax and VAT violations, which carry penalties of up to seven years per offense. An original charge of aggravated fraud was dropped, and he pleaded guilty to aiding in illicit property dealings under the Anti-Money Laundering Law, rather than directly committing them. The defense argued that Zaken's debts amounted to NIS 2.4 million and that the Tax Authority had imposed a NIS 1.8 million penalty. They requested a sentence between 12 and 30 months, citing Zaken's difficult financial situation, which may lead to the sale of his family home.

Judge Winograd acknowledged the severity and sophistication of the criminal plan, noting its significant damage to public funds. However, he cited Zaken's confession, which saved court time and indicated remorse, his agreement to forfeit substantial assets, and his participation in a rehabilitation program as reasons for the lighter sentence. The parties agreed to the forfeiture of NIS 270,000 from Zaken's assets and NIS 1.4 million from Migdalor's funds. Zaken was also fined NIS 10,000, with the judge noting that a larger fine would be unpayable given his financial state and could prolong his imprisonment. Legal proceedings are ongoing against Yitzhak Schreiber, whom the state alleges played a more significant role in the offenses.