Israeli Ultra-Orthodox Men Lose Millions in Alleged Ethiopian Gold Mine Ponzi Scheme
In recent weeks, a financial scandal has shaken the ultra-Orthodox community in Jerusalem's Ramot neighborhood and Modi'in Illit. Hundreds of ultra-Orthodox men, many of them Torah scholars, were persuaded to mortgage their only homes for investments in supposed gold mines in Ethiopia through a company called Lekach Investments. The scheme promised to pay their mortgage installments and deliver astronomical returns of over 100%, but it is now suspected to be a Ponzi scheme that has left many families at risk of losing their homes.
The investment pitch was promoted by trusted community figures and rabbis, who encouraged the men to take out loans of 2-3 million shekels or more without disclosing the true purpose to the banks. The company allegedly used new investors' mortgage payments to cover earlier investors' debts, with no actual gold mining profits. This financial model resembles the classic pyramid scheme, raising fears of widespread financial ruin.
The Forum for the Protection of the Ultra-Orthodox Consumer has been actively exposing the case, which recently escalated when the Israel Securities Authority (ISA) launched a public investigation. ISA investigators raided the company's offices to examine allegations of securities law violations, fraud, and misappropriation of funds. The company denies all accusations and claims full cooperation with authorities, expecting the case to be closed once facts are clarified.
Financial journalist Simy Spolter, who has extensively covered the story, warned about the dangers of mixing religious trust with financial decisions and criticized the rabbis' involvement in encouraging risky investments. She stressed that such schemes inevitably collapse, causing devastating damage to families. The case serves as a stark warning to the ultra-Orthodox community about the risks of unregulated investments and the importance of professional financial advice.
Despite the ongoing investigation, many families remain in distress, fearing irreversible losses. The Forum continues to receive numerous complaints, urging caution when faced with investment offers promising unrealistic returns, especially those requiring mortgaging one's home.
