Israeli police investigate suspected $65 million diamond fraud

Israel Police are investigating serious allegations of a $60-65 million cash and diamond theft at the Ramat Gan Diamond Exchange, which could cause the bankruptcy of dozen diamond companies. A well-known diamond dealer,  Hanan Abramovich, who is suspected of stealing the diamonds is said to have embezzled jewels worth tens of millions of dollars, and police suspect that some of his family members may also be involved and to be questioned.

Hanan Abramovich was arrested on Tuesday. The allegations are that Abramovich did not pay for the diamonds that he had passed on. The investigation is being carried out by the Tel Aviv Police Fraud Squad. Channel 2 news reported.

Abramovich was being brought to court for a remand hearing Wednesday. Abramovich is alleged to have taken goods from 12 leading diamond companies without paying for them or giving them back, the TV report said.

“We weren’t aware of it but creditors opened a dialogue with him and he strung them along for seven months, ” explained Eli Avidar,  managing director of the Israel Diamond Exchange. “When he didn’t arrive yesterday for arbitration meetings it became clear that it was a matter of embezzlement.”

Avidar noted the rigorous process involved in becoming a member of the exchange, which requires candidates to work in the diamond business for eight years and pass several lie detector tests as well as background reviews to ensure there is no history of embezzlement or theft. “Whoever doesn’t pass the polygraph, can’t be accepted as a member of the exchange.”

“We are talking about huge deception by a man who planned it a long time in advance, ” said Eli Avidar to TOI, “He took advantage of the ethical code of the exchange members. Hanan Abramovich is a swindler and happily there aren’t many like him, ” Avidar continued. “It is the first time in our history there was embezzlement on this scale. You can’t make a phenomenal sum of tens of millions of dollars disappear without leaving a trace. We are sure the man hid diamonds and cash, and the police will find them quickly and easily.”

Avidar said suspicions of embezzlement were first raised a few months ago when Abramovich failed to make certain payments.

The exchange’s administration said it had begun checking Abramovich’s dealings after a complaint was filed against the company he owns, which was said to owe payments for tens of millions of dollars to traders.

After a number of internal arbitration meetings, the complaint was handed over to the exchange’s legal department, which then asked police to open a criminal investigation.

TOI says that printed sheets posted on walls in the exchange featuring a photo of Abramovich urged “anyone who owes money and/or traders to exchange member Mr Hanan Abramovich or anyone whom the aforementioned owes money and/or traders is requested to immediately notify the legal department.”

The posters also said that Abramovich had been banned from the exchange trading floor for 14 days until the management further reviews the matter.

Abramovich’s legal representative attorney Adi Carmeli told Channel 2: “My client acted within the framework of regular business practices and denies any connection to illegal activities. A simple investigation will validate this.”

A statement issued by the Diamond Exchange management said that the investigation had been launched after complaints were received by several companies claiming they were owed tens of millions of dollars for goods sold to Abramovich’s company.

Israel Diamond Exchange managing director Eli Avidar said, “The Diamond Exchange’s management will show zero tolerance to those who hurt other members of the exchange. Israel’s diamond sector has been going through difficult times in recent years and to our regret we are being exposed to unfortunate instances like these where the situation is being exploited. The Diamond Exchange management will work resolutely to clarify the case including working with the enforcement authorities.