Investigations indicate that billions of shekels in illicit online gambling transactions may have been facilitated
Prosecutors in Israel are mulling the possibility of an indictment on credit card issuer Cal following an investigation that may indicate that the company was used to clear billions of shekels in online gambling and other illicit transactions, reports the publication Haaretz.
The State Prosecutor's Office revealed Tuesday it was considering an indictment against Cal Israel Credit Cards and six businesspeople, including Cal's former CEO Boaz Chechik.
The six are being summonsed for a final hearing which will determine whether prosecutors should issue indictments for allegedly facilitating transactions in online gambling and other illicit activity involving billions of shekels, the State Prosecutor's Office's economics division said in a public statement.
"Cal itself as well as its former CEO Boaz Chechik and former vice president Steve Greenspan are suspected of aggravated fraud, false entries in corporate documents, bribery and violations of the Prohibition on Money Laundering Law," the office said.
The Bank of Israel's banks supervisor, David Zaken, has ordered Cal to cease any dividend payments out of concern that the company may be liable for severe financial penalties.
Cal, which issues Visa, MasterCard and Diners Club in Israel, is 72 percent owned by Israel Discount Bank and 28 percent by First International Bank of Israel.
If an indictment is issued against Cal it will, Haaretz reports, be the first ever against a major financial institution in Israel.
Cal said it was studying the prosecutors' statement and declined further comment for now. A spokesman said: "We believe that the prosecutor, after studying the matter in context, will accept our view and decide against filing an indictment against the company."
The national police's 433 Unit, which began investigating the affair in December 2011, alleges that the fraud and other violations occurred in two areas.
In the first, between 2006 and 2009, Cal and the six executives cited by prosecutors defrauded the international credit card issuers MasterCard and Visa by fraudulently offering credit card clearance services to online gambling businesses.
Investigators say the business became so big that in 2008 the company formed a new unit – Cal International – to handle it.
"It is suspected that as of 2007 the two companies processed payments for gambling sites (including U.S. gamblers) by false coding, classifying them as supposedly legitimate business activities, approving businesses as customers without proper identification procedures and other fraudulent activities," the state prosecutor's economics division said.
In the second area, prosecutors believe that Chechik and associate Albert Alhadaf, helped by Greenspan, took bribes from Canadian businessman Nathan Jacobson, who engaged in online payment processing through a company called Paygea.
Police allege that in exchange for providing Cal services to Paygea, Alhadaf was given a controlling stake in the company and a share in the profits. Paygea cleared credit card payments for online sales of products and services.
Haaretz reports that there are allegations that Chechik and Greenspan developed a sophisticated system for covering up the transactions and high cancellation levels from the international credit card issuers, and intimidated Cal employees into cooperating. Four of the company's risk managers quit in protest, it has been claimed.
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