The Magistrate’s Court in Rishon Lezion allowed last night (Monday) to publish the names of four managers in the construction company “Gabay Initiation and Execution Ltd.”, who are suspected of tax offenses. The suspects are Eli Gabay, a shareholder on behalf of the company, CEO Maya Gabay-Tobol , Orit Tirer-Gabay, VP of Marketing and Sales, and Roi Pepper, Sales Manager. Three of the four suspects are brothers and children of the company’s chairman.
During an undercover investigation conducted by the National Crime Fighting Unit (“Diamond” unit), it was suspected that the executives lowered apartment prices marketed by the company, made false contracts regarding the value of transactions, reported false income tax and real estate tax returns on the value of the transactions, and received payment in cash. In violation of the law for the difference between the reported value and the real consideration.
In addition, during the investigation, evidence was discovered that some of the managers even purchased apartments from the company for themselves, while lowering the value of the assets and falsely reporting the transactions to the tax authority. The investigation shows that three of the four suspects purchased 5-room apartments measuring 129 square meters in a building built by the company at 13 Arber Street in Tel Aviv for a sum of NIS 2,050,000 to 2,125,000, reflecting a value of about NIS 16,000 per square meter. This is when the other apartments in the building were sold at a value of NIS 21,000 to NIS 36,000 per square meter.
It was also suspected that the apartments were sold to the company’s executives with the knowledge and consent that each apartment would be split into two separate apartments, with the cost of construction and splitting being at the company’s expense. It turned out that at a price of a little over two million shekels, each of the three managers suspected of this offense received two apartments in Tel Aviv, with parking and a warehouse adjacent. The unit investigating data regarding the execution of additional transactions of those suspects with other companies under their control, amounting to tens of millions of shekels.
Section 3 (i) of the Income Tax Ordinance stipulates that a person who exercises a right to purchase property (in this case an apartment) at a price lower than the market price, and the price reduction is due to being a controlling shareholder or relative, shall report the difference between the price he paid and the market value as income. (4) to the Ordinance. According to the evidence gathered the suspects were not included in the reports submitted by this income. The suspects were arrested and released on restrictive conditions. The investigation continues.
Advocate Uri Spiegel, representing the company and the Gabay family, responded: “The background to the Tax Authority’s investigation is a business dispute between courts my client and third parties regarding the number of apartments in a specific project that has been completed. My client cooperates fully with investigators. We are confident that at the end of it it will become clear that their conduct was impeccable and that no defect occurred in it. “