Fraud and Deception

Theft by a manager or authorized person

Introduction: theft offenses under special circumstances

The Penal Law distinguishes between a basic theft offense and theft offenses under aggravating circumstances. Basic theft under Section 383, taking another person's property without permission, by fraud and in bad faith with the intention of taking it permanently, is punishable by up to 3 years' imprisonment. When the theft is committed by someone who has been granted authority or trust, the legislature takes a stricter view, and the punishment increases to up to 7 years' imprisonment.

Theft by an office holder in a corporation, Section 392

Section 392 of the Penal Law provides that a board member or office holder in a corporation who steals property from the corporation is liable to 7 years' imprisonment. An "office holder" is defined broadly: CEO, deputy CEO, director, and any manager directly subordinate to the CEO.

For a conviction, it must be proven that the office holder took property of the corporation without consent and with the intention of taking it permanently, and that he was aware of his conduct and the circumstances. Important to know: there is no need to prove actual damage to the company; the taking itself is sufficient to constitute the offense.

Theft by an authorized person, Section 393

Section 393 defines several situations of theft by an authorized person, all carrying a penalty of up to 7 years' imprisonment:

The theft of an asset received with power of attorney to act in relation to it; the theft of an asset deposited for safekeeping or use; the theft of an asset received for possession for the benefit of another; and theft from the proceeds of a security intended for a specific purpose or a specific person.

An "authorized person" is defined as anyone between whom and the owner of the asset there are relations of authorization or agency, that is, power of attorney over the specific asset. The asset may be physical or intangible (copyrights, services, virtual assets). These offenses are common among investment managers, bankers, receivers, and sometimes also lawyers who embezzle their clients' funds.

Why is the punishment so severe?

The harm in these offenses is twofold: harm to the property of the corporation and its shareholders; and harm to special fiduciary relationships created between the office holder and the corporation. The fiduciary duty of the office holder, established in section 254(a) of the Companies Law, requires him to act in good faith and for the benefit of the company; theft of its assets is a material breach of this duty.

In CrimA 281/82 Abu Hatzira v. State of Israel, the Supreme Court held that in offenses of this type, "laying hands on another's property and breach of the trust given by a public that relied on their honesty and decency are concentrated and intertwined," and held that real and tangible punishment, including actual imprisonment, is essential.

The Supreme Court's position, a trend toward harsher punishment

In CrimA 4430/13 Netanel Sharon v. State of Israel, the Supreme Court held unequivocally that the time has come to raise the sentencing threshold in economic offenses, including the imposition of actual imprisonment. The Court emphasized that these are sophisticated offenses that are difficult to detect, committed by people of status and education while exploiting their power and authority. The damage, when it is discovered, is far more severe than in ordinary property offenses. One should not rely on the "white-collar" nature of the offense as a mitigating factor; the Supreme Court said so expressly.

Why is early representation critical in these offenses?

Offenses of this type are investigated over a long period, sometimes years, before leading to arrest or an invitation for questioning. When the defendant receives an invitation for questioning, a detailed evidentiary file has usually already been formed. Anyone who is not represented from the earliest stage arrives at the questioning empty-handed. Advocate Israel Arama, a former member of the Tel Aviv District Attorney's Office, is familiar from the inside with how complex economic cases are built, both how the prosecution builds them and where they can be attacked. Contact us for an initial consultation with no obligation before taking any step.

Theft by a public employee

What is the offense and why is it especially serious?

Theft by a public employee is set out in Section 390 of the Penal Law, and it is the most serious in the series of theft offenses established by law. Its penalty is 10 years' imprisonment, higher than all other theft offenses, except for weapon theft, which carries the same penalty.

The rationale is clear: a public employee enjoys the public's trust, powers granted to him to serve the public, and sometimes access to assets and resources that are not his. Theft through abuse of this status is a double betrayal, both of public property and of the trust placed in him. The legislature seeks to instill a norm of proper administration and deter public employees from abusing their position.

Who is considered a "public servant"?

The definition of a "public employee" in Section 34Kaf-Dalet of the Penal Law is broad and comprehensive: any state employee, including soldiers; employees of a local authority and a local education authority; employees of a religious council, the National Insurance Institute, the Bank of Israel, the Zionist Organization, the Jewish Agency, Keren Kayemeth, Keren Hayesod, and the Employment Service Bureau. In addition, anyone who works in a factory, institution, fund, or body in whose management the government is a partner, including council or management members in such a body.

Elements of the offense

The actus reus: taking or carrying property with a value exceeding 1,000 shekels, which came into the defendant's possession by virtue of his role as a public employee, without the owner's consent and with the intent to deprive the owner of it permanently. "Taking" also includes obtaining possession by deceit, intimidation, or exploitation of the owner's mistake.

The mental element: awareness of the theft conduct and its circumstances, and intent to deprive the owner of the property permanently.

Important to know: this is a conduct offense, not a result offense. It is not necessary to prove actual damage; the very commission of the theft constitutes the offense.

Sentencing trends in case law

In recent years, the courts have taken a stricter approach to offenses of this type. Public employees accused of theft are often people of high economic status and education, who exploit their position and professional understanding to commit sophisticated offenses, and precisely for that reason the court does not make do with suspended sentences. Imposition of actual imprisonment is the norm, even without reaching the maximum penalty.

Theft through abuse of public status may harm a broad population, and not only a single injured party. Such acts undermine public trust in state institutions and require an appropriate response from the court.

Legal representation in theft cases by a public employee

These offenses are usually conducted in a prolonged, complex, and high-profile proceeding. They sometimes involve related offenses: bribery, deception, fraud, and false registration. Anyone accused of this offense needs representation from someone who thoroughly understands how economic-public cases are built, the way the prosecution operates in these cases, and the points at which action can be taken. Israel Arama, a former member of the Tel Aviv District Attorney's Office, accompanies suspects and defendants in these offenses from the initial investigation stage. Contact us for an initial consultation with no obligation.

Exam fraud

What is exam fraud?

Exam fraud is an act of deception committed during an examination, whether it is a university entrance exam, the Psychometric Exam, bar exams, licensing exams for medicine, law, and certified public accountants, the theory test for a driver's license, the Amir and Amiram exams, or any other professional or academic examination. The definition includes copying, bringing in prohibited aid materials, impersonating an examinee, hiring another person to take the exam in exchange for payment, and forging identification documents.

Exam fraud is not merely a "moral offense"; it is a criminal offense in every respect, which may lead to a police investigation, an indictment, and a criminal record.

The relevant criminal offenses

Several sections of the Penal Law may apply simultaneously in a case of exam fraud:

Impersonating another person (Section 441): sending another person to the exam under the examinee's name, with an original or forged identity card. Penalty: up to 3 years' imprisonment.

Forging a document (Section 418): forging an identity card, exam form, or signing the exam documents in another person's name. Penalty: up to 3 years' imprisonment when the forgery is intended to obtain something.

Obtaining something by deceit (Section 415): obtaining a grade, certificate, exemption, or admission to an institution through deception. Penalty: up to 3 years' imprisonment.

All three offenses may be attributed both to the examinee himself and to the person who took the exam on his behalf.

Types of exams commonly encountered

University entrance exams and the Amir/Amiram exams: the most common fraud is sending a substitute examinee who impersonates the registered candidate. The National Institute for Testing and Evaluation customarily files police complaints in every case of suspicion. These cases are usually handled by the district attorney's office, not the regular police prosecution, due to the severity of the harm to the integrity of the examinations.

The Psychometric Exam: an examinee suspected of impersonation or copying may receive a summons for a repeat exam to compare handwriting, alongside a summons for questioning.

Licensing exams for medicine: exams for obtaining a license to practice medicine, dentistry, and pharmacy. Fraud here also endangers the future professional license, alongside criminal exposure.

Bar and lawyer licensing exams: Israel Bar Association exams. Alongside the criminal case, a conviction will thwart registration with the Bar.

Theory test for a driver's license: hiring a substitute examinee to take the test under another identity, an offense that the Israel Police is enforcing with increasing determination.

Examinations for positions in the public service, entrance exams for government positions, in banks, and in public bodies. Beyond the criminal charge, a conviction will lead to disqualification from the position.

Certified public accountant exams and accounting professions, a conviction endangers both the professional registration and the entire career.

What happens when the suspicion is discovered?

The moment the examination institution files a complaint, and usually they do, a criminal case is opened. The examinee is summoned for questioning under caution. A critical warning: a person who has never been in trouble with law enforcement authorities and arrives for questioning without prior preparation may make mistakes that will cost dearly. A summons to a repeat examination for handwriting comparison is often the first sign that an investigation is being opened, and at this stage it is important to seek legal advice before attending that repeat examination.

Options for closing the case

Most suspects in examination fraud are completely normative people, students, discharged soldiers, employees, who acted without assessing the consequences. Years of experience in representing cases of this type shows that options for closing the case do exist, often through a conditional arrangement, but this requires early advice and swift action.

Legal representation in examination fraud cases

Israel Arama, formerly of the Tel Aviv District Attorney's Office, represents suspects and defendants in examination integrity offenses from a wide range of fields. Familiarity with the way the prosecution works in these cases, and with the circumstances that tip the scale between an indictment and closing a case, allows for focused and effective action. Contact us for an initial consultation without obligation, and it is advisable to do so before the questioning, not after it.

Obtaining something by fraud

What is the offense?

Section 415 of the Penal Law provides: "A person who obtains something by deceit is liable to three years' imprisonment, and if the offense was committed under aggravating circumstances, is liable to five years' imprisonment."

The offense of obtaining something by deceit is one of the most common in the field of white-collar offenses, and is sometimes accompanied by additional offenses such as credit card fraud, forgery, and computer offenses.

Elements of the offense

"Something" is defined in Section 414 of the law as "immovable property, movable property, a right, and a benefit." The interpretation is broad: in Criminal Appeal 817/76 Danino v. State of Israel, it was held that causing a woman to submit sexually by means of false representation constitutes obtaining a "benefit" by deceit. Even intangible values fall within the scope of the definition.

"Deceit" means an assertion of fact regarding the past, present, or future, in writing, orally, or by conduct, when the person making the assertion knows it is untrue or does not believe it is true.

Causal link, the prosecution must prove a direct connection between the act of deceit and the obtaining of the thing.

Mental element, the defendant's awareness of his conduct, the circumstances, and the possibility of causing the result.

The penalty

Ordinary offense, up to 3 years' imprisonment. Under aggravating circumstances, up to 5 years' imprisonment (a felony offense). The courts treat these offenses seriously, and in many cases impose actual imprisonment.

Aggravating circumstances

The prosecution will examine whether one of the following exists: large-scale deceit; a combination of several offenses as part of a broad criminal scheme; involvement of minors; serious harm, economic, emotional, or otherwise; exploitation of status or profession for the purpose of the deceit.

Conditional arrangement, when is it possible?

In an offense that is not under aggravating circumstances, it is possible to seek a conditional arrangement, an alternative procedure that allows the suspect to avoid a criminal conviction in exchange for fulfilling conditions: compensation to the victim, community service hours, participation in a rehabilitation program. This depends on the circumstances of the case, the severity of the offense, and criminal record.

Hearing before filing an indictment

Under aggravating circumstances, the defendant is entitled to a hearing. This is a significant opportunity: presenting a version of events, mitigating circumstances, and weaknesses in the evidence. A successful hearing may lead to closing the case, reducing the charges, or a plea arrangement. Do not appear for a hearing without a lawyer.

What happens after an indictment is filed?

Once an indictment is filed, there is a real possibility that the prosecution will seek actual imprisonment. However, action can still be taken at this stage: identify flaws in the indictment, conduct negotiations to reduce the charges, reach a favorable plea arrangement, and in cases of material defects in the investigation, even request dismissal of the indictment.

What should you do if you were questioned?

Do not provide a version of events before consulting a lawyer. Preserve the right to remain silent. Do not cooperate with investigators without advice. Every word in an interrogation is documented and may be used as evidence.

Legal representation in cases of obtaining something by deceit

Israel Arama, former member of the Tel Aviv District Attorney's Office, represents suspects and defendants in fraud offenses at all stages of the process, from pre-investigation advice, through the hearing, to conducting the trial. Familiarity with the way fraud cases are built by the prosecution allows for early identification of weak points and effective action. Contact us for an initial consultation without obligation.

Credit card fraud

Why is this offense expanding?

Credit cards have become the dominant means of payment in the Israeli economy, online shopping, the reduction of cash through legislation, convenience of use. All of these have also created a fertile market for offenders. In recent years there has been a significant increase in the scope of credit card fraud offenses, and the police and the prosecution are responding accordingly: aggressive enforcement, focused investigations, and indictments that do not wait.

The legal framework

Offenses relating to prohibited use of a payment instrument are currently regulated, among other things, by the Payment Services Law, Hatashat-2019, which replaced the Charge Cards Law, Tashamav-1986. The precise classification depends on the act, the payment component, and the intent that was proven:

Use of an essential component in a payment instrument, or delivering it to another while knowing that they may use it, with intent to defraud, may constitute an offense under Section 40(b)(2) of the Payment Services Law. The maximum penalty is 3 years of imprisonment, and under the aggravating circumstances set out in the law — 5 years.

Taking or possessing an essential component in a payment instrument without the payer's consent, with intent to use it or allow another to use it, may constitute an offense under Section 40(b)(1) of the Payment Services Law, Hatashat-2019. The maximum penalty is 3 years of imprisonment; the elements of the offense must be proven according to the circumstances.

Equipment for copying payment details or for forgery may constitute evidence of committing offenses, attempt, or complicity, according to the acts and intent that were proven. Section 18 of the repealed Charge Cards Law should not be applied to it automatically; the relevant offenses under the Payment Services Law, the Penal Law, and other laws as applicable must be examined.

What must the prosecution prove?

The offense of fraud is an intent offense, it is not enough to prove use of the card alone. It must be proven that the defendant acted with the purpose of defrauding. It is precisely here that significant room for defense lies, and at times this is the point that decides the case.

Common ways the offense is committed

Physical theft of the card and online purchases in its name; installation of tiny cameras at ATMs to collect details; "electronic lips," a component positioned at the card insertion slot that copies data and transmits it; "phishing," sending messages in the name of familiar entities (the Tax Authority, Israel Post, National Insurance Institute) with a link to a fake website to steal details.

What determines the severity of the punishment?

The aggravating circumstances are learned mainly from the scope of the commission of the offense and the degree of sophistication demonstrated. Someone who used a stolen card once is very different from someone who operated an "electronic lips" setup and used the data of dozens of victims. The distinction between the two levels can amount to an additional two years of imprisonment.

In practice, what is done?

The prosecution examines credit fraud cases seriously, and at times seeks actual imprisonment even for first offenses. Advice before questioning is not a "tool for criminals," it is the most basic right of every suspect, and it may fundamentally change the outcome of the proceeding.

What to do: do not provide a version before consulting; preserve the right to remain silent; examine the possibility of a conditional arrangement in cases that do not involve aggravating circumstances; and in more serious cases, conduct an aggressive hearing before indictment.

Legal representation in credit card fraud cases

Advocate Israel Arama, formerly of the Tel Aviv District Attorney's Office, represents suspects and defendants in fraud and deceit offenses, including credit card fraud. Familiarity with how cases of this type are built by the prosecution makes it possible to act quickly, precisely, and effectively, before the damage becomes irreversible. Contact us for an initial consultation with no obligation.

The scope of the phenomenon

Credit card fraud is among the most common offenses in Israel and worldwide. In Israel, the damage amounts to tens of millions of shekels per year, and worldwide, to billions. With the transition to a digital economy and the rise in online payments, the phenomenon of fraud is expanding rapidly, and the Israel Police is correspondingly intensifying enforcement and punishment.

Taking or possessing an essential component in a payment instrument without the payer's consent, with intent to use it or allow another to use it, may constitute an offense under Section 40(b)(1) of the Payment Services Law, Hatashat-2019. The maximum penalty is 3 years of imprisonment; the elements of the offense must be proven according to the circumstances.

The five most common fraud methods

Physical theft of the card and impersonation of its owner; copying the magnetic stripe data and counterfeiting cards; purchasing credit card details through the dark web (darknet) or Telegram groups; using a credit card number without permission in online orders; and SIM Swap fraud, replacing the victim's SIM card in order to block them from receiving unusual alerts.

Some of these methods also include related computer offenses, unauthorized access to computer material, and the distribution of malicious software, which increase criminal exposure.

Who are the suspects in practice?

Contrary to the common perception, a large proportion of suspects in these offenses are completely ordinary people, students, soldiers, everyday people, who committed fraud in a moment of poor judgment without assessing the consequences. The offense is relatively easy to commit, but the criminal consequences may be severe: a criminal case, harm to a career, to a professional license, and to reputation.

Police investigation: how should you deal with it?

Suspicion of this offense leads to questioning under caution. Anything said in the investigation will be documented and used as evidence. One should not come to questioning without prior legal advice. An experienced criminal defense lawyer can examine the evidence, identify flaws in the investigation, and work to close the case, sometimes through a conditional arrangement that prevents an indictment altogether.