Civil Case (Tel Aviv) 44767-04-14 Israel Alhalal v. Rami Geva Mikulitsky

1. I have before me a monetary claim in the sum of ILS 2.7 million, which is based on a number of legal foundations, the main of which is the tort of fraud set forth in section 56 of the Torts Ordinance [New Version] (hereinafter: the "Torts Ordinance"). The factual process is long and winding, but at this stage the dispute that remains, which requires a judicial decision, is that between the plaintiff (hereinafter: "the plaintiff" or "Israel") and the defendants 1 and 5, Mr. Rami Geva Mikulitsky and Mr. Ofer-Gil Castel Mikulitsky (hereinafter: "defendant 1" or "Rami" and "defendant 5" or "Ofer"), since after hearing the evidence in this case and before submitting summaries, settlement agreements were signed with defendants 2-4 and 7-9, in exchange for receiving the sum of ILS 500,000 (ILS 400,000 from defendants 2-4 and ILS 100,000 from defendants 7-8).

I will note that defendant 6 is in insolvency proceedings and the claim against him is delayed.

The Background Required for the Claim

2. The plaintiff, Israel, owns a business called Mor Marketing 2003 (hereinafter: "Mor Marketing"), which is used to sell industrial cleaning products. Rami, who operated a car wash business, served as a client of Israel.  In 2013, Rami approached Mr. Shlomi Grunler (hereinafter: "Grunler"), a joint acquaintance of him and Israel, through whom Rami offered Israel a business cooperation, in the framework of which the two would merge their activities and continue it in parallel (hereinafter: "the joint business", with its essence and the disputes regarding it, see further below).
3. As part of the agreements between them, Israel paid Nitza Paz (defendant 7, hereinafter: "Nitza") the sum of ILS 500,000, in 24 equal installments, which will be paid out of the joint business's activity. The purchase was made after Rami introduced the plaintiff with Nitza and her son Shahar (defendant 8, hereinafter: "Shahar"), and it will be noted that there is a dispute between the parties as to the nature of the agreement, which will also be detailed later (see in this regard the agreement that was attached as Appendix 131 to the plaintiff's affidavit, which he refers to in paragraph 270 of his affidavit as a "forged agreement").  In short, I will note that the plaintiff claims that he purchased Nitza's share in Rami's business and agreed with him on an equal division of the business's income, while Rami initially claimed that he served as an employee of the plaintiff (see paragraph 1 of the amended statement of defense and paragraph 9 of his affidavit).  In the summaries, Rami claimed that there was never a partnership between the parties (paragraph 12); In any case, a partnership could not have been established at that time, since Rami was in bankruptcy proceedings that were known to Israel; and that a "business cooperation" was created between the parties, in the framework of which it was agreed that the plaintiff would repay Rami Lanitsa's past debt from the proceeds that were supposed to go into the joint business, and in return Rami was supposed to assist the plaintiff in the success of the new business of laundering.
4. In any case, there is no dispute that since July 2013, Israel and Rami began working together, while the business activity is carried out through new and old bank accounts opened by Israel, all through Israel's licensed dealer. There is also no dispute that shortly after the joint activity began, it was decided that Ofer, Rami's brother, would join the business as the finance and administration manager.  It was also agreed that Rami's son, Dean (defendant 6), would join as the person in charge of the operation of the washing stations in the north.  There is no dispute that as part of the joint work, Israel met Charlie Attias (defendant 2, hereinafter: "Charlie"), whom Rami introduced as his friend for many years and as a business owner with whom Rami contracted to pay the salaries of the employees of the joint business.
5. There is no dispute that over the course of the nine months of joint activity, Israel gave Rami and Ofer a huge amount of checks (about 700) that he signed "on the part", and even issued two credit cards for them, all (according to Israel) to be used for the benefit of the joint business. In addition, there is no dispute that Israel took out additional loans and injected personal funds into the joint business, with Rami and Ofer's knowledge.  Israel also purchased four vehicles and four electric bicycles for the use of the business.
6. After nine months of activity in the joint business, Rami and Ofer suggested that Israel open a tax appeal company and operate the business through it, in order to try to raise state-guaranteed loans. Israel turned to his accountant, Mr. Benny Gaon (hereinafter: "CPA Gaon") to assist him in this matter.  According to Israel's version, CPA Gaon's suspicion about what was happening in the joint business arose, and he referred Israel to his friend, CPA Yechiel Schiffer (hereinafter: "CPA Schiffer") to examine the conduct of the business.  CPA Schipper's examination revealed apparently significant gaps between Rami and Ofer in supervising the business's income and expenses, while allegedly excluding the joint business's external account manager.  In addition, it was suspected that the checks given to the two by Israel were not paid to the suppliers, but were taken for their personal needs and for payment to third parties unrelated to the joint business, including those on the gray market.
7. In light of these suspicions, the plaintiff arrived at the offices of the joint business on the night of March 23, 2014 and took all the binders and checkbooks contained in it in order to learn about the factual record and the financial and business conduct therein. The review of the binders strengthened Israel's suspicions, in addition to other suspicions that arose according to which Charlie illegally received funds from Rami for work carried out by the joint business by transferring the proceeds to defendant 3, Barkat Initiation Trading and Management of Shirel in a tax appeal (hereinafter: "Barkat").  This company is formally managed by Charlie's mother and defendant 4, Simon Attias (hereinafter: "Simon").  In addition, it was suspected that additional checks were deposited without authorization in the account of defendant 9, Michael Mozes (hereinafter: "Michael"), who, as it turned out later, was an acquaintance of Shirley's.
8. After the affair "exploded," Israel, Rami and Charlie met in order to try to reach an agreed-upon solution. During the meeting, Rami and Charlie made it clear that Charlie's friend, Michael, was willing to invest and purchase the business in order to help Israel deal with its creditors.  In addition, Rami and Charlie demanded an additional ILS 100,000 for remaining debts to suppliers and institutions for operating the business so far.  The negotiations ran aground, and therefore the lawsuit before me was filed, which was initially directed against all the nine defendants mentioned in the heading.

The development of the process

9. This proceeding was opened in September 2014.  Initially, he was handled by the court registrars, inter alia, with requests to impose temporary foreclosures that were filed in the case.  The case went through several panels and in January 2018 it was transferred to my care.  At the pre-trial meeting on January 25, 2018, I ruled: "I am of the opinion that this case should be advanced to the submission of affidavits and the hearing of evidence.  These things are further strengthened in light of the agreement that was formulated and it is clear that a neutral professional body appointed will track all the financial transfers that have been made, will know how to demand additional documents or review those that have been given, and will be able to give the court the full picture." Later in the decision, I ordered the submission of affidavits of the main witness.  Indeed, on behalf of the plaintiff, an affidavit signed by him was submitted; Affidavit of CPA Gaon and CPA Schiffer; An expert opinion on behalf of the plaintiff, CPA Eyal Broder, regarding the financial transactions in the plaintiff's accounts and the extent of the damage, and the opinion of an expert in the comparison of manuscripts, Ms. Mali Kadosh (hereinafter: "Mali"), regarding the plaintiff's signature on a number of checks.  On behalf of the defendants, affidavits signed by them were submitted only (with the exception of defendant 6).
10. On December 27, 2018, a pre-trial meeting was held following affidavits. At that meeting, I ordered the appointment of CPA Yaniv Buchnik (hereinafter: "CPA Buchnik") as an expert on behalf of the court, "to examine the activity of the business, and more precisely - the business refers to its activity under the plaintiff's authorized dealer as of July 2013 (hereinafter: the "Business").  Regarding the end of the period, there is no dispute that the business operated until the end of March 2014, but according to the plaintiff, Shikim continued to be repaid until July 2014.  Therefore, the expert must examine the period of business activity from July 2013 to July 2014.  The identity of the expert was determined, among other things, because I believed that "this case is suitable for the appointment of an investigative and critical accountant."
11. On January 20, 2021, after I was required to make a number of decisions regarding the payment of the court's expert fee by any of the defendants (including the possibility of deleting statements of defense), his opinion was submitted (hereinafter: "Buchnik Opinion" or "Court Expert Opinion"). As part of his opinion, CPA Buchnik examined Mor Marketing's activities, including revenues, expenses and work methods in the business.  These are the main findings relevant to our case and to the defendants before me, as arose in the opinion of Buchnik.  Due to the importance of the matter, I will quote his findings in full, see paragraph 107 of the opinion, where Rami is referred to as "Mr. Geva" and Israel as "Mr. Al-Halal":