Civil Case (N) 6110-12-22 State of Israel – The Center for the Collection of Fines, Fees and Expenses v. Nissim Baranes - part 5

And from the general to the individual:

26. In light of the aforesaid, the question to be decided is whether it is correct and justified in the circumstances of the case to order the lifting of the reverse veil between the company "defendant 2" and its sole shareholder "defendant 1".
27. And I will clarify, the plaintiff is entrusted with the public interest and public funds.
28. According to the plaintiff's claim, which was not concealed, defendant 1 and defendant 2 have unpaid debts under the law.
29. The plaintiff's claim that defendant 1 is the sole owner and the sole director of defendant 2 was not concealed.
30. The defendants' arguments that the funds that are supposed to be paid to defendant 2 by virtue of the judgment in civil case 9558-04-16 are intended to serve as future collateral for commercial loans for the purpose of operating defendant 2, or that the funds are supposed to be returned to the 3 sisters of defendant 1 in respect of a financing loan they gave at the time of the establishment of defendant 2, were claimed in vain and without any evidentiary basis or support.
31. In addition, the claim is inconsistent with the plaintiff's claim that there has been no activity in defendant 2 since its inception and that it is an inactive, law-violating and debt-insured company. These claims were not
32. The aforesaid is further strengthened by what was stated in the judgment in criminal case 48893-12-12 [Nevo] in the case of defendant 1, in the following words:

See section 6 at p.  33 of the judgment.

33. Moreover, in reading the judgment given in the case of defendant 1 in criminal case 48893-12-12, [Nevo] it can be learned that defendant 2, in its existing structure of activity and on the dates relevant to the offenses that are the subject of the charges against defendant 1, had a relationship of one economic unit with defendant 1 and it served as a conduit for transferring/plucking/withdrawing some of the forged checks that are the subject of the criminal proceeding.
34. In these circumstances and in light of all of the above, I am of the opinion that it is correct and justified in the circumstances of the case to order the lifting of the reverse veil between defendant 2 and defendant 1, in such a way that the rights of defendant 2 to receive funds can be used in order to clear the debt of defendant 1, its shareholder and sole director.
35. It is not logical and common sense that on the one hand, the plaintiff would pay defendant 2 money in the framework of case 9558-04-16, and on the other hand, the defendants do not pay their legal debt to the public coffers and to the victims of the offense.
36. As stated, defendant 2 has no economic or business prospects, it does not conduct its own economic activity, it has no capital or assets (except for the luxury vehicle that is the subject of a civil case in quick trial 9558-04-16) [Nevo] and all of its activity amounted to being an extension of defendant 1 as part of the actions carried out in the framework of criminal case 48893-12-12 [Nevo].
37. In light of this, there is a real concern that the funds that are supposed to be paid to defendant 2 will only serve as a conduit for receiving the funds from defendant 1, who is, as aforesaid, the sole owner and sole director of defendant 2, and has large debts to the plaintiff.
38. Therefore, there is a clear public interest that the plaintiff, who is entrusted with public funds, will not pay money to defendant 2 as a conduit for receiving funds from defendant 1.
39. With regard to the alleged exemption order that applies to the debt to the victims of the offense, I do not accept this argument. The defendants showed a slap in the face by not updating the court regarding the financier's updated response in the insolvency case, according to which the exemption order does not have the power to apply to a debt that was fraudulently created, and the court's decision in the insolvency case of November 19, 2024, according to which the exemption does not apply to the three victims of the offense, and the defendant's request in this regard is deleted.
40. Consideration should also be given to the provisions of section 175(a)(2) of the Insolvency Law, according to which the exemption does not apply to a debt that was fraudulently created. In his case, defendant 1 was convicted of criminal offenses of fraudulent receipt under aggravated circumstances and use of a forged document under aggravated circumstances.
41. Hence, the exemption given to defendant 1 does not apply to his duties towards the victims of the offense and the plaintiff is acting legally to collect these debts.

Conclusion:

42. The lawsuit should be accepted.
43. I hereby order that the veil of incorporation be lifted between defendant 2 and defendant 1.
44. The plaintiff is entitled to collect, by way of offset and at the expense of defendant 1's debt to her, monies due to defendant 2 by virtue of a judgment in a civil case in a fast-track proceeding 9558-04-16 A.L. In the Tax Appeal v.  The Ministry of Public Security - Israel Police [Nevo]. 
45. In view of the fact that the parties reached an outline for the conclusion of the proceeding immediately after the first pre-trial and without the need to hear evidence, the defendants, jointly and severally, will bear the plaintiff's expenses in the sum of ILS 7,500.

The amount will be paid within 30 days.