See also Edelstein's testimony at p.  55,66-22.

32. This reasoning was also presented in the same IAS in the refusal of the Business Audit Department (P/5, pp. 33-34).
33. The aforementioned reasons for the refusal were sent to the defendants in a letter dated May 8,2022 (P/8 at p. 2), when the defendants were also informed of their right to appeal the decision and that conducting a business without a license constitutes a violation of the law (P/8 at p.  4, and see also Edelstein's testimony in the transcript of January 22,2026, at p.  30, paras.  26-33,1-4).
34. Edelstein further explained in the context of these refusals that from the perspective of business auditing, as long as there is no correspondence between the plan and the reality on the ground, it is not possible to advance the application for a license at all (minutes of January 22,2026, p. 33, paras.  14-20).
35. Subsequently, on December 4,2022, an engineering license refusal was also received , and in his comments it was noted that the business did not meet the requirements of the local planning and building committee, and two administrative orders were even issued against it. This is the wording of the matter (P/5, p.  33):

"In examining your application for a business license that was submitted, it was found that your application does not comply with the planning and building laws.  There are 2 administrative demolition orders: Nos.  1335-2019 and No. 1336-2019, and on December 8,2021, your application for a building permit was rejected by the local committee.  In these circumstances, your application for a license is refused until the business is suited for a building permit or alternatively it is regulated by the Licensing and Building Supervision Department."

36. The aforementioned refusal of an engineering license and its reasons were quoted in a letter sent to defendants 1-2 and is dated December 4,2022 (P/6 at p. 2, and see also Edelstein's testimony in the transcript of January 22,2026, at p.  31, paras.  4-12).  At the end of the letter, the defendants again informed that "you can file an objection to the refusal to grant a license/permit...  within 30 days from the day you became aware of the decision/demand..." (P/6 at p.  4), and it was also clarified in Kiddush Livneh letters: "This document does not constitute a license, temporary permit or expedited permit to run the business.  Anyone who runs a business without a license, temporary permit or expedited permit is violating the law and will be liable to the penalties prescribed by law" (P/8 at p.  4).
37. In accordance with the above, and since the licensing status has not changed since then, Edelstein testified that as of the date of his testimony, the business does not hold a business license (transcript of January 22,2026, p. 19, paras.  1-4).
38. According to Edelstein, since the business was refused by an internal licensing body, it was not possible to grant the business a temporary permit (minutes of January 22,2026, pp. 20, paras.  16-33 and p.  21, paras.  1-20).
39. In this context, an email correspondence was submitted between someone on behalf of defendant 2 and the accuser's representatives, from October 2022, in which the Authority's position that it is not possible to obtain a temporary permit to operate the business was clarified, in accordance with section 8a1(a)(2) of the Business Licensing Law, and in view of the existence of two pending administrative proceedings in accordance with the Planning and Building Laws. It was further clarified that the refusal to grant a temporary permit remained in place even after consultation with the legal service, which was done at the request of defendant 2 (P/7, as well as Edelstein's testimony in the transcript of January 22,2026, p.  31, questions 17-26, pp.  32, questions 27-33).  It should be noted that the letter sent by Defendant 2 to Mrs. Avital Yaakov was not attached, when according to the email itself there should be such an attachment (P/7).  The parties agreed that after the testimony of the accuser or the defendants, they would complete and submit the letter from the attachment to the court (p.  57, paras.  6-8), but this document was never submitted by either of the parties.
40. In his cross-examination, Edelstein was asked to explain the accuser's position that due to the refusal of the engineering license, it was not possible to grant a temporary permit, as stated in his testimony and Bat/7. In response to questions in this context, Edelstein explained that he did not handle the matter personally, but that they were handled by officials in the municipality's engineering department, namely: Ms. Avital Yaakov Simchi and then her replacement, Mr. Yuval Peleg (transcript of January 22,2026, p.  35, questions 21-26, p.  39, questions 1-6,33).  Counsel for the defendants informed him that one of the administrative demolition orders issued for the property had already been revoked for the time being, but Edelstein said that he did not know about this (transcript of January 22,2026, p.  36, questions 27-33).  Counsel for the defendants added that the other order is expected to be executed as soon as possible, after it was approved by the Court for Local Affairs and an appeal filed in the matter was rejected (transcript of January 22,2026, p.  28, paras.  16-33).  Counsel for the accuser confirmed this (transcript of January 22,2026, p.  36, questions 28-33).  On August 20,2026, a reference was attached to my review, indicating that the order was executed on June 3,2026.
41. Counsel for the defendants argued before Edelstein that the building in which the business operates was purchased in a very dilapidated state, and therefore intensive renovation was carried out under the supervision of the municipality, which was required to ensure compliance with its requirements on the grounds that it was a building for preservation. Counsel for the defendants also claimed that a civil lawsuit was filed, at the end of which an order was issued ordering a halt to the renovation work on the property, but then the Rental Court effectively annulled that judgment.  To all this, Edelstein replied that he knew nothing.  According to him, as part of his work, he refers the application for a license to the various licensing bodies, and his testimony relates to the response of each of the parties and not to the processes that were taken within each and every entity in examining the application, and the details that arose in the course of the examination at the various stations (N/1, transcript of January 22,2026, p.  41, questions 14-31, p.  42, questions 1-9, p.  43, questions 15-33, p.  44, questions 1-12, p.  45, questions 2-8,12-19, p.  46, questions 11-19,26-29).
42. Also in his cross-examination, Edelstein was presented with document N/3 in which he was informed that defendant 2 was a director of defendant 1 and that he was available to receive letters at an anonymous address and not at a certain address to which the invitation to give a version was sent. Edelstein replied that he did not know of an anonymous address, and as far as he was concerned, the reliance was on the address registered in the residents' database (p.  49, paras.  31-33, p.  51, questions 1-16).  He also confirmed that he did not know to whom defendant 2 was given the mail containing the invitation to deliver the version (p.  51, paras.  17-18).
43. At the end of his cross-examination, Edelstein was asked about the enforcement policy at Abulafia's building near the business address, which according to the defendants was a hotel where a balcony fell on January 22,2023, and yet he still holds a temporary permit. Edelstein said that he had nothing to do with it, and did not recall being approached about the matter (p.  51, questions 20-33, p.  52, questions 1-5,29-30, pp.  54, questions 3-4).  In response to the court's question, he confirmed that if the adjacent building does indeed constitute a dangerous structure, this may and is even expected to affect the status of the license (p.  52, questions 6-33, pp.  53, questions 24-30, pp.  54, questions 28-32).

The Haganah Affair

44. As stated, defendant 2 testified on behalf of the defense, as well as the architect Roi Amit.
45. Defendant 2 stated that he was "a businessman, CEO of a group and also a partner in the activities of hotels, real estate, shipping, the port of Eilat, aviation, agriculture" (p. 58, paras.  15-16).
46. According to defendant 2, he is one of the shareholders of defendant 1 and also a director thereof, and since June 2018 he has been involved in the hotel in question (p. 58, questions 18-19).  Defendant 1 is a protected tenant on the land in which the hotel operates and operates it (p.  85, questions 2-6).  The hotel operates 29 rooms (p.  64, question 2).
47. Defendant 2 elaborated on the background to the purchase of the hotel. According to him, Abulafia, who is the owner of adjacent lands (hereinafter: "Abulafia"), has a primary economic interest in thwarting the activity of the business, because the private possession of Defendant 1 in the hotel, when Defendant 1 is a protected tenant of the land, prevents Abulafia from promoting a zoning plan in the area he owns the vast majority of it (p.  64, paras.  12-23).  According to Defendant 2, when he was interested in purchasing the hotel, Abulafia heard about it, called him and threatened him not to purchase the hotel, because it was Muslim land and he should not purchase it as a Jew.  According to him, he threatened his life and the lives of his family.  On the same day, his daughter, who had served in sensitive military service, was saved from death.  Against the background of the shocking event, he decided that as a Jew in the State of Israel he would not be threatened on such a basis and would not be deterred from making the deal.  Thus, according to him, in less than 24 hours, he met with the seller who was close to bankruptcy, and purchased the hotel.  All this, without seeing the hotel and without having any awareness of its situation (p.  59, questions 1-11, p.  69, questions 17-27, p.  78, questions 6-17, p.  85, questions 11-15, p.  86, questions 16-19).
48. According to defendant 2, after the purchase, it became clear that the hotel in question was in fact used as a brothel. Photographs were shown to illustrate the dilapidated condition of the building at the time of the purchase (p.  59, paras.  12-14, N/4).  Therefore, a renovation proceeding began, which was carried out with renovation permit N/1.  It was emphasized that this was a building that was defined as a structure for conservation, which made the work challenging from a planning point of view.  Moreover, with the beginning of the renovations, the entire building began to disintegrate and crumble, and thus the work in that building for conservation became particularly complicated, accompanied by a long list of architects and a construction engineer, and carried out in full coordination with the municipality (p.  60, s.  7-21, p.  61, s.  5-26, N/5, p.  63, s.  20-27, p.  78, s.  13-21).  The costs of the renovation and construction amounted to a total of ILS 30 million, with the original intention to invest only ILS 3-4 million (p.  63, s.  28-30, p.  64, s.  1-2).
49. However, the works encountered difficulties not only in the field of construction, but also in the field of regulation and supervision, which resulted from the harassment of the neighbor. According to Defendant 2, Abulafia summoned the police from time to time and even filed civil lawsuits with the court, all in an attempt to stop the work and prevent the operation of the hotel.  Initially, an order was issued to stop the work (p.  60, questions 23-32, pp.  61, questions 1-2), but later a proceeding was conducted in the Rental Court, in which a previous decision to stop them was revoked (p.  66, questions 26-33, p.  67, questions 1-33, p.  68, questions 1-8).  Eventually, the work was completed, and photographs were presented to demonstrate the aesthetic appearance of the hotel (P/8, pp.  68, questions 29-33).
50. Defendant 2 explained that since the acquisition, inter alia, taking into account the coronavirus and the security situation, the hotel has suffered huge losses. He added that for more than a year the hotel was used for "one good thing" - a hotel for the evacuees (p.  59, paras.  25-30).
51. In the course of defendant 2's main interrogation, an application for a business license was also filed, on which his name appears. According to him, he does not know who submitted the application and why his name appears there, it is possible that the person who submitted the application was the architect Moti Cohen, but this was done without the knowledge of defendant 2 (P/7, p.  65, questions 3-33, p.  66, questions 1-4, p.  78, questions 22-25, p.  79, questions 11-12).  According to him, the email address mentioned in the application is not his (p.  79, questions 4-10,15-17).  He also added that the business has additional directors, and no indictment has been filed against them (p.  78, questions 26-33, p.  79, questions 1-3).
52. Defendant 2 gave an address where he lives, which is different from the address that appeared in the population registry according to the accuser (P/4), and according to him, he no longer lives there. According to him, it would have been correct to address him to the anonymous address that appeared in P/3, which is the address of his offices where he resides permanently, but despite the letter N/3 he never received mail there or any other address regarding this proceeding (p.  66 Q.  5-23, p.  79 Q.  33 and p.  80 Q.  1-32, p.  81 Q.  1-2).  When he was asked in cross-examination what version he would have given if he had received the invitation to the hearing, he said that he would have consulted with a lawyer, and then he would have brought his version, similar to the one heard at the hearing; However, he reiterated that he was not given this opportunity (p.  81, paras.  7-33, p.  82, s.  1-5).
53. In his cross-examination, defendant 2 confirmed that he knew that a business license was needed in order to operate a hotel (p. 69, s.  28-33, p.  70, s.  1).
54. According to him, the business was not operated immediately after its purchase, due to the precarious condition of the property and the difficulty in completing the renovation work that was necessary for its operation (p. 70, paras.  3-12, p.  71, paras.  1-3).
55. He explained that after the renovation, the business began to operate, and thus on July 4,2022, which was mentioned in the indictment, the business was already operating (p. 73, paras.  17-22).
56. According to him, the operation of the business, even though it did not have a license at this stage, was done in light of the policy that allows the issuance of a business license within a year of the date on which a new business was opened (p. 73, paras.  22-24, p.  82, paras.  6-10).
57. Counsel for the accuser referred defendant 2 to the fact that not only did the business not have a license, but also, that there was a judicial closure order ordering its closure.
58. Defendant 2 explained that the operation of the business despite the order was possible because, in practice, the hotel that was built was completely new, and it seems that his position was that when the business underwent a significant renovation, as a result of which it was rebuilt, a previous order should not apply (p. 82, paras.  6-10).  According to him, this was also requested in view of the many investments he had invested in the place (p.  71, paras.  4-32).  In his words (my emphases - Nevash):

Adv. Panso Lavi: ...  When did you learn that there was an order?