Criminal Case (Center) 6040-07-20 State of Israel v. Arkadi Shkovitzky - part 98

Other sources of cash deposits in 2017 were the sale of household appliances (p. 534); a relative of the defendant who brought her a gift (p. 534); a friend of the defendant who purchased earrings from the defendant (p. 534). The defendant also stated that he sold a car in 2016 and also received cash. He used to deposit in the sums of "10 and 900" in order to save a commission of NIS 30 (p. 535). In addition, in 2017, his mother sold Amidar's apartment, received part of the money in cash, and transferred the money to him (p. 535). In addition, the defendant sold a watch in "second hand" for NIS 10,000 in cash, and deposited this amount in the bank account (p. 536).

Cash deposits in 2018: Approximately NIS 55,000 of the cash amount received for the sale of the vehicle in 2016, was deposited in 2018 (p. 535).

The defendant referred to the fact that there were cases in which he withdrew sums in cash and transferred them to another account in order to "close the minus" in the bank account (p. 535).

832. The defense submitted Exhibit N/6 - a thick booklet of about 300 pages, entitled "Notice of the Submission of Affidavits and Expert Opinions" under procedure number 24693-09-20. The booklet opens with an affidavit of the two defendants, and includes many appendices, including the following documents, which I will refer to below:

Annual Reports N.K. Building, Appendix E

Notice of Closure N.K. Building, Appendix p. 35

Summary of the Defendants' Assessment for the Years 2017 and 2018, Appendix F

"List of Leases for the Period 2014-2018" (hereinafter: the "Lease List"), Appendix H, p. 236

"List of Tenants Who Lived in the Villa Free of Charge" (hereinafter: "List of Tenants Free of Charge") Appendix H

Number of leases (motel and apartment in Pardes Hanna), Appendix E

Number of tax invoices of N.K. Building, Appendix E

"Explanations for Receipt of Cash", Appendix 3

Cross-examination (transcript of February 27, 2023, September 19, 2023)

833. The rent in Pardes Hanna: The defendant received the rent money in Pardes Hanna and transferred it to his daughter, in accordance with the agreement with his ex-wife (p. 495). The apartment was rented to Marina Zarbiloff for a rent of NIS 2,500 per month, until the beginning of 2018, when his mother moved in the apartment (p. 496). However, the defendant also confirmed that the tenant's last bank transfer was made in May 2018. When asked if he made a mistake in the main investigation, when he stated that he had rented the apartment in Pardes Hanna only until August 3, 2017, he replied in the negative, adding that the tenant did not always make the payment on time, and it appears that there was a cumulative debt (p. 496). To the claim that he had given several versions on the matter, he replied that he did not remember by heart when his mother moved into the apartment, but even after that date Marina, who is a tenant, had a debt with the house committee (p. 496). As to the fact that according to the bank account, Marina the tenant transferred NIS 2,500 every month until May 2018, to be exact, he replied that Marina continued to pay for a period of time even after she left, due to a debt (p. 498). He insisted on his version that his mother had moved into the apartment as early as May 2017, even after he was told that Marina had given a testimony to the police that she lived in the apartment until May 2018 (p. 498).
834. The apartment in Pardes Hanna was rented as early as 2013 (p. 504). The defendant gave his accountant the lease with the tenant Marina and informed him that he was receiving NIS 2,500 per month from rent (p. 502, the lease contract - Exhibit N/6, in Appendix H). The accountant told the defendant that he did not have to pay tax on this rent, and did not record the rent in the reports P/130-132 (p. 504). The defendant was not part of the conduct with the accountant with regard to this apartment (p. 502).
835. The defendant transferred the rent money from the apartment to his daughter every month, in cash originating from the rent in the villa and from the sale of a car (p. 508). This was until 2018, when he stopped transferring money to his daughter (p. 508). The defendant was referred to the testimony of his daughter, according to which the defendant promised her NIS 1,000 per month, and this was done only twice (p. 508). The defendant denied this (p. 509).

As for his daughter's statement that the transfers stopped because she had stopped meeting with him and that there is currently no contact between the two, the defendant denied this, saying that in the past there was a disconnection in the relationship, but later the relationship was renewed and it was an excellent relationship (p. 510). The defendant stated that his daughter had lived in the villa for two and a half years and without payment, a short distance from his place of residence (p. 510).

836. When asked why he transferred ownership of the apartment to his son Ziv in 2018, he replied that after his mother moved into the apartment, it turned out that the apartment was still mistakenly registered in his ex-wife's name, and it was decided instead of transferring the apartment in the defendant's name, to transfer it to his son's name (p. 512).
837. The motel:

Income in 2014 – In that year there was no income from the motel (p. 520). The defendant then noted that there was low rental income in December 2014 (p. 520). The plaintiff referred to the rental list, where a nine-day rent was mentioned in December 2014 (although it was originally recorded on December 29, 2014 – 07/07/2014). The defendant testified that he prepared the said document alone, in 2018, after his interrogation by the police, on the basis of copies of invoices and contracts, as well as according to his memory (p. 526). According to him, there were no tenants for a day or two who were not registered (p. 527). He also stated that he himself issued N.K.'s tax invoices. Bilding, in coordination with the defendant, and the defendant forwarded the material to the accountant (pp. 530-531).

838. K. Building's tax invoices, seven in number, attached to Exhibit N/6, Appendix E: two from 2014 (Nos. 0048, 0051), two undated (Nos. 0047, 0049) and three from 2015 (Nos. 0052, 0056, 0078). It should be noted that these invoices include only partial details (some of them lack dates, some details about the service and some the name of the recipient of the invoice). The defendant was asked about invoice 0051 for NIS 480, and replied that it was possible to know that it was an invoice for a single rent for three days, based on the lease. However, a lease contract was not attached, and the defendant noted that apparently no contract was made in this case (p. 534). Under "Details" in the invoice (as well as on two other invoices) it was stated "motel services". The defendant confirmed that he wrote this, but added that he did not define the villa as a motel (p. 534).
839. Closing N.K. Building: Regarding the notice of the closure of the business N.K. Building On March 1, 2017 (N/6, p. 35 of Appendix 2), the defendant did not know whether the notice was submitted to the Tax Authority, and claimed that the question should be referred to the accountant. The defendant did not know whether the company had indeed terminated its activity in 2017 (p. 517).
840. 2018: The defendant answered in the negative to the question of whether he rented the motel in 2018, but later confirmed that they continued to rent the motel after April 2017 and also in 2018. During this period, no invoices were issued, and the report was made to the accountant on the basis of contracts. For every tenant who came, even for very short periods of time, a contract was made (p. 519). At the end of the year, he transferred all the contracts to the accountant who prepared the annual report (pp. 518-519).
841. Summary of the Defendants' Assessment for the Tax Year 2017 and for the Tax Year 2018 - The CPA submitted the report to the tax authorities. In the 2018 report, joint income of NIS 38,000 was reported from rent. This amount includes the motel and does not include the apartment in Pardes Hanna (p. 538). As for the joint rental income for 2017 – NIS 33,000, the defendant claimed that contracts were made with the tenants and that he transferred the contracts to the accountant. It should be noted that no contracts from the years 2017 and 2018 were submitted to the file (pp. 539-540).
842. When asked for what monthly amount the long-term unit was rented out in the motel, the defendant replied that there was no fixed amount, but later confirmed to the police that this unit was rented for NIS 4,500 per month in 2017 (p. 540). The long-term rental was in the unit in the basement (p. 542). The defendant was referred to call number 1092 of February 8, 2018, in which he was talking about a person who rented for a period of a month and a half in 2018 and was arrested by the police. To the argument that this rent does not appear in the table prepared by the defendant (P/6, 236-237 of Appendix H) and that this is income that he did not report, the defendant replied that he reported all the income to his accountant (p. 542).
843. The defendant's daughter lived in the unit on a long-term basis, free of charge, in the years 2015-2017, before the same tenant in whom he spoke in call No. 1092 (p. 542). The defendant was referred to the list of tenants free of charge, which he compiled. When asked whether he prepared the list after the police interrogation in November 2018 (since the document was not seized by the police), he answered in the negative, explaining that the data was indeed collected in 2018, but before that he had documents that had been taken by the police – which had disappeared (pp. 548-549). The defendant testified that the registration in this document was accurate, and that in the case of his daughter, the registration was based on a contract drawn up at the request of the daughter's spouse (p. 543; it should be noted that no such contract was submitted – M. B.). The plaintiff referred the defendant to the fact that, according to the table, his daughter lived in the unit from August 5, 2015 to May 16, 2018, and that this record contradicts conversation No. 1092 of February 2018, according to which the unit is rented to another person. The defendant's response was that he may have asked his daughter to move to another unit (p. 544).
844. Further to this, the plaintiff referred to the fact that in the framework of Exhibit N/6, Appendix H, a lease contract was submitted between the defendant and a person named Lior Banin, according to which she rented him the apartment on the basement floor of the villa for 12 months between February 20, 2015 and February 20, 2016, for NIS 3,800 per month. To the question of why the income did not appear in the report submitted to the Income Tax Authority (in which an income of NIS 4,340 from rent for 2015 was mentioned), the defendant reiterated that all the contracts were transferred to the accountant (p. 544). The defendant was asked to confirm that no tax invoice in this regard was attached to Exhibit N/6, and he replied that he did not know (p. 544).
845. The plaintiff referred to the list of rents (N/6, Appendix H, p. 236), to the rents from 2017. The list contains two rents for the year 2017: the tenant Sima Knin between January 22, 2017 and April 22, 2017, a payment of NIS 21,000 by check; a 12-month rent in 2017 in an apartment in Pardes Hanna, payment of NIS 28,000 by bank transfer. The defendant testified that in 2017 no additional units were rented in the motel (pp. 555-556). To the argument that according to the list, the total rental income in 2017 was NIS 49,000, whereas in the summary of the assessment for 2017 (N/6, Appendix F) the joint rental income for 2017 was reported to be only NIS 33,000, the defendant replied that the accountant should be contacted in this matter, who knew about all the income (p. 556).
846. As for short-term rental (rental at a fixed price per night, according to the number of nights), the defendant testified that this type of rental was only during the period of the hotel's registration under the business (N.K. Building). The defendants understood that this type of rental was not profitable, and in 2018 they no longer rented it for short periods. To the claim that all the wiretapping conversations from 2018 were about short-term rentals, the defendant replied that he did not remember this (p. 541).
847. The plaintiff referred to the fact that according to the list of free tenants, between January 1, 2017 and December 30, 2018, "at least, between 10-12 tenants from the "Chance for Life" association lived in the villa, without the names of the tenants or other details. To the question of how to know that this was a true report, the defendant replied that affidavits had been submitted regarding some of the tenants, and if necessary, they would be contacted to testify. Some of the tenants were not among the living. The association used 2-3 housing units and the tenants would change and arrive at varying periods of time (p. 547). This list appears as "Diord Natalia, the "Opportunity for Life" association as someone who lived free of charge for a period of about a year and a half, between September 7, 2015 and April 21, 2017. The defendant testified that although he did not have a contract with this tenant, he nevertheless knew the exact period of her residence in the unit (p. 549). It should be noted that the defendant tried to intervene in this matter during the defendant's cross-examination (p. 548). Later, the defendant was asked about Svetlana Khorushevsky, who, according to the list, also lived free of charge in the villa from December 1, 2017 to June 25, 2018 on behalf of the association, and the defendant confirmed that the tenant was from the association, while the defendant tried to intervene in his words (p. 552). He also testified that Gertrude Marina, who according to the list lived in the villa free of charge on behalf of the association from August 1, 2017 to February 1, 2018, did indeed come through the association (p. 553).
848. According to the same list, between May 16, 2016 and May 20, 2017, the defendant lived in one of the units, stating that he was in the process of divorce at the time. The defendant testified that he lived in the motel for three months and moved between the vacant units during that period (p. 549). As for the contradiction between his testimony and the fact that according to the list he lived in the motel for a year, the defendant claimed that he wandered between the houses and did not live permanently in the motel during the entire period, but only for three months (pp. 551-552).
849. As for Amsalo Abba, who, according to the list, lived in a villa with his two children free of charge between June 2015 and February 2016, and also later for three months in 2017, the defendant noted that Abba moved between the units, and usually lived in the unit in the basement. To the claim that at that time another party lived in the basement (Lior Building), the defendant reiterated that Abba moved between the units (p. 552).
850. According to the list, the defendant's parents, Kantor Gandhi and Svetlana, who live in Germany, stayed at the villa during their visits to Israel, free of charge. This was done on January 14, 2016 – November 26, 2016, and on August 13, 2016 – October 17, 2016. It can be seen that the second period is included in the first period. To the question regarding this double registration, the defendant replied that the reason for this may be that the parents moved to another unit (p. 553).
851. To the question of why the list of free living in the motel did not contain information about the year 2018, the defendant replied that there was one tenant in that year and he reported this to the accountant. In light of these words, the plaintiff accused the petitioner of the fact that according to the rent list (P/6, Appendix F, p. 236), no rent appears in 2018. The defendant insisted that there was rental income in 2018 and that he reported it – a tenant named Vika, apparently without a contract for 2018 (p. 557). When the plaintiff also mentioned the tenant who rented a unit at the beginning of 2018 (conversation no. 1092 above and below), the defendant reiterated that he had reported all the rental income, and denied the plaintiff's claim that he had concealed a large amount of cash income (p. 557).
852. As for Vika, she rented the unit in the basement for two years, and lived there with her son. According to the defendant, a contract was drawn up because Vika had to present a contract for the National Insurance Institute. The tenant paid NIS 4,500, including municipal taxes, electricity and water. Sometimes she did not pay the full amount. In accordance with the instructions of CPA Menachem Dotan, in 2018 there was no longer an agreement with her. When asked what he reported to the Income Tax on Vika in 2018 and where the documents that served as the basis for the report, he replied that the accountant received the contract (transcript of September 19, 2023, pp. 572-574 - references in the continuation of the defendant's testimony from this transcript).

The defendant added that in 2018 there was almost no income. Until June 2018, there were no tenants, only Vika and a couple who came for chemotherapy treatments. When the plaintiff mentioned Haim Dekel and his wife (below in the details of the phone calls), the defendant replied that the couple had indeed rented a unit until March 2018, for several months, and that the defendants reported the matter to the accountant. Later, after June 2018, the defendant's daughter lived in the Vika motel for a few days, as well as Roman, also for a few days. The defendant stated that he was sure of his statements, based on his list (pp. 575-576).

853. Later in the cross-examination, the defendant was interrogated, referring to his and the defendant's phone conversations during 2018 regarding the rental of the units in the motel.

Conversation No. 3572 of May 28, 2018 - A conversation between the defendants, in which a man asked to rent a unit for three months and the defendant told him that the price was NIS 4,500 per month. In the conversation, the defendant mentions renting a woman named Anka for NIS 4,500 and also mentions that "those from above" are renting (in the present tense) for NIS 6,000. In his testimony he did not mention who it was, and claimed that he had all the contracts and invoices regarding the rents (p. 566). It should be noted that no contracts or invoices were submitted in relation to these rents. The defendant referred to the list of rents (P/6), but in this list there is no mention of rents from 2018 (p. 567).