Hundreds of Israelis who invested their money in the funds managed by Bernard Madoff and won't have nice returns to look forward to anymore, may soon be required to report to the Israel Tax Authority on where they got their money from.
The trustee appointed by the court in New York to protect the investors' money, Irving Picard, will likely reveal the complete list of investors in Madoff's funds, as well as the amounts they put in over the years, and the Israeli taxman may take a serious interest in the information.
Madoff is the Wall Street investment manager who recently admitted to a years-long Ponzi scheme fraud scam totaling some $50 billion.
The entry ticket to Madoff's investment fund was a minimum of $1 million, as well as complete control over the investments. Madoff's wide net of connections in Israel and worldwide Jewish communities drew quite a number of Israeli investors. Many of them saw Madoff as not only a way to earn a nice return on their money, but also as a way to avoid the income tax authority's watchful eye.
A number of quite worried clients have shown up at the doors of the best-known Israeli law firms specializing in tax law in the past few days asking for an urgent consultation. The fears that Picard will reveal the names and amounts, or be forced to reveal them as the result of a lawsuit, has caused the large number of requests.
"Already at this stage it is possible to say that large sums of money reached Madoff's funds from Swiss banks and various tax havens," said Dr. Avi Nov, a lawyer specializing in tax planning. "Usually the money there is not money that the owners are interested in reporting to the authorities.
"Here there was an excellent linkup of sophisticated investors who knew how to avoid paying taxes in Israel, and funds specializing in hiding their true purposes. Private investors in Israel always spoke about Madoff's returns. European banks recommended investing with him and when they heard the success stories, they asked to increase their investment," said Nov.
Read the eitire story from the link, especially if you've been more naughty than nice about sneaky cash-related things and this report sounds any personal alarm bells. The report seems to indirectly say that sporting the taxman is as much an Israeli national sport as it is reported to be in many parts of Europe - but not North America, of course, where self reporting honesty is a national pride, for us.
While a comeuppance of this kind might not be wholly unjust, and that term, "tax planning," can be overly elastic for some people, it is quite unfortunate that many charities, foundations, and scholarship funding outlets have been stung by this fraud. The general level of community suffering in hard times seems to have a multiplier effect as dominoes fall; not a good thing for anyone except apparently the lawyers and the taxman. What would George Harrison say?