Shavei Israel Embezzlement Hearing Put Off
(October 25) Scheduled for October 17, a pretrial hearing of Sarah Freund vs. Shavei Israel, a case in which the former wife of Michael Freund is accusing her ex-husband of embezzling IS50,053,751 (close to $15,000,000) of the family’s money and transferring it to Shavei Israel, the organization he founded and heads, has been put off with no new date so far set by the court. No reason for the postponement was given by Tel Aviv District Court judge Naftali Shilo, the justice presiding over the case.
Sarah Freund’s suit to recover funds said by her to have been fraudulently taken from money belonging to her family has yet to reach the evidentiary stage. Thus far, court sessions have been procedural, starting with the plaintiff’s motion to transfer the case to a civil court from the family court in which it was initially argued after the couple’s separation in 2016.
In rejecting this motion, in a ruling given on June 21, 2020, Tel Aviv District Court Judge Etan Orenstein summarized Sarah’s claims.
“The plaintiff,” Judge Orenstein wrote, “contends that she received from her father, Pinchas Green, millions of dollars that were intended for the needs of her and Michael’s family. However, she says, Michael took possession of these funds and transferred them to an amuta [a non-profit organization. i.e., Shavei Israel] and to individuals connected to it, thereby violating an understanding between them that was based on mutual trust and fidelity. The plaintiff states that Michael, who founded the organization and was its chairman, devoted most of his time and energy to it, whereas she had no involvement with it and no intention of giving large sums to it or to persons associated with it. According to her, the defendants illicitly enriched themselves at her expense and stole money that belonged to her and that must now be returned.”
Judge Orenstein’s summary were based on Sarah’s statements to the family court, whose proceedings took place behind closed doors, in keeping with the such courts’ policy of protecting the privacy of family members. One of her motives in requesting the transfer to a civil court, apparently, was to permit her accusations to be made public. To this end, her lawyers dropped Michael Freund from the list of defendants, reducing it to Shavei Israel, Shavei’s lawyer Eitan Tsafrir, and former Shavei employee Rabbi Eliyahu Birnbaum. These two persons, according to the Israeli investigative website News 1, were said by Sarah Freund to have received, respectively, IS1.6m and IS1.7m of the embezzled funds.
In rejecting the plaintiff’s motion, which was opposed by Michael Freund’s lawyers, Judge Orenstein ruled that the case belonged in family court after all, saying:
“Given the plaintiff’s claim that she was duped by her husband, who acted fraudulently and in violation of the fidelity owed her, investigating the circumstances of the matter clearly calls for examining the conduct of the couple [the Freunds] in the course of their married life and the relationship between them as life rather than business partners, including their joint bank accounts.”
Rather than send the case back to family court in its present form, however, the judge wrote that he was dismissing it entirely in the expectation that Sarah Freund would file a new family court suit reinstating her ex-husband as a defendant.
Yet Shavei Israel’s victory, which would have succeeded in keeping Michael Freund’s alleged misdeeds out of the public eye, was short-lived. Judge Orenstein’s decision was appealed to the High Court of Justice by Sarah’s lawyers, Zohar Lande, Gal Lifschitz, and Zohar Haim-Levinger of the Tel Aviv firm of Barnea. On the 6th of December, 2020, High Court justice Anat Baron upheld the dismissed motion in a succinct verdict that stated that“Given that the main parties to the case [i.e., Sarah Freund and Shavei Israel] are not related, the jurisdiction over it belongs to the district and not the family court.” Overruling Judge Orenstein’s decision, she ordered the case returned to the Tel Aviv District Court, where it was reassigned to Judge Naftali Shilo.
Still seeking to keep the case under a mantle of secrecy, Michael Freund’s lawyers, led by Tal Shapira of the firm of Tel Tzur & Partners, now petitioned Judge Shilo to hold the District Court’s hearing, too, behind closed doors. This request was based on two arguments: 1) That inasmuch as the District Court would be required to examine testimony given before the family court, this testimony would become public knowledge despite the family court’s ban on its disclosure; and 2) That such a disclosure might cause “irreparable harm” to Michael and Sarah Freund’s children.
The second of these arguments was dismissed by Judge Shilo out of hand: the Freunds’ children, he observed in a decision handed down on January 22 of this year, were no longer minors and did not need such protection. Nevertheless, the judge promised, addressing the first argument, if “intimate matters” came up at the District Court trial, he would consider striking them from the protocol.
Judge Shilo’s ruling was, he wrote,based on “the principle of the public nature of trials,” which is “one of the foundations of our system of law” and is stronger than Michael Freund’s right to privacy.
Moreover, the judge stated, Shavei Israel, which has no such right, was not merely a passive recipient of the funds said to have been stolen. This was because it was also charged by Sarah Freund in family court that “the non-profit organization was falsely registered with the Registrar of Amutot”on documents “in which her signature had been forged. In addition, she claimed that there were ‘grave and substantial’ defects in the organization’s administration and pointed to the many flaws and failures that, so she said, took place in it.
The alleged forging of Sarah’s signature on Shavei Israel’s registration papers and reports to the Registrar of Amutot would presumably have been meant to facilitate the counter-claim that the transfer of money to Shavei could not have occurred without her knowledge and consent.
The way was now cleared for the trial to begin. On April 20, 2021, the litigants met in Judge Shilo’s courtroom and set last week’s date of October 17 for a preliminary session, the reason for whose last-minute cancelation has not been given. Asked by our Newsletter to comment, Sarah Freund’s lawyer Zohar Lande did not reply.
In a related development, the Israeli daily business newspaper Calcalist reported earlier this year that, in a separate suit filed against Michael Freund by Sarah Freund’s father Pinchas Green, a Tel Aviv family court presided over by Judge Shmuel Bar-Yosef ordered Freund to return to Green the IS50,000,000 shekels determined by it to have been illegally taken from money given by Green to his daughter, plus an additional IS2m. in court costs. The decision is currently being appealed by Freund’s lawyers. What would be the fate of Sarah Freund vs. Shavei Israel should Judge Bar-Yosef’s decision be upheld is not clear.