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Report: Plea in Israel Mafia Case

March 20, 1998

JERUSALEM (AP) _ Israel’s first high-profile case against a Russian immigrant with reputed ties to organized crime has ended in a plea bargain, two Israeli TV channels reported Friday.

The defendant, Gregory Lerner, was to have gone on trial Sunday on 14 charges of fraud and bribery in connection with alleged attempts to set up a Russian-Israeli bank that authorities feared would be used to launder money. Lerner was also accused of trying to bribe Israeli politicians.

Under the plea bargain, Lerner will plead guilty to some of the charges, serve a prison term of five to seven years and pay a fine of nearly $5 million, the reports said.

Lerner, who also goes by the Hebrew name Zvi Ben-Ari, previously denied all charges.

Justice Ministry spokeswoman Etty Eshed refused comment on the reports on Israel TV’s Channel One and Channel Two. Lerner’s lawyer, Yoram Sheftel, could not immediately be reached for comment.

The Jerusalem District Court will rule Sunday on whether to accept the deal, the reports said.

The Lerner case involved a defendant with alleged links to mafia-style groups from the former Soviet Union.

Israel’s former police chief, Asaf Hefetz, said in an interview that $4 billion of organized crime money from the former Soviet Union had been invested in Israeli real estate, businesses and banks over the past seven years. Police have about 30 organized crime suspects under surveillance.

Lerner’s lawyer has argued his client was the victim of an ``organized campaign″ by the Israeli prosecution and Russian authorities to stifle Russian entrepreneurs.

Lerner came to Israel in 1989 at the beginning of a wave that has brought almost 800,000 immigrants from the former Soviet Union.

Court papers accused Lerner of defrauding Russian banks. They said money was transferred to Lerner’s company from four banks. Lerner set up a pyramid scheme, using money from one bank to entice investment by others, and shuffled the funds between various accounts before much of it disappeared, the court papers said.

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