Business Investigation

The 50 Million Dollar Straw Man

Just how did an Israeli businessman carry out an intricate scam against a Dutch investor? What reads at first as the next bestselling intrigue novel complete with backroom deals, forged documents and offshore checking accounts, is in fact a breaking news story you are unlikely to have heard of. Jean-Paul Ney is reporting in Netherlands/Israel with LeWeek.

LeWeek international edition opens with this businnes investigation.

Our story begins in Israel with a midlevel businessman by the name of David Katz, a man registered as the owner of several international companies and reportedly worth tens of millions of dollars. However, in actuality Katz is a man who lives in a modest apartment in a suburb of Tel Aviv and his ‘businesses’ appear to be more on paper than in reality. Katz, a man who otherwise would likely never have made headlines, is now at the center of massive scandal. His accounts have been questioned, and his business holdings are still under investigation and scrutiny. In order to understand how it all went wrong for him, let us try to make sense of the key players in this fascinating case.

David Katz & Isaac Dabah

In 1997 a Dutch Businessman by the name of Henk Keilman (cover picture) purchased the rights to the Gloria Vanderbilt fashion empire through his company RIG Investments. The illustrious fashion house was purchased from Isaac Dabah, a prominent Israeli investor and the owner of Delta-Galil the largest textile company in Israel. Delta –Galil is worth a reported $800 million and publicly traded on the New York Stock exchange. Keilman acquired the Vanderbilt Trademarks for a sum of nearly 55 million dollars from Dabah, and sold it few years later to Jones Apparel Group for 80$ million, profiting almost $25 million for himself.

Dutch Businessman Henk Keilman we met in Amsterdam.

With these profits from the sale, Henk Keilman promptly reinvested a significant amount of his funds, $9.8 million to be exact into Sterling Macro Fund. Sterling Macro Fund (SMF) is a hedge fund operated from the Cayman Islands and managed among others by Mr. Dabah. The pair had up until this point upheld positive relations and Keilman sought to further their cooperation by investing in another Dabah project. After almost 15 years the investment made with SMF had reached the sum of more than 50$ million, a profit of more than 40$ million on top of the invested amount in 2002. In October 2012, Keilman requested to liquidate 5 million dollars out of his profits, in order to avoid Bankruptcy of his main investment holdings in the Netherlands. Keilman received letters from Dabah and his lawyer confirming the liquidity requested, but the money was never payed and in consequence of that his Holding company in the Netherlands went bankrupt. Afterwards they denied sending that letters, claiming that Keilman has forged it.At this point it is imperative to introduce Worthing Properties Ltd into our narrative. Keilman invested in Sterling Macro Fund through a, Worthing Properties Ltd, a special propose vehicle that was set up for that investment.

Keilman received financial reports about the management and the growth of his investments in SMF until 2012. Only 3 years later, on 2015, after a court order, it was came to his knowledge that Katz gave instructions via his lawyer to remove worthing as the sole share holder off SMF replaced it with Victory hill, a brand new company hold and controlled by Katz.
In independent research it was founds that Worthing Properties Ltd is not now nor was ever managed by David Katz. With some simple sleight of hand, Keilman’s position as the Sole Beneficial Owner was eradicated. David Katz, together with his lawyer, brilliantly masterminded the transfer of millions of dollars from Keilman to himself by signing a piece of paper instructing the management of SMF to transfer the ownership of the funds from Worthing to Victory hill, stating that he controls both of them. A second letter, undated, presented the first time in late 2015 stating that Katz declared to transfer funds out of SMF before the court in Amsterdam is determined who is the beneficial owner. In the letter he authorizes Dabah to fill out the date in the letter when it will be deemed necessary. Funny enough, the letter was written three years before the court in Amsterdam gathered to decide who is the beneficial owner of worthing, and the trial is still on going. So what do we have here? Someone declares himself as a beneficial owner of a company he did not invest one dollar in it, and gives authorization to transfer money out of the pocket of the real investor.

Watch the exclusive interview with Henk Keilman

David Katz, the man and the legend
According to a legal opinions prepared by top law firms after investigation, there is no evidence of Katz putting money in Worthing or transferring money to Keilman (or his companies) to invest in Worthing on his behalf. Katz has not provided any evidence of alleged payments and aside from the letter he presented to courts upon request there is no further proof of rightful ownership to Worthing or its profits.

The report went on to clarify that:
Katz is not a registered shareholder of Worthing,
Katz was not a director of Worthing,
Katz did not direct any funds into Worthing,
Katz did not take any action / was allowed to sign any forms on behalf of or related to Worthing and finally,
Katz did not receive documents related to Worthing.

When Keilman began investigating his losses, he was immediately stonewalled by Katz and Dabah’s lawyer. The Lawyer and Katz continue to assert that due to suspicions over Keilman’s capabilities to manage his investments they moved the assets without notifying him. With little to no proof to support their claims, this case appears to be a classic example of finger pointing and blame.

What does seem to be clear, even to a laymen on the matter is that Katz never once made an investment of his own in Worthing or Sterling Macro Fund. Keilman’s investments were stolen from under him by men he thought he could trust and when the case went to court in the Cayman Islands, the Judge left confused. Despite the evidence in Keilman’s favor; documentation of ownership, transaction receipts, and bank records- the presiding Judge felt unable to pass a clear judgement in favor of his claim, and passed it to the Dutch court.

Katz is asked during his cross examination in court: “Mr. Katz, you’re an experienced businessman, aren’t you? So why would you do a deal worth 55 million Dollars, without making it clear, in black and white and on paper, that you were the real beneficiary?” His only reply was: “Sorry, I thought I didn’t need that. I trusted him [Keilman] with a great deal of money without putting it on paper. He did a perfect job, but without putting anything on paper.” Documents that were presented to the court on behalf of Katz are suspected of being drawn up after the trail process began.
Sitting in his house in Holland, Henk Keilman remembers the first time he heard the name David Katz, a man referred to at the time as “The Strawman”. Katz received the nickname after it became known that he was “the man” to list on business contracts if you didn’t want to worry. As Keilman tells it, Katz once ran into trouble with Isaac Dabah’s lawyer and miraculously avoided facing charges only to become a close business associate of the millionaire instead.

While Keilman and his attorneys are in the process of appeal in the hopes of recouping their lost revenue, Katz –“The Straw Man” sits on his supposed 6 percent share worth tens of millions of dollars, of the Delta-Galil giant, and quietly passes the time in apartment in a working class city of Israel, while the question to be asked is: are the Securities and Exchange Commission in Israel and America aware of Katz’s nest egg? Are they prepared to investigate the 6% share he guards so well?

Investigation to be continued…

Cover picture : Henk Keilman (rr)
Video production : Skudbox
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