Diamonds and Diamonds and Israel and HAP – Eran Polack

Loose-diamonds

HAP co-founder committed fraud in $10M diamond heist: Israeli court

HAP Investments’ Eran Polack lied about being a victim of a $10 million diamond heist, an Israeli court ruled in September, after more than $5 million of the supposedly stolen inventory was recovered in his possession.

Polack, who co-founded HAP with two partners, was enmeshed in a long-running insurance case in Israel, in which he claimed to have been robbed of $10 million worth of diamonds in his office in Hong Kong in 2010. In September, an Israeli court threw out the claim, finding that more than $5 million of the stolen inventory had been with Polack all along, and that Polack lied about how the robbery went down, if in fact there was one.

“The defendants have successfully proven fraudulent intention,” the judge wrote. “Not only that the plaintiffs gave false testimony, but that they knew it was false, and did so with the intention of unlawfully recouping funds from the defendants on its basis.”

Polack is not facing fraud charges, as this was an insurance case, but the claim was thrown out and Polack is required to pay the insurer’s legal costs and attorney’s fees, in addition to $215,000 in legal fees.

Channel 10 News in Israel reported that Polack resigned from HAP following the ruling, and quoted a statement from the firm that, “Polack requested to leave his position as chairman and CEO soon after the ruling.”

However, in a statement to The Real Deal, a spokesperson for HAP denied that was the case. “Eran Polack was, and is, a founding partner and CEO of HAP Investments LLC and its affiliates in the United States,” the spokesperson said, and added that he intends to appeal the court’s decision.

According to Israeli court documents, Polack traveled to Hong Kong in February 2010 to sell about $10 million worth of diamonds. On the day of the alleged robbery he met with two men, identified only as “Africans,” at his office building in Hong Kong, to discuss the deal, documents show. At the building, Polack claims, the two men attacked him at knife-point and forced him to open his office, then ran off with the diamonds, leaving him bound.

Polack had increased his insurance policy from Menora Insurance days before leaving to Hong Kong in preparation for the deal, the documents show. After the heist, he filed a claim for 1,898 stolen diamonds worth a total of $9.5 million. Menora denied the claim on account of inconsistencies in Polack’s story, and followed up with a complaint accusing him of fraud.

Over the course of the next few years, more than $5 million worth of the stolen inventory was discovered in Polack’s possession, according to the documents. Three of the most valuable gems, worth a combined $2.5 million, had allegedly been bought on consignment in Hong Kong days before the robbery and Polack later tried to sell them. Polack removed another 41 gems from the list early on, deducting their value from his claim, after they too were found in his possession. In both cases, he was caught because he went to get the diamonds certified and reinsured, the documents state.

Polack’s story about the Africans was suspect from the start, according to Menora, who pointed out a list of inconsistencies and abnormalities, like the fact that the office was unfurnished, that he dismissed his secretary early that day and didn’t tell his partner about the meeting. But the key piece of evidence was CCTV footage that contradicted the crux of the story. In elevator security footage that was entered as evidence, Polack is seen taking the keys to his office out of his bag, proving that he allowed the two strangers inside voluntarily without accompaniment, which is not allowed by the policy.

According to the court, the robbery might have happened, only not under the circumstances described. “The motive for telling the wrong story is clear,” the judge wrote, since Polack knew that he hadn’t followed the security procedure and wouldn’t get the insurance money unless he fudged the details. Raising the stakes further was the fact that Polack was a middleman, and not all the stolen diamonds were his.

Dovid Levi, a victim of the theft, told Channel 10 news in Israel that back in 2010, Polack promised to return the money once the insurance paid up. “Then suddenly, I hear he’s running around New York, investing in real estate.”

HAP was founded by Polack, Amir Hasid and Nir Amsel, and they are funded in part by private Israeli investors. They are developing several multifamily buildings in Harlem, including a 20-unit condo building at 329 Pleasant Avenue, designed by Karim Rashid. The firm’s biggest New York City project to date is a $387 million development in Chelsea at 215-227 West 28th Street, where they plan to build a 21-story building with 199 units. HAP is also developing a 42-story mixed-use tower in Jersey City.

See article in its original post, click here.

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