Alleged crypto scams, sex offenses, unpaid bills: the claims against Moshe Hogeg
Moshe Hogeg, owner of Beitar Jerusalem football club and sometimes famous entrepreneur and investor, has had to face his fair share of legal problems in recent years. The 40-year-old Tel Aviv resident has been repeatedly prosecuted since 2018, in the United States and Israel, for allegedly misleading and defrauding investors and partners in various projects involving digital currencies, dummy companies and a $ 1,000 blockchain smartphone that never quite made up for the market.
On Thursday, Hogeg and seven other suspects were arrested as part of an Israel Police operation on suspicion of being involved in an alleged massive cryptocurrency fraud scheme. Police said the suspects had operated over a long period of time, “cooperatively and systematically, while defrauding investors in a number of cryptocurrency projects.”
Law enforcement officials said each suspect “pocketed millions of shekels, while misrepresenting potential investors to invest in seemingly profitable businesses.”
According to court documents, Hogeg is suspected of 21 offenses, including money laundering, theft and fraud, as well as crimes resulting in sexual and moral turpitude currently under gag order.
Earlier this month, a well-known model said Hogeg sexually assaulted her years ago when she was 17. Channel 13 quoted the model as saying Hogeg walked into her hotel room and tried to force herself on her, but managed to push him away. Hogeg denied the charge and said the sexual interaction was consensual, adding that he had taken a lie detector test to confirm his version.
Thursday’s arrests came after about a year of a police investigation by the Lahav 433 anti-corruption unit into Hogeg’s alleged wrongdoing. Police reportedly dubbed the investigation “The Big Game,” according to public broadcaster Kan.
Authorities said the alleged cryptocurrency fraud scheme was “systematic and sophisticated” and aimed to defraud investors of millions of dollars, after they were presented with clear but bogus plans to fund certain initiatives. The money ended up being pocketed by the suspects for their personal use or to support other business interests, according to court documents.
Lawyers representing Hogeg said in a statement Thursday that he “vehemently denies the suspicions against him and is cooperating fully with investigators.”
The many companies of Hogeg
Hogeg began his journey as an entrepreneur over a decade ago with the pop-up startup Web2Sport, which allowed football fans to watch a match live and make real-time decisions on what players should. do next, effectively seeking out the role of the team coach. The start-up lasted about a year, but attracted several wealthy and prominent investors including Alon Carmel, founder of JDate, Israeli businessman Danny Rubinstein and Easyforex, one of Israel’s premier forex companies, according to an earlier Times of Israel report.
Over the years, Hogeg has shown a knack for attracting top investors and celebrity supporters.
In 2010, he launched the now defunct Mobli, the mobile photo and video sharing website, which investors at the time hoped would be serious competition for sites like Vine (also defunct) and Instagram (now a Facebook / Meta company). Although he ultimately failed to gain widespread adoption, Mobli also attracted top investors, including tennis star Serena Williams, Mexican billionaire Carlos Slim, American actor Leonardo DiCaprio and man of Kazakh business Kenges Rakishev.
(Rakishev rose to prominence in 2007 when he negotiated a deal with Kazakh oligarch Timur Kulibayev, the son-in-law of Kazakh President Nursultan Nazarbayew, to buy the house of British Prince Andrew for £ 15million or £ 3million of the asking price.)
In 2012, Rakishev and Hogeg started a venture capital fund that later became known as Singulariteam, which at one point was one of Israel’s most active investment funds. According to its online portfolio, the fund has invested in around three dozen companies, some still active, some not.
The fund has also invested in startups co-founded or led by Hogeg, including Invest.com, Sirin Labs, Yo, as well as Mobli.
Invest.com became linked to Israel’s fraudulent binary options industry, according to a 2018 petition, when a planned 2017 merger between Invest.com and Israeli binary options firm AnyOption went wrong. Former AnyOptions shareholders alleged at the time that Hogeg systematically robbed the company of its assets and profits so that the company, which should have been very profitable, became insolvent and could not cover its costs. basic operating. Hogeg then sued AnyOption in a Cypriot court. The matter has since been settled.
In 2016, Hogeg’s Sirin Labs unveiled what he called a highly secure, “military-grade” smartphone called Solarin with a whopping $ 17,000 price tag for so-called high-end customers. The phone was unveiled at a star-studded event in London that year.
After the hype subsided, Sirin Labs, of which Hogeg served as president, unveiled the Finney phone at a more modest price of $ 1,000 to $ 2,000 depending on specs. The phone was touted as a secure open source device with an internal operating system, SirinOS, and cold (offline) crypto wallets. Sirin Labs contracted Hong Kong-based mobile phone maker Foxconn International Holding (FIH) to manufacture the phones.
The company signed football star Lionel Messi as a brand ambassador and, later in 2017, raised around $ 158 million from investors around the world through an ICO (Initial Coin Offering ) which was later labeled a scam by former employees.
Two other ICOs, for Stx Technologies Limited (Stox) and Leadcoin, which raised an additional $ 100 million, were also alleged to be scams.
(An initial coin offering is a form of fundraising in which a startup, instead of issuing shares to the public, issues a special token, or digital coin, which can be used within the platform. form this business to access goods and services. The startup thus acquires both users and funding, and the hope is that if the startup is successful, the value of the token will increase in secondary markets, making its holders richer.)
In August 2018, Hogeg bought Beitar Jerusalem, one of Israel’s top soccer teams, for $ 7.2 million, coming full circle with football-related initiatives. The purchase put him more in the spotlight as he sought to change the culture surrounding the club, known for its racist anti-Arab factions among its fans. He then faced backlash from those factions when in 2020 he said he was selling a 50% stake in the club to Sheikh Hamad bin Khalifa Al Nahyan, a member of the ruling Abu Dhabi family. Al Nahyan has pledged to inject $ 90 million into the team over the next decade. But following an investigation into the UAE’s finances, the deal fell through.
Problems are piling up
Legal issues began in early 2019 when a Chinese cryptocurrency investor filed a NIS 17million (about $ 4.6million) lawsuit in Israel against Hogeg and Stox, alleging that Hogeg embezzled millions of dollars. of cryptocurrency invested in the business. The case went to Gibraltar for arbitration.
Later in 2019, two US investors sued Hogeg and claimed he pressured them into investing in Mobli under false pretenses. The plaintiffs said the company used DiCaprio’s investment as a media gimmick “to slyly lure and persuade potential investors, like plaintiffs and others, to buy stocks at inflated prices.
In their lawsuit, the plaintiffs complained that media in Israel and abroad regularly portrayed Hogeg as a “financial assistant” and a rising star in the startup world, when in fact they claimed “he was caught red-handed in this case. and in other scandals and proved to be a dangerous actor and failed serial entrepreneur who caused serious damage to plaintiffs and other investors to the tune of several hundred million shekels.
At one point, Hogeg donated $ 1.9 million to Tel Aviv University to establish a blockchain research institute. He also founded Alignment Blockchain Hub, a company that would help develop blockchain projects at an early stage.
A separate 2019 lawsuit brought by a Seattle-based investor, also against Stox and Hogeg, was later dismissed by a U.S. judge.
But trials continued to flow. In 2020, Hong Kong phone maker Foxconn International Holding, commissioned to manufacture the Finney phone, also sued Hogeg, demanding compensation of around $ 6 million for unpaid bills. The lawsuit claimed that despite the much-vaunted launch and celebrity endorsements, only 10,000 units of the Finney phone were manufactured by the FIH. It is not known how many were sold.
In May of this year, Hogeg was fined $ 16.1 million by former Singulariteam employees. The plaintiffs alleged that Hogeg deceived them into believing that the ICOs of Sirin Labs, Stox and Leadcoin were legitimate and, as a result, they invested their own money and persuaded family and friends to invest in the three startups. . They claimed to have suffered financial damage and psychological trauma as a result.
Hogeg denied (link in Hebrew) the allegations and said the lawsuit was an attempt by disgruntled employees to extort him.
Hogeg has been in custody since his arrest Thursday.
Simona Weinglass contributed to this report.