NIS 4.3 billion – it is difficult to think about, especially when it comes to the pensions and savings of 105,000 people accumulated over many years. Their access to funds has now been completely blocked, and for thousands of them it is not at all clear whether they will ever see their money again.
The Slice case stands out as the largest pension problem in Israel’s history. It concerns more than 800 million shekels. Of this amount, the whereabouts of at least NIS 500 million are unknown. Globes spoke to people who were victims of Slice and the actions taken against it, and who lost their financial footing overnight.
First of all, a summary of the issue. In February 2022, the Capital Markets, Insurance and Savings Authority began receiving complaints about Slice. The savers claimed that insurance agents sold them loans in exchange for transferring their money to a provident fund management company. Six months later, a class action suit was filed, and after another two months Globes reported that the Financial Markets, Insurance and Savings Authority had raided Slice’s offices and opened an investigation.
In November 2023, despite the investigation, the Capital Markets, Insurance and Savings Authority renewed Slice’s license to sell savings and investment products. In a Knesset debate last week, representatives of the authority said the renewal was “technical.” For savers, it was a sign that things seemed to be going well. A month later, the lid was lifted. The regulator fired the company’s top managers and appointed public accountant Effi Sandrov as a special manager in their place. He froze all of the company’s activities.
Since then, the full dimensions of the case have begun to become clear. Slice is a digital savings fund management company owned by the Goldberg and Tokatli families, which bills itself as specializing in personally managed savings funds (IRAs). It is a savings product that allows savers to have full control over the management of their investments, unlike the “shelf products” of financial institutions, which offer standardized investment paths for all clients. Of the 4.3 billion shekels managed by the company, 3 billion shekels are in these funds.
The money in Slice is divided into three risk levels. The first is the traditional pension funds, worth NIS 1.2 billion, which appear to have been unharmed. The court approved the sale of these funds, and they are waiting for a buyer. The second is the so-called “white funds”: NIS 2.2 billion in funds managed by the private manager. The private manager believes that these funds were managed properly. The remaining amount (NIS 890 million), which is considered to be of the highest risk, is in the “red funds.” This money was invested in pension funds, but mainly in external funds that are feared to have been mismanaged. At present, it is not clear what happened to the money. So far, only NIS 60 million has been found. All the money in Slice, across all investment paths and at all risk levels, has been frozen, and savers have been unable to access it for six months.
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Many of the victims we spoke to described severe financial, psychological and health damage, sleepless nights, feeling disconnected from their environment and resorting to pills. Pandora’s box opened at the same time as the war, an event that forced many people to adapt financially. But for those who had saved with Slice, when the rainy day came, the money was gone. Testimonies reveal how investment products were sold to clients without making it clear what they contained and where the money would actually be invested.
The agents, many of whom had known the clients for a long time, would persuade, and sometimes pressure, people to transfer their money to Slice, with promises that it was a safe investment, or in exchange for loans. In the class action lawsuit filed in August 2022 by Adv. Adeel Zimran and the lawyer. Nimrod Eliyahu Levy Lawyers described this style of agreement specifically to transfer savings in exchange for loans on easy-looking terms. Clients did not know that the loans would be funded from their own savings, which may never happen again.
“It started when I went to the Slice website and didn’t have access or password,” says one woman who transferred her savings to Slice in exchange for a loan. “When I called them, they started telling me dubious stories. A month passed, then two, and every time I tried to talk to Slice, there was no response.” At some point, she was referred to the fund manager, who himself sent her the code and password, but with an indirect link. “When I mentioned the numbers, I saw that they were not normal. I had much less than I transferred.” When she asked about it, she was told that she had been charged an administration fee four years ago.
The testimonies have similar broad lines. First, there is the reliance on seemingly trustworthy agents, but also the trust that everyone placed in the regulator and the state, which proved misplaced. The authorities woke up more than a year after the initial complaints were made.
Hannah is 76 and retired. Her husband, Shimon, who is older than her, has cancer. For many years, Hannah’s retirement savings were in a large investment house run by an insurance agency. Their daughter says that the insurance agents who came to her parents’ house “were very kind and trustworthy,” and convinced her parents to trust them. “One day, we just got a letter saying that the money had been transferred to Slice,” says Hannah. The money she had saved for 25 years was put into offshore funds—“red boxes.” Hannah says she had never heard of the company before, but she trusted the agent. “He said they were investing the money in a very reliable British fund, and there would be no problem with that.” According to Shimon, the money initially accumulated with good returns, but one day the information stopped coming back. “We tried to contact them, but we couldn’t. When we asked about it, we were told that they were in trouble.” When they tried to transfer the money, they were no longer able to.
According to the daughter, her parents’ investment portfolio was large. “It was money they saved shekel after shekel, a large investment portfolio that they relied on to have a decent retirement, without having to ask for services or think twice before consulting a doctor privately or if they needed medications that were not in the public health basket. Now, they have reached the point where they need medications and treatments that are not in the basket, and they need this money, and it is not there now, when my father is suffering from cancer, it is really the last thing they need.”
The agent was like a family member
Shlomit Yitzhaki, a retiree who worked for years as a nurse at Carmel Hospital in Haifa, describes the relationship of trust with the insurance agency Finbert, which brought her to Slice. “My husband left me three years ago, and he was the one dealing with the cars and the money. Suddenly I was a bit helpless after dividing the property, and I didn’t know exactly what I was doing. It was a kind of naivety and trusting thing,” she describes.
“A nice-looking woman called me,” Yitzhaki says, recalling how she was introduced to an agent working for Finbert. They met at her home, and she says the agent has since visited her many times and has become like a member of the family. “She was very persuasive,” she says, and with her consent she transferred her money to Finbert.
“I wanted to preserve the value of the money, so that it would not decrease. She (the agent, N.S.) said it was an Israeli insurance company. I did not know that the money would be transferred abroad. No one knew us.” But this is exactly what happened with more than 400 thousand shekels, all of her savings, which ended up in “red boxes” whose fate is unknown. But one morning, while talking to an acquaintance who happened to be a former banker, Yitzhaki realized what had happened. “When I told her where I invested, her face turned white as chalk. She said, ‘Withdraw the money and put it somewhere else,’ but by the time I tried, it was all blocked.”
All funds are frozen.
In addition to the investors in the “red funds,” tens of thousands of other savers are facing a complete freeze on their investments. Yossi Gevner is one of them, as is his wife. Both invested their pensions with Slice. “I had many financial advisors over the years, and they all knew that I was only prepared to preserve the value of the money, not to make profits, but so that I wouldn’t lose any of it.” During 2022, they suffered significant losses on fixed income tracks due to the war between Russia and Ukraine. “So we turned to the agent to find us a track like short-term deposits, and she brought us to Slice,” he says. “She found us a track for bonds. I had no idea what it was about. I thought bonds were something from the government. I certainly didn’t know that money could be invested abroad. We transferred the money there, almost two years, a million shekels, a pension for 38 years of work.” Among other things, they set aside the money to buy an apartment for their disabled daughter.
In December, the Slice case hit the headlines, and they realized how it had gotten. “I called the agent, trying to reassure them, and she said, ‘It’s all a rumor. You know how when you get an article in the paper and everyone gets upset, but if you want, for peace of mind, I’ll move your money,’” he called. “‘What peace of mind?’ I said, ‘Everything’s on fire!’ That day he gave instructions to move, but it was too late.
“The first three months were sleepless nights. We had no grandchildren, no children, no contact with our surroundings,” he says. “We just suffer. There is no amount of money to compensate for what we have been through. We are retired. Do we have the strength to fight? And wait for years?”
Geffner is one of those who invested his money in “traditional” paths, but still froze. “It’s ridiculous. We didn’t do anything wrong, and we have to justify ourselves? Claim our money? Give approvals? Justify it? It’s unbelievable. This is money I’ve saved my whole life.”
The court last week approved the release of funds to those aged 70 and over, at the request of attorney Yael Havasi Aharoni of the Holocaust Survivors and Elderly Rights Clinic at Tel Aviv University. But the special administrator sought to narrow the scope of the ruling, and no court ruling has yet been issued. Meanwhile, the Knesset discussed the tranche issue for the first time last week, at a Finance Committee meeting. MK Merav Cohen (Yesh Atid) called the story “the Commerce Bank affair on steroids,” referring to the collapse of Commerce Bank in 2002 as a result of the embezzlement of some NIS 250 million by the bank’s deputy investment officer, Eti Alon. She helped her brother, Ofer Maksimov, pay off gambling debts. Committee chairman MK Moshe Gafni (United Torah Judaism) admitted that he had heard about the matter for the first time and was surprised by the numbers. The Capital Markets, Insurance and Savings Authority was asked to prepare a document within a month that would answer a series of questions. A follow-up session has not yet been scheduled, and a parliamentary investigation committee has not been formed.
Finbert Insurance responded to the report by saying: “The money belonging to Finbert clients that has been invested is in the investment accounts and in the investments themselves, and our legal obligation is to ensure that savers who have put their trust in us get their money back.”
Slice, its directors and the agencies mentioned have not been charged with any crime and are entitled to the presumption of innocence.
Published by Globes, Israel Business News – en.globes.co.il – on June 30, 2024.
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