Olmert Accuser Faces FBI Probe Into Allegations of Money Laundering

Washington — A New York businessman who is at the center of a corruption scandal that brought down Prime Minister Ehud Olmert is now facing an FBI investigation into alleged money laundering and tax evasion.

A federal grand jury was convened in Brooklyn last month and has begun subpoenaing witnesses and documents involved in the businessman’s financial dealings with Olmert. The FBI investigation was kept secret in accordance with laws restricting the disclosure of grand jury procedures, but it was made public August 12 after Talansky’s lawyers learned of the investigation and put out an official letter on this issue.

The Talansky investigation could potentially derail a criminal probe against Olmert, who has already announced that he will resign in September. The businessman has threatened to cease his cooperation with Israeli authorities if the FBI probe against him proceeds. He has demanded that the investigation be stopped and that he be granted immunity from further criminal prosecution based on his testimony in the Olmert case. Israeli prosecutors have joined Talansky in requesting that the probe be halted.

Calls to Talansky’s home on Long Island went unreturned, and his defense attorneys issued only perfunctory statements on the probe. According to neighbors, Talansky has not been seen at his home since he returned from his most recent testimony in Israel.

Talansky testified in Jerusalem in May that he gave Olmert nearly $150,000 over a period of more than a decade. The businessman told investigators that he paid Olmert’s bills at high-end New York and Washington hotels and that he provided the Israeli politician with money for family vacations and expensive cigars. Talansky also testified that he occasionally provided Olmert with envelopes stuffed with thousands of dollars.

Talansky’s lawyers in the United States, Bradley Simon and Neal Sher, first learned of the FBI investigation shortly after the businessman returned from his testimony in Israel. Talansky himself was not formally informed about the investigation, sources close to him say, and learned of the probe through prosecutors who have been conducting the investigation.

The Justice Department has not commented publicly on the investigation.

On August 12, Talansky’s lawyers sent a letter to Israeli Attorney General Menachem Mazuz, stating that he would not appear in court August 31 for scheduled cross-examination by Olmert’s defense team.

“By cooperating with Israeli authorities, Mr. Talansky has placed himself in legal jeopardy in the United States,” the attorneys state in the letter.

Advisers to Olmert celebrated the announcement, telling the Israeli press that Talansky’s refusal to cooperate further with the investigation dealt a serious blow to the prosecution and proved that the case against the prime minister was on shaky legal ground.

Sources close to Talansky told the Forward that he would return to Israel and complete his testimony only if the Justice Department’s case against him were closed.

“The government of Israel should protect him as a key witness,” the sources said.

Israeli prosecutors have been in close contact with the Justice Department regarding Talansky’s case, according to an Israeli official informed on the issue. The intergovernmental cooperation began after Talansky first testified in Jerusalem, with representatives of the Israeli police traveling to the United States to join FBI agents in gathering information on the case. The cooperation was based on an Israeli request for judicial assistance, under a joint treaty between the two countries.

Israeli prosecutors are now seeking ways to persuade the Justice Department to halt the investigation in order to ensure Talansky’s return to Israel to give the rest of his testimony. An official who was briefed on the issue said that talks between the sides were still going on and that “it is definitely possible” that a solution will be found in the coming days.

American defense sources said that although Israel cannot formally intervene in an ongoing investigation in the United States, it is not unheard of for American prosecutors to abandon an investigation in favor of a more important one in another country.

“They have an ongoing relationship,” the source said of Israeli and American prosecutors. “They can find an informal way of dealing with it.”

The FBI investigation, according to an Israeli source who is informed on the case, is looking into alleged money laundering violations and bribing of foreign officials by Talansky. The case, if it remains open, could lead to an indictment against Talansky and possibly others involved in providing funds to Israeli politicians.

Author

Nathan Guttman

Nathan Guttman

Nathan Guttman staff writer, is the Forward’s Washington bureau chief. He joined the staff in 2006 after serving for five years as Washington correspondent for the Israeli dailies Ha’aretz and The Jerusalem Post. In Israel, he was the features editor for Ha’aretz and chief editor of Channel 1 TV evening news. He was born in Canada and grew up in Israel. He is a graduate of the Hebrew University of Jerusalem. Contact Nathan at guttman@forward.com, or follow him on Twitter @nathanguttman

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Olmert Accuser Faces FBI Probe Into Allegations of Money Laundering

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