Olmert Suspected Of Bilking Charities

Investigation of Israeli Premier Expanded Based on New Evidence

JERUSALEM, July 11 -- Israeli investigators have widened a probe into fraud allegations against Prime Minister Ehud Olmert based on evidence that he cheated several charitable groups, officials said Friday, further imperiling Olmert's prospects for staying in office.

The latest accusation, announced in a joint statement by the Justice Ministry and the police, is that Olmert billed charitable organizations and the government for the same flights and then used the extra money to fund personal vacations during his tenure as mayor of Jerusalem and trade minister.

Among the organizations is the Holocaust memorial Yad Vashem, according to officials close to the investigation who spoke on the condition of anonymity because the case remains active. Other charitable groups that paid Olmert include those that help soldiers, mentally disabled children and the physically disabled, the officials said.

The statement said that a travel agency coordinated the fraud on Olmert's behalf. Olmert would speak for the groups during trips abroad, then ask each one -- plus the government -- to separately pay the airfare.

An official close to the investigation said Olmert made more than $100,000 through the alleged scheme, which also included double billing for hotel rooms and other travel expenses.

The allegations, if proved, could very quickly end Olmert's 2 1/2 -year run as prime minister and abort or delay peace initiatives he has pursued with Syria and the Palestinians.

"Olmert for all practical purposes is finished," said Menachem Hofnung, a political scientist at Hebrew University in Jerusalem. "Before, there was an assumption that he could last until the end of 2008. Now the question is whether he can last until the end of July."

Hofnung said the new allegations "look serious. It appears to be a very simple and ugly fraud."

The allegations follow testimony by New York businessman Morris Talansky that he gave Olmert $150,000, much of it in cash, over a nearly 15-year period. Talansky said he believes Olmert used the money to fund a lavish lifestyle -- including a family vacation in Italy and expensive cigars. Talansky is to be cross-examined by Olmert's attorneys next week.

A spokesman for Olmert on Friday said the prime minister would continue fighting the allegations.

"The prime minister is convinced that he has done nothing wrong and that as this investigation continues, his innocence will clearly be shown," said Mark Regev, Olmert's spokesman.

But Olmert has said he will step down if he is indicted, and investigators indicated Friday that they are nearing that point. Olmert was questioned by investigators for more than two hours Friday, his third such session since the scandal broke two months ago.