The president and four other employees of services provider ISE, which runs outlets of foreign institutes of higher education in Israel, were detained yesterday by the Israeli police, the company advised the Tel Aviv Stock Exchange.
The company officials are being investigated for alleged fraud and falsification of corporate documents.
The Tel Aviv district police said that the fraud squad is seeking court approval to extend the detention of five ISE officers.
According to police sources, for weeks the fraud squad has been investigating several suspicions, including that ISE was selling academic degrees from the colleges it represents for $5,000.
The police also allege that officials representing certain foreign universities wrote academic papers for cash, and then graded those papers themselves.
Just last week ISE reported that the Higher Education Council had agreed to license 14 new study programs at two additional branches, in Haifa and Jerusalem. The licenses expire on December 31, 2002. They enable ISE to enroll students for these study programs at the two branches.
ISE also reported losing NIS 6.2 million for the third quarter of 2001, and NIS 10.9 million for the first nine months of the year.
Quarterly sales grew 12% from the parallel to NIS 21.8 million, the company reported. It was cash-flow negative in the third quarter, to the tune of NIS 4.4 million.