National Insurance demands Sderot residents reimburse Oct. 7 aid funds over 'unlawful' purchases

Residents of Sderot, a town in southern Israel near the Gaza border, have been notified by the National Insurance Institute (NII) that they must repay portions of aid funds distributed following the October 7 Hamas attack, which killed nearly 1,200 Israelis and took over 240 hostages. The NII claims these funds were misused for so-called "unlawful" purchases such as airline tickets, mobile phones, and portable speakers. The demand has sparked widespread concern among Sderot residents, many of whom were already grappling with trauma and loss after the attack. The situation came to light after Sderot Regional Council member Eliran Gerbi shared on social media that he had received numerous calls from residents who had been informed they needed to return the money. Many expressed confusion and distress, unsure how to proceed with the repayment requests. According to the NII, the funds were initially allocated to support victims of terrorism through alternative treatments aimed at rehabilitation. These included therapies such as acupuncture, surfing, therapeutic horseback riding, and traditional Chinese medicine known as tui na. However, the institute alleges that some recipients diverted the money toward personal expenses not covered under the program’s guidelines. In a recent statement, the NII confirmed that it had contacted approximately 2,700 individuals who allegedly used the funds for prohibited purchases. The total amount reportedly involved exceeds NIS 15 million. The institute emphasized that all eligible treatments were listed explicitly on its website and in the claim forms signed by beneficiaries. It claimed that the misuse of funds occurred because some individuals submitted false or inappropriate receipts to justify their expenditures. The NII also disclosed that it had uncovered a network of individuals who actively encouraged victims of terrorism to falsify documents in exchange for payment. These fraudulent receipts were subsequently submitted to the NII for reimbursement. While the institute did not name specific individuals or groups involved in the scheme, it stated that legal action would be pursued against those responsible for the deception. Since the October 7 attack, the NII has recognized around 86,000 Israeli citizens as victims of terrorism. This includes both direct survivors of attacks and those affected indirectly by the conflict. The institute has been providing ongoing support to this group, including medical care, psychological services, and financial assistance for rehabilitation. The controversy has raised questions about oversight mechanisms within the NII and the extent to which recipients of aid can be held accountable for misuse. Some residents argue that the emotional and physical toll of the attack made it difficult to distinguish between necessary and non-essential spending. Others contend that the NII should have offered clearer guidance on permissible uses of the funds. The NII has reiterated its commitment to ensuring that aid is used appropriately and that those who attempted to exploit the system will face consequences. Officials have not yet specified whether the repayment process will involve formal legal proceedings or administrative measures. Meanwhile, local authorities in Sderot continue to assist residents in navigating the complex requirements set forth by the NII. As the situation unfolds, the focus remains on clarifying the boundaries of acceptable fund usage and addressing the concerns of those who feel unfairly targeted. The NII has not indicated plans to halt the repayment demands, leaving many residents uncertain about the next steps.