Police are not yet certain how to proceed, due to the lack of legal basis for prosecuting Israelis espousing anti-Semitic ideology.

The neo-Nazi group was discovered following the arrest on drug charges of a 20-year-old IDF soldier. A swastika tattooed on his arm aroused police suspicions, and neo-Nazi material was later discovered in his home.

In the course of the investigation of the arrested neo-Nazi and his mother, who also professed hatred for Jews and Israel, other members of the group were revealed. Police detective Chaim Fadlon told the Maariv newspaper that the suspects are believed to have met each other in anti-Semitic internet chat rooms. Their contacts soon took the form of meetings and ceremonies with swastika banners and other Nazi paraphernalia.

"We cannot disclose details of the inquiry, but it's chilling," Fadlon said. "It appears these are people living in this country who are talking among themselves about extermination of the Jews."

Under the 'Law of Return,' anyone with a Jewish grandparent - even it is only his father's father - can immigrate to Israel and receive citizenship and benefits. (Only those born to a Jewish mother or who have properly converted to Judaism are considered Jewish.) Immigrant groups representing Jews from the former Soviet Union have long called for reform in the law because of immigrants who move to Israel not because they are Jewish but for financial reasons. Often, they bring their enmity for Jews and Israel along with them.

Interior Minister Ofir Pines-Paz (Labor) has asked Attorney General Menachem Mazuz to examine the legal procedure under which a new immigrant’s status can be revoked.