For months, police have been investigating two cases. According to Hadashot news, Lapid was a witness in Case 1000, an alleged illicit deal involving bribery made between PM Netanyahu and Milchan.
In Case 1000, Netanyahu is suspected of having received gifts from businessmen overseas, including cigars for himself.
According to the police, the gifts from Milchan were worth more than $1 million shekels ($283,000).
"The close friendship between the families is an unequivocal fact and can not be denied", Hefetz added. He denies any wrongdoing.
"It is the duty of every decent public figure to strengthen the police and the law and to act to end the path of the government headed by Netanyahu", he wrote on Twitter. The prime minister admitted taking the gifts but said they were presents between friends and that he had not given any political favours in return.
The petition sought to have the court examine the process whereby police transfer case files to the State Attorney's office alongside a recommendation on whether to lay charges, but the Court dismissed it on the grounds that it had previously passed judgement on the system of recommendations and upheld its lawfulness.
When did the investigations begin?
Netanyahu long ago earned the nickname "the Magician" for his uncanny knack for political endurance, and even his most ardent opponents have been hesitant to write him off.
Police records in which he is considered suspicious are counted in a thousand.
When did the investigations get serious?
"One receives gifts, not demands", the police said, and referred to testimony they had gathered that "there was a demand (by the Netanyahus) to receive the goods in a systematic and covert manner". Once that happened the material gathered by the police was passed to the Attorney General's office for examination. "That too is subject to a hearing and will be refuted completely", she said in September.
Netanyahu is at the center of two probes. During his first state visit to Australia in February 2017 he insisted nothing would come of the police investigation into his ties with Mr Packer as there was "nothing there, except friendship".
In return for the goods, Netanyahu allegedly approached U.S. officials and asked them to extend Milchan's visa to the US. Outwardly, he has displayed an abundance of confidence that he will be cleared.
Netanyahu has vehemently denied any wrongdoing and has vowed to fight on, saying that no police recommendation would prompt his resignation. The attorney general would then be charged with determining whether there is sufficient evidence to prosecute.
However and prior to the police declaration, Netanyahu appeared on TV to explain his conduct and lay to rest any speculation that he would leave office willingly.
Police separated allegations against Netanyahu, who has been Prime Minister since 2009, into two cases. He is an asset, especially to a right-wing government.
In closing Netanyahu reflected on his own status. He has often employed what has become his catchphrase about the investigations: "There will be nothing because there is nothing".
Lapid later issued a statement calling on Netanyahu to resign. That might not play well with those parties' conservative voter base.
Israel has not shied away from pursuing criminal cases against top politicians. That case involved an American businessman and a travel-expense scandal from Olmert's days as mayor of Jerusalem and minister of industry and trade.
Aryeh Deri, the leader of the ultra-Orthodox Shas party, was convicted of taking bribes while he was the Interior Minister.