Fallen Israeli business magnate Dankner gets two-year jail sentence

Tel Aviv court sentences the former chairman of the troubled conglomerate IDB Holdings of illegally manipulating the value of his company's stock in 2012.

By
December 5, 2016 09:56
2 minute read.
Nochi Dankner

Nochi Dankner. (photo credit: REUTERS)

 
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Former chairman and controlling shareholder of IDB Holding Corp.

Nochi Dankner was sentenced by a Tel Aviv District Court judge on Monday to a two-year prison term and a NIS 800,000 fine, along with a suspended sentence of a further year.

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His accomplice, Itay Strum, received one year in prison and a NIS 500,000 fine. IDB and Strum’s ISP Trading Group were fined NIS 250,000 and 150,000, respectively.

“Today, the court accepted our position that whoever acts fraudulently and damages the integrity of the financial-market system deserves an active prison term. The severe conviction and subsequent prison sentence help keep the integrity, lawfulness and transparency of our financial market,” attorney Hana Korin of the Tel Aviv District Attorney’s Office Securities Department said after the sentencing.

Dankner and Strum were convicted in July 2016 on several counts of securities fraud and one count of money laundering, including fraudulent stock manipulation, failure to issue reports and illegal use of assets under money-laundering laws.

Following a series of bad business deals by Dankner, IDB – then a public entity – took millions of dollars worth of losses. In an attempt to save his control of the company, Dankner got Strum, stockbroker Adi Sheleg and other wealthy colleagues to buy and sell IDB stock at inflated prices as part of a public offering in February 2012 intended to raise capital for the company. Sturm himself received NIS 8 million from Dankner for the fraud.

Strum and accomplices intentionally bought stock at prices above what they knew it was worth to fool other traders into buying the company’s stock at inflated prices. This would artificially raise the stock’s price above what its worth and is considered by law as illegal stock manipulation.

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The scheme succeeded in artificially raising NIS 321m. that likely could not have been raised legally. However, that amount was still not enough to save Dankner, and IDB collapsed regardless. By the time Dankner lost control in 2014, he was on his way to being criminally investigated as well. The accused took a further blow when Sheleg became a state’s witness and testified against his former accomplices, Dankner and Strum.

“The offenses were perpetrated by someone who was the best-known figure in the Israeli economy and capital market. These were sophisticated actions carried out over three days, involving sums in the tens of millions of shekels, and intended to serve a forbidden purpose,” Judge Khaled Khabub wrote in his sentencing.

Before his downfall in 2014, Dankner controlled an estimated NIS 400 billion of the public’s wealth through IDB Holdings, including control of or substantial shares in the country’s biggest supermarket chain, Shufersal, mobile operator Cellcom, Clal Insurance and Bank Hapoalim.

While the Tel Aviv District Attorney’s Office had asked for a three- to five-year prison sentence, Khabub said in his sentencing that he “deemed it appropriate to punish the accused within the lower levels of the appropriate punishment due to the personalities of the accused, their extraordinary philanthropic work and the damages and losses they inflicted on themselves by getting embroiled in this scheme.”

According to the sentencing document, Dankner received more than 60 letters and documents entered as evidence and that attested to his good character. These documents were sent to the judge by organizations including the World Jewish Congress and institutions such as Bar-Ilan University. The individuals who attested to Dankner’s character include top-tier generals in the IDF, politicians and rabbis.

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