Prosecutors from the State Attorney's securities department have filed an indictment against businessman and former IDB chairman Nochi Dankner for stock manipulation and securities fraud. The case was originally handled by the Israel Securities Authority.
Dankner is being accused of running stocks, giving false details in a corporate statement and breach of anti-trust laws – the maximum sentence for each is a five years in prison.
He is also accused of breaking one of the articles of the Anti-Money Laundering Bill, according to which he allegedly traded in property he was not permitted to trade in – an offence which holds a maximum sentence of seven years in jail.
The central allegation focuses on the IDB Group's February 2012 IPO – which saw the company raise some NIS 342 million from the public. According to the indictment, Dankner feared the offering would end badly, and thus worked to preserving a high price for the stock, ensuring IDB would maximize its profits.
The IPO, the indictment claimed, came at a sensitive time for the company, with Dankner's continued control as well as IDB's ability to pay back past debts riding on the offering's success.
According to the indictment, Dankner ran the stock by coordinating purchases with Itay Strum, the owner of ISP Financial Services, and Adi Sheleg, a broker who has since turned into a witness for the State. The purchases were conducted through the accounts of family members and affiliates.
According to the indictment, in their actions, Dankner and Strum "influenced IDB's stock price through manipulation… (and) tried to motivate people to sell or buy IDB stocks while concealing key information… to secure the IPO's success."
The indictment details the manner Dankner used his connections in the business and banking sectors to secure large loans for Strum so he could churn the IDF stock during the IPO, calling bank officials and asking them to give Strum millions of shekels.
Moreover, during the three day IPO sale, Dankner made sure businessmen would buy the stock at a price lower than what the 'runners' were buying at, thus covering their potential loses. He also transferred some NIS 8 million to Strum to cover his eventual losses.
One of Israel's largest holding companies, IDB and its various units hold stakes in Cellcom, Israel's largest mobile phone operator, Super-Sol, the country's biggest supermarket chain, and real estate developer Property & Building. Dankner was IDB's controlling shareholder at the time of the IPO.
Dankner lost control of IDB when Argentinian businessman Eduardo Elsztain and his Israeli partner Moti Ben-Moshe group won support from 75 percent of bondholders and bank creditors for a takeover as part of a debt restructuring.
ISA had already recommended an indictment last July.
Tomer Gonen and Zohar Shahar Levy from Calcalist wrote this report, background information was taken from Reuters