Former Israeli business-star, Nochi Dankner, was sentenced on Monday to two years in jail after he was found guilty for manipulating share prices.
Dankner was wellknown before the crisis and during the turbulent period he lost most of his fortune. It included a supermarket chain, a phone operator, an airline and one of the Israeli newspapers. But crisis caught him unprepared and as things got worse, Dankner boosted the price of his shares in his IDB group to help a stock offering, a Tel Aviv district court judge found in July.
IDB used to be a hard-to-read control scheme with multiple levels of holding firms and subsidiaries. But it hit hard times when the market crashed and some investments, such as a major Las Vegas real estate deal, failed. This case has led to economic reforms in Israel, with the government passing regulations to increase market competition.
A spokeswoman of the court stated, that Dankner was sentenced to two years in jail and fined 800,000 shekels ($200,000). Strum was also sentenced – for a one-year sentence and a 500,000 shekel fine. There will be a 45-day delay in carrying out the jail sentence to allow them to appeal the guilty verdict. Dankner and Strum have denied any wrongdoing. A lawyer for Strum said his client would appeal.
In its July verdict, the court described how Strum’s company bought IDB stock on the Tel Aviv Stock Exchange, only to sell it off the exchange to Dankner’s own network of investors and use the money received to buy more IDB stock. During the initial offering, IDB raised 321 million shekels.
IDB together with all of its subsidiaries has been sold to Argentinian businessman Eduardo Elsztain. This topic was popular in the Israeli newspapers and public found it as an immoral proof of the economic power of these businesses and protests in 2011 over the high cost of basic goods, the government passed a law limiting the number of levels in such pyramid structures.
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