Former tycoon Nochi Dankner said Wednesday he was “surprised and disappointed” by a court decision to extend his jail term to three years behind bars.
Following an appeal, the Supreme Court increased Dankner’s sentence from two years, and ruled that the former IDB Holding Corp. controlling shareholder will begin serving his prison term on October 2 for his role in carrying out millions of dollars’ worth of fraudulent transactions in an attempt to influence the share price of the troubled company.
“At this difficult time I draw strength from my family, my friends and my love for the state,” Dankner said after the verdict, Hebrew media reported.
His co-defendant, Itay Strum, owner of a company that manages assets for wealthy families, had his sentence doubled to two years.
“The increased punishment is inappropriate,” said Strum’s lawyer. “Especially after the Supreme Court did not accept the testimony of the state’s witness, at the very least it could have lessened the sentence, not increased it.”
However, the sentence was welcomed by Israeli investors.
“Dankner is the symbol of Israeli tycoons that ruled the Israeli capital markets for over a decade. He was the king of tycoons,” said Yaniv Pagot, an economist and head of strategy at the Ayalon Group. “Even the finance minister went to visit him at his offices in Azrieli tower – a move that was widely criticized by the public because it symbolized just how much power these tycoons were seen to have.
“Dankner represents a period in which a small number of tycoons controlled Israel’s biggest companies in a very concentrated and highly leveraged manner, and through a pyramidal holding structure. He milked the companies for dividends and made some bad investments,” he said.
Pagot said that the court ruling was a clear sign that Israel and the securities authority were now “cracking down on illicit behavior. Dankner’s story attracts so much attention because it is a fall of a mighty person from such a height.”
Dankner had been given a two-year prison sentence in 2016.
Dankner — once one of the richest men in Israel — was also given a one-year suspended sentence and ordered to pay a fine of NIS 800,000 ($209,000).
Strum had been sentenced to a single year behind bars, a year’s suspended sentence and a NIS 500,000 fine ($130,760).
However, both men appealed their sentence. In Monday’s ruling the court increased Dankner’s sentence to three years and Strum’s to two years.
In the ruling Judge David Mintz said that their actions had harmed public confidence in the stock market, adding that it increased suspicion that trading prices for securities do not accurately reflect the economic activity of the economy or the market.
The judges said that they felt the initial sentence was not commensurate with the severity of the crimes.
“A review of the sentence showed that even though it used harsh language against the actions of Dankner and Strum, and even stressed the clear need to eliminate white collar crime in general and within the capital market specifically, this approach was not adequately expressed in the sentence and the punishment,” they wrote in their ruling.
Both men had been convicted for their involvement in insider trading in the run-up to a stock flotation for Dankner’s holdings company, IDB Group, in 2012.
Dankner had sunk into massive debt with the banks and had met a brick wall trying to raise cash or get further loans.
IDB took on millions of dollars in debt following a series of bad business deals. The courts wrested control of IDB from Dankner as a result.
Dankner, a favorite of Israel’s business community, was often credited with helping rescue Israel’s economy at the height of a Palestinian uprising. Under his leadership, IDB became Israel’s largest holding company and Dankner became a celebrity.
During his original trial, Dankner did not deny his “failures and poor decisions,” but tried unsuccessfully to convince the court that his actions had not been criminal. He tried to put much of the blame for IDB’s collapse on reforms in the cellular market introduced by Finance Minister Moshe Kahlon in his previous cabinet role of communications minister.