Nochi Dankner, once one of Israel’s most prominent businessmen, arrived at Maasiyahu Prison on Tuesday morning to begin serving a three-year sentence for market manipulation and securities fraud.
Dankner will serve his sentence at the prison’s Wing 10, which was built especially ahead of former prime minister Ehud Olmert beginning his own sentence and has since housed other well-known inmates, including convicted rapist and former president Moshe Katsav, former chief rabbi Yona Metzger and singer Kobi Peretz.
Dankner arrived at the prison in a friend’s car, accompanied by his lawyer and his son-in-law.
“This is a difficult day for me and my family,” he told the media before entering the prison. “I fought for my innocence. I believe in G-d that everyone is for the best. I trust the justice and judicial system and love the State of Israel very much.”
Two months ago, the Supreme Court rejected Dankner’s appeal of his 2016 conviction and accepted an appeal by the prosecution, increasing his prison time from two to three years. Dankner was also ordered to pay a NIS 800,000 fine.
The Supreme Court adopted the ruling of the district court, determining that Dankner, the former IDB Holding Corp. controlling shareholder, carried out millions of dollars’ worth of fraudulent transactions in an attempt to influence the share price of the troubled company.
Nochi Dankner was convicted in 2016 of providing the finances for a scam involving the purchase of IDB stock on the day it was issued. That day, IDB Holdings’ stock registered unusually high activity on the Tel-Aviv Stock Exchange. He manipulated the market on the day of issue—in other words, he was involved in a massive acquisition of IDB Holdings stock, along with broker Adi Yehuda Sheleg.
The affair started at 2011, when Dankner foresaw problems in IDB cash flow after years of prosperity. The company had a complex pyramid of control with multiple levels of holding firms and subsidiaries. It hit hard times when the market crashed and some investments, such as a major Las Vegas real estate deal, failed.
Nochi Dankner then started looking for funding sources, and alongside his counterparts, had decided to issue securities in order to raise the money.
On February 23, 2012, IDB held a successful securities issue in which it raised NIS 321 million ($83 million). In the institutional phase the company raised NIS 286 million ($74 million) and the public offering yielded NIS 35 million ($9 million) in requests.
The stock acquisition was aimed at maintaining the stock’s value ahead of the issue. Once the issue ended, IDB Holdings’ stock began plummeting.
At the time, Dankner was chairman of IDB’s board and one of the owners of its controlling interest, and financed the scam with his own resources as well as recruited other parties who, according to his instructions, purchased stock that was bought by broker Adi Yehuda Sheleg and businessman Itay Strum to provide the finances to keep the scam going.
IDB took on millions of dollars in debts following a series of bad business deals. The courts wrestled control of IDB away from Dankner as a result.
Sheleg later turned state’s evidence and testified against Nochi Dankner and Strum, saying that Strum had asked him to “raise the share’s value to save Nochi’s investment.” The two accused him of a false testimony.
Dankner did not give up after his conviction and appealed to the Supreme Court against both the conviction and sentence—a 24-months prison sentence and a NIS 800,000 fine—in February 2017. Strum had also appealed, but the court did not accept their claims and rather increased their sentences.
Nochi Dankner ’s case has led to economic reforms in Israel, with the government passing regulations to increase market competition and limit pyramid-style companies.
Dankner, a former 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.
Control of IDB and its subsidiaries has since been sold to Argentinian businessman Eduardo Elsztain.
Ynet News Reuters and the Associated Press contributed to this report.