Substantial evidence has been found by the Israel Securities Authority to charge the controlling shareholder of the IDB group, Nochi Dankner, for crimes related to stock manipulation, according to a report cleared for publication by state prosecutors on Monday.
Dankner is suspected of manipulating the share price of IDB Holding Corp. with the help of securities traders Itay Strum and Adi Sheleg, during a February 2012 stock offering by the company.
"This fraudulent activity was carried out with the knowledge of Dankner, at his instruction and with his financing,” the ISA said in its report.
The report claimed that Dankner initiated the fraud, and also found that he had even transferred NIS 8 million into an account controlled by Strum soon after the stock offering.
The report also stated that its conclusions were made only regarding the nature of the evidence found, and that state prosecutors will have to decide whether to indict Dankner.
Following the announcement, Dankner's office released a statement saying they were still awaiting a decision on the case by prosecutors. “We believe it will be determined that Nochi Dankner's behavior was without flaw,” the statement said.
The ISA announced on July 23 that it had concluded its investigation into Dankner and transferred the file to Tel Aviv District prosecutors. At the time, in accordance with Israeli law, the ISA did not make clear whether it had recommended that prosecutors pursue charges against Dankner or drop the case. It did, however, file a request seeking the publication of a summary of the investigation's findings after consultation and approval from Attorney General Yehuda Weinstein.
The investigation focused on a February 2012 share offering that raised NIS 321 million for IDB Holding Corp., which sits at the apex of the IDB group. Dankner allegedly enlisted Strum, who co-owns the ISP Financial Services company together with Sheleg, to use ISP and City Brokers, a financial services firm owned by Sheleg, to pump up the price of IDB Holding shares to ensure the success of the offering.
Dankner allegedly generated the financing for the stock purchases both by transferring funds to Strum and Sheleg himself and directing associates to do so as well during the trading days when the fraudulent activity is said to have occurred.
Strum and Sheleg are suspected of having pumped tens of millions of shekels into IDB Holding’s shares during the offering period.