The biggest mystery in the conviction of Nochi Dankner was how the connection between him and Itai Strum, the guy who did Dankner’s dirty work manipulating stocks, came about.
The district court judge, Khaled Kabub, convicted Dankner and Strum in 2016 of manipulating the stocks of IDB Holdings after its IPO in early 2012, but he ruled that the tie between the two developed almost coincidentally. They had found each other almost by happenstance, as far as he was concerned, even if he found in the end that they had both conspired regarding company shares.
The Supreme Court justices accepted almost all of Kabub’s findings in their entirety, and then they took an additional step.
Justices Neal Hendel, George Kara and David Mintz unanimously rejected Dankner and Strum's appeal, finding that they had worked together to manipulate IDB shares in what practically turned out to be an “IPO for friends.”
The judges were so unified in their opinion that they wrote it in unique fashion; Hendel rejected Dankner’s appeal, Kara rejected Strum’s appeal and Mintz accepted the state’s appeal to stiffen the sentences handed down by Kabub.
The justices explain in their decision that the facts do not mesh with the story of a chance encounter between Dankner and Strum, according to which each of them was acting based on purely economic motivation. Hendel explains that the success of the IPO of IDB shares were very important to Dankner.
He writes that Dankner acted with the knowledge that Strump was working IDB shares, and that Dankner moved to abet Strum by advancing the loan that Strum took with extraordinary conditions by referring a rich investor to acquire shares from Strum in order to save him – and by giving a loan to Strum after the incident.
Kara crowns each of the chapters of his analysis with a question: Was this “coincidental?”
The answer is unequivocal; Dankner and Strum weren't partners in securities fraud by chance but rather joined forces most likely at the beginning of the IPO and perhaps even earlier. Hendel describes Kabub's approach, by which Dankner and Strum started working together a half-a-day or a day after the IPO was launched as “too cautious.”
The justices not only examined Kabub’s ruling but also gained their own impressions from the evidence upon which Kabub based his decision. Hendel brings readers into the depths of the investigations room in his description of nine minutes from Dankner’s testimony, which was recorded on video. Hendel describes how Dankner was asked precisely if he had asked Strum “to manipulate the shares.” For nine minutes, Dankner refused to answer explicitly.
He remained silent. He evaded, and then he asked to consult with a lawyer. Kabub said that this exchange caused him “discomfort.” The three justices agreed with him. At this moment, Dankner’s credibility collapsed in the eyes of the court, after which the faith in the rational and economic theses, which Dankner used to justify his behavior, also collapsed like a house of cards.
The person who almost disappeared entirely from the 140-page ruling is state's witness Adi Sheleg, the man who never met Dankner but who was Strum’s point man for acquiring IDB shares.
The lower court found many problems with Sheleg’s testimony, and cast doubt on the credibility of some of it.
Kabub dedicated part of his ruling to splitting the testimony into credible and non-credible parts. It was superfluous. The justices were convinced that it was possible to convict Dankner and Strum even without the state’s witness, although they did not negate the need to try to obtain a state’s witness for the case.
The Supreme Court’s involvement in the level of punishment is a most exceptional matter. Mintz made it clear that in the eyes of the court there is a need for being tough with white collar crime because it is often committed by rational people making cost-benefit considerations. Kabub’s punishment was lenient by any measure, and therefore the Supreme Court increased Dankner’s sentence from two to three years in prison and doubled Strum’s sentence to two years.
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