Brooklyn, NY – The former chief executive officer of Comverse Technology Inc pleaded guilty on Wednesday to securities fraud, a decade after he fled to Namibia from the United States to avoid prosecution.
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Jacob “Kobi” Alexander, the Woodbury, New York-based software developer’s founder, entered his plea in federal court in Brooklyn, after ending his fight to avoid extradition to face charges pending since 2006.
The case is one of the last open prosecutions arising from government or internal investigations of stock options backdating at over 200 companies, including Comverse, which was acquired in 2013 by former unit Verint Systems Inc.
In backdating, a company retroactively grants stock options on dates when stock prices are lower, making them more valuable. Concealing the practice through improper accounting is illegal, and can inflate earnings.
Alexander, 64, told U.S. District Judge Nicholas Garaufis that he and others at Comverse used “hindsight” to select the effective dates for granting stock options.
“I deeply regret having participated in this conduct,” Alexander said.
Garaufis scheduled Alexander’s sentencing for Dec. 16. Bail conditions have yet to be determined. Alexander faces up to 10 years in prison.
Prosecutors say the Israeli-born Alexander fled to Namibia in July 2006 after learning that charges were likely.
Before he disappeared, Alexander transferred $57 million to Israel, fueling speculation he may have fled there. He later turned up in the Republic of Namibia, where he was briefly detained by local authorities but thereafter was allowed to freely live with his family while fighting extradition.
Over the years, Alexander bought a home in Namibia and invested in local businesses. There were reports that he flew in hundreds of people for his son’s bar mitzvah and that he took up charitable causes in the capital city of Windhoek.
He returned to the United States voluntarily after prosecutors let him plea to just one of the 35 counts he faced.
Alexander had been charged along with William Sorin, Comverse’s general counsel, and David Kreinberg, its finance chief, for what prosecutors called a fraudulent scheme to reap millions of dollars from backdating between 1998 and 2001.
Sorin pleaded guilty and was sentenced to one year in prison, while Kreinberg was spared prison after pleading guilty.
The case is U.S. v. Alexander, U.S. District Court, Eastern District of New York, No. 06-cr-00628.
Chillul Hashem. Don’t do the crime if you don’t want to do the time.
Why flee to Namibia of all places? Does he have family there?
I suspect that bad economic times as we had a few years ago stresses fraudulent schemes and we see more cases like this. When the economy is good, people like this are harder to find.