Ex-Comverse CEO who fled to Namibia faces
U.S. fraud sentencing
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[February 23, 2017]
By Nate Raymond
NEW YORK (Reuters) - The former chief
executive officer of Comverse Technology Inc, who returned to the United
States last year after spending a decade in Namibia to avoid
prosecution, is scheduled to be sentenced on Thursday for engaging in
securities fraud.
Jacob "Kobi" Alexander, the Woodbury, New York-based software
developer's founder, is expected to be sentenced by U.S. District Judge
Nicholas Garaufis in Brooklyn, who said the former executive could not
be trusted when he pled guilty in August.
Lawyers for Alexander, 64, are seeking a sentence of no more than two
years in prison for the Israeli citizen, who has spent six months in
custody after Garaufis rejected his request for release on a $25 million
bond.
In a letter to the court, Alexander urged Garaufis to consider the "good
things" he did while living in Namibia and apologized for fleeing.
"I know I should have come back sooner but I could not bring myself to
face the consequences of my actions," he wrote.
But prosecutors in court papers argued Alexander's flight warrants a
"substantial sentence." He faces up to 10 years in prison.
The case was one of the last open U.S. prosecutions arising from
government or internal investigations of backdating of stock options 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 were lower, making them more valuable. Concealing the
practice through improper accounting is illegal, and can inflate
earnings.
Prosecutors said that from 1998 to 2001 Alexander participated in a
scheme to use hindsight to select the effective dates for granting
options for employees, resulting in misleading statements to investors.
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Fugitive U.S. millionaire Jacob "Kobi" Alexander sits with his wife
Hanna, as he awaits the start of his extradition hearing in
Windhoek, September 17, 2008. REUTERS/Stringer/File Photo
Alexander fled to Namibia with his family in July 2006 amid the
investigation, prosecutors said. Charges were announced that August
against him, William Sorin, Comverse's general counsel, and David
Kreinberg, its finance chief.
Sorin pleaded guilty and was sentenced to one year in prison.
Kreinberg was spared prison after pleading guilty.
While abroad, Alexander agreed in 2009 to pay $60 million to
Comverse in connection with shareholder litigation, and to waive
over $72 million in claims he had against Comverse.
He settled related civil government lawsuits in 2010, resulting in a
$6 million penalty by the U.S. Securities and Exchange Commission.
The case is U.S. v. Alexander, U.S. District Court, Eastern District
of New York, No. 06-cr-00628.
(Reporting by Nate Raymond in New York; Editing by Phil Berlowitz)
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