US Attorney Loretta Lynch: Alexander fled halfway around the world, but he was not able to escape the financial consequences of his crimes.
Jacob ‘Kobi’ Alexander, the former chairman and CEO of Comverse Technology, the makers of voicemail software, has agreed to pay $53.6 million to settle a civil action by the SEC for backdating stock options and misguiding investors, according to the regulator.
Alexander, who fled to Namibia in 2006 to avoid prosecution is now barred from serving as an officer or director of a public company in the US.
The settlement, which was filed on Tuesday with the US District Court for the Eastern District of New York indicated that Alexander has agreed to forfeit more than $47.6 million from a pair of investment accounts – allegedly the gains from a stock option chicanery scheme that involved two former Comverse executives, including former general counsel William Sorin. Sorin has the distinction of being the first (but not only) executive to be imprisoned for options backdating.
The funds recovered in this most recent settlement will be distributed back to Comverse and will be allocated to settling shareholder suits relating to the backdating allegations. Almost a year ago the company settled a securities class action suit related to the options scandal for $225 million ($60 million of which was recouped from Alexander). A handful of suits remain outstanding and the company could yet incur further charges. Additionally, the former CEO is set to pay $6 million civil penalty to the SEC.
‘This case underscores the important role asset forfeiture plays in recovering stolen money from criminals and returning it to the victims of their crimes,’ says Brooklyn-based US attorney Loretta Lynch. ‘Alexander fled halfway around the world, but he was not able to escape the financial consequences of his crimes.’
In 2006, the SEC and federal prosecutors charged Alexander and other former Comverse executives, who left the company in the same year, for tampering with stock options for profit. The SEC said that Alexander also designed a ‘slush fund of backdated options,’ by causing options to be given to fictitious employees, and later used these options to recruit and retain important personnel. According to regulators, this practice resulted in Comverse overstating its earnings for more than a decade.
‘Like the previous settlements of the other civil cases, the resolution of the SEC and forfeiture actions is without any admission of fault on his part,’ says Jeremy Temkin, Alexander’s attorney.
Although the settlement marks the end of civil action against Alexander for the SEC, his legal woes are far from over. The Department of Justice is pursuing a raft of criminal indictments against him for conspiracy, securities fraud and money laundering among others things.
