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Ex-Comverse chief turns fugitive

Options backdated by a one-armed man?

Internet Security Threat Report 2014

Former Comverse CEO Jacob "Kobi" Alexander, 54, has become the target of a worldwide manhunt.

He disappeared after being charged with fraud for a role in the firm's stock options scheme.

A warrant for his arrest was issued last week when Department of Justice officials in Brooklyn, NY, charged him and two former colleagues - Comverse CFO David Kreinberg and former general counsel William F Sorin - with conspiracy to commit securities fraud, mail fraud, and wire fraud.

Kreinberg and Sorin were arraigned in federal court and and granted bail for $1m each.

Alexander's lawyer told Bloomberg: "I've been in Hawaii. He's not in Hawaii. The last time I talked to him, he talked to me from Israel, three weeks to a month ago."

Alexander has dual American-Israeli citizenship. An Interpol notification for his immediate arrest has been issued.

The trio resigned from Comverse, the world's largest voicemail software provider, on 1 May in the midst of an internal investigation into stock option grants. Investigators accuse them of profiting from backdating options and making misleading public financial statements between 1998 and 2002.

US Attorney Roslynn Mauskopf said: "By backdating these options, the defendants, in effect, gave themselves and others an opportunity to place a bet in the middle of a race - a bet that paid off handsomely."

The DOJ's statement on the case is here.

Prosecutors also allege Alexander transferred $57m out of the US to accounts in Israel, in a "money laundering scheme". They were able to seize $45m left in US accounts.

The Comverse charges were the second to arise from the ongoing SEC probe into backdating. Alexander is the first exec to turn fugitive. Former Brocade CEO Greg Reyes is battling his case going to trial in San Francisco.

The ever-deepening stock options investigations have led one Silicon valley bigwig to describe it as a "witchhunt". NetApp CEO Daniel Warmenhoven told Business Week: "I think the government is looking to find some egregious examples [of wrongdoing] and to publicly hang people for them. That's fine. But where does it stop?

"I'm not saying the past practices were all good. But I thought the SEC's role was to build investor confidence. What they're doing right now is destroying it, and I don't see the purpose." The full interview is here. ®

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