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Fugitive ex-Comverse CEO pays $54 million in accord
November 23, 2010 / 6:22 PM / 7 years ago

Fugitive ex-Comverse CEO pays $54 million in accord

NEW YORK (Reuters) - Jacob “Kobi” Alexander, the fugitive former chief executive of Comverse Technology Inc, agreed to pay $53.6 million to resolve U.S. government litigation over the backdating of stock options.

<p>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</p>

Alexander is in Namibia, where he was arrested in September 2006 after a global manhunt. He has been fighting extradition following his indictment in the United States on 32 charges including securities fraud, money laundering and conspiracy.

Tuesday’s settlement resolves a Securities and Exchange Commission lawsuit, as well as a civil forfeiture action by U.S. prosecutors that covers Alexander’s wife, Hana.

It includes a $6 million fine payable to the SEC, and does not affect the government’s criminal case. The settlement requires court approval. Alexander did not admit wrongdoing.

“This case underscores the important role asset forfeiture plays in recovering stolen money from criminals and returning it to the victims of their crimes,” U.S. Attorney Loretta Lynch for the Eastern District of New York said in a statement.

“Alexander fled halfway around the world, but he was not able to escape the financial consequences of his crimes.”

Jeremy Temkin, a partner at Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer PC representing Alexander, said: “Mr. Alexander is pleased to have resolved the SEC and civil forfeiture actions, and to put these matters behind him.” He declined to comment on the extradition proceedings.

The Alexander case is one of the biggest arising from U.S. government investigations into options practices at more than 200 companies, and one of the last remaining criminal cases.

Backdating involves the retroactive grants of stock options on dates when stock prices were lower, making the options more valuable. Concealing the practice through improper accounting is illegal, and can inflate earnings and perhaps stock prices.

Under the SEC settlement filed with the U.S. District Court in Brooklyn, New York, Alexander will forfeit $26.2 million of ill-gotten gains and $21.4 million of interest, in addition to paying the $6 million fine.

He and his wife are forfeiting more than $46 million held in two bank accounts, a sum that satisfies much of the SEC settlement, court papers show.

Comverse, a New York-based software developer, agreed last December to settle an investor lawsuit over backdating for $225 million.

In connection with that settlement and related litigation, Alexander agreed to pay $60 million to Comverse and waive more than $72 million of claims against the company.

Lynch said money being forfeited will go to Comverse, for use in the shareholder litigation. A Comverse spokesman did not immediately return a call seeking comment.

The cases are SEC v. Alexander et al, U.S. District Court, Eastern District of New York, No. 06-03844; and U.S. v. All Funds on Deposit at: Citigroup Smith Barney Account No. 600-00338 held in the name of Kobi Alexander et al in the same court, No. 06-03730.

Editing by Gerald E. McCormick, Steve Orlofsky and Bernard Orr

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