• United States



by Dave Gradijan

Former Comverse Exec Pleads Guilty to Backdating

Oct 26, 20062 mins
CSO and CISOData and Information Security

The former chief financial officer of software vendor Comverse Technology has pleaded guilty to two felonies in an ongoing U.S. government probe into stock-options backdating.

David Kreinberg pleaded guilty to one count of conspiracy to commit securities, mail and wire fraud, and one count of securities fraud, the U.S. Department of Justice (DoJ) announced Tuesday. The charges stem from efforts at Comverse, dating back to 1998, to backdate stock options to dates when the stock was trading at historic lows, allowing executives at the company to collect millions of dollars, the DoJ said.

In charges made public in August, Kreinberg and two other former Comverse executives were also accused of operating a secret stock options slush fund.

The conspiracy charge against Kreinberg carries a maximum sentence of five years in prison and a fine of up to $250,000. The securities fraud charge carries a maximum sentence of 10 years in prison and a fine of up to $1 million. The charges also require restitution in an amount to be determined by the court at sentencing, currently estimated at $51 million, the DoJ said.

Kreinberg was charged in U.S. District Court for the Eastern District of New York.

Separately, the U.S. Securities and Exchange Commission (SEC) settled its civil charges against Kreinberg under an agreement that requires him to pay $2.3 million in fines and bars him from practicing as an accountant before the agency.

Last month, law-enforcement officials in Namibia arrested Jacob “Kobi” Alexander, Comverse’s former chief executive officer, after a six-week manhunt for him.

The DoJ and SEC have begun investigating several tech companies for stock options backdating in recent months. In July, two former executives with storage networking vendor Brocade Communications Systems were charged with securities fraud.

By Grant Gross, IDG News Service (Washington Bureau)

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