Stock Fraud Fugitive Found in Africa

Law-enforcement officials in Namibia have arrested the former chief executive of Comverse Technology, a fugitive after being charged in August with backdating millions of the company’s stock options, the U.S. Department of Justice (DoJ) announced Wednesday.

Jacob “Kobi” Alexander was arrested Wednesday on a Namibian warrant issued at the request of the U.S. government. He was one of three former executives at the software vendor charged with conspiracy to commit securities fraud, mail fraud and wire fraud in August in U.S. District Court for the Eastern District of New York.

The three, including former Chief Financial Officer David Kreinberg and former General Counsel William F. Sorin, were accused of operating a secret stock options slush fund, issuing false and misleading financial statements, and reaping millions of dollars in profits through a scheme to backdate stock options between 1998 and 2002, the DoJ said.

The DoJ will seek Alexander’s extradition to the United States to face multiple charges, many of which were made public Wednesday: conspiracy, two counts of securities fraud, eight counts of making false filings with the Securities and Exchange Commission, four counts of mail fraud, 14 counts of wire fraud, and three counts of money laundering.

The indictment also seeks to force Alexander to forfeit about US$138 million in assets, the DoJ said.

Alexander is scheduled to appear before a court in Windhoek, Namibia, within 48 hours.

The effort to find Alexander was an “international manhunt,” U.S. Attorney Roslynn Mauskopf of the Eastern District of New York said in a statement.

If convicted of the most serious charge, securities fraud, Alexander faces a possible sentence of 25 years in prison.

The former Comverse executives were the second group to be charged in connection with options backdating. The U.S. Securities and Exchange Commission has been investigating several tech companies for irregularities in connection with granting employees stock options, a common practice in the IT industry in the late 1990s.

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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