3 Min Read
(Adds details from court proceedings)
By Nate Raymond
NEW YORK, Feb 23 (Reuters) - The former chief executive officer of Comverse Technology Inc, who returned to the United States last year after spending a decade in Namibia to avoid prosecution, was sentenced to 2-1/2 years in prison on Thursday for engaging in securities fraud.
Jacob "Kobi" Alexander, the Woodbury, New York-based software developer's founder, was sentenced by U.S. District Judge Nicholas Garaufis in Brooklyn, who criticized the former executive for trying to avoid justice for so long.
"I really don't understand how someone as brilliant and accomplished and focused and respected as you could be so incredibly, abjectly foolish to make some of the decisions you made," Garaufis said.
The sentence was above the up to two years in prison his lawyers sought, but below the 10-year maximum he faced. Alexander, dressed in brown jail clothing, said he was "truly sorry for everything I have done wrong."
"I deeply regret running away instead of dealing with the justice system like I should have," he added.
The 64-year-old Israeli citizen has been in custody since he pleaded guilty to securities fraud in August, after Garaufis rejected his request for release on a $25 million bond. He is expected to receive credit for his time in jail.
The case was one of the last open U.S. prosecutions arising from government or internal investigations of backdating of stock options at over 200 companies, including Comverse, which was acquired in 2013 by former unit Verint Systems Inc.
In backdating, a company retroactively grants stock options on dates when stock prices were lower, making them more valuable. Concealing the practice through improper accounting is illegal, and can inflate earnings.
Prosecutors said that from 1998 to 2001 Alexander participated in a scheme to use hindsight to select the effective dates for granting options for employees, resulting in misleading statements to investors.
Alexander fled to Namibia with his family in July 2006 amid the investigation. Charges were announced that August against him, William Sorin, Comverse's general counsel, and David Kreinberg, its finance chief.
Sorin pleaded guilty and was sentenced to one year in prison. Kreinberg was spared prison after pleading guilty.
While abroad, Alexander agreed in 2009 to pay $60 million to Comverse in connection with shareholder litigation, and to waive over $72 million in claims he had against Comverse.
He settled related civil government lawsuits in 2010, resulting in a $6 million penalty by the U.S. Securities and Exchange Commission.
The case is U.S. v. Alexander, U.S. District Court, Eastern District of New York, No. 06-cr-00628. (Reporting by Nate Raymond in New York; Editing by Dan Grebler and Jonathan Oatis)