Ex-Comverse CEO Kobi Alexander gets 2.5 years prison

Henner Frankenfeld | Bloomberg | Getty Images

Jacob "Kobi'' Alexander and his wife Hana in a 2008 file photo.

The former chief executive officer of Comverse Technology, 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 had said the former executive could not be trusted when he pled guilty in August.

Lawyers for Alexander, 64, had sought a prison term of no more than two years for the Israeli citizen, who has spent six months in custody after Garaufis rejected his request for release on a $25 million bond. Alexander is likely to be credited for the time he was held.

In a letter to the court, Alexander had urged Garaufis to consider the "good things" he did while living in Namibia and apologized for fleeing. "I know I should have come back sooner but I could not bring myself to face the consequences of my actions," he wrote.

But prosecutors in court papers countered that Alexander's flight warranted a "substantial sentence."

Alexander had faced up to 10 years in prison.

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, prosecutors said. 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.

CNBC

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