Ex-Comverse CEO ‘Kobi’ Alexander Faces Justice: 30 Months For Fraud

BROOKLYN, NY – Jacob “Kobi” Alexander, the former Chief Executive Officer and Chairman of the Board of Directors of Comverse Technologies Inc. (Comverse), will spend the next 30 months in federal prison. Alexander, an Israeli national, was sentenced today in the Eastern District of New York for his central role in a decade-long securities fraud scheme that artificially inflated the company’s profits.

The scheme, spanning from 1998 to 2006, involved the illegal backdating of stock options. Alexander and his co-conspirators manipulated the issuance dates of Comverse stock options, awarding themselves and employees “in-the-money” options when the stock price was low. This practice bypassed proper accounting procedures, falsely boosting Comverse’s reported profits and misleading investors. As the top recipient of these fraudulently obtained options, Alexander personally pocketed approximately $30 million in paper profits.

This wasn’t just a paper crime. The fallout from the scheme was massive. Comverse, once a component stock of the S&P 500 and NASDAQ 100, saw its reputation tarnished. Alexander’s attempt to obstruct justice didn’t stop there. After the fraud came to light, he allegedly attempted to bribe a witness to provide false statements to federal investigators. Rather than face the music, Alexander fled the United States, relocating to Namibia with his family.

But running didn’t work. More than ten years after being indicted, Alexander was extradited from Namibia, finally brought to account for his actions. The 30-month sentence, announced by U.S. Attorney Robert L. Capers and FBI Assistant Director-in-Charge William F. Sweeney, Jr., marks the longest term of incarceration handed down in connection with an options backdating scheme. Alexander also agreed to pay $60 million in forfeiture and civil settlements, which will be distributed as restitution to Comverse and its shareholders.

“Today’s sentence should send a powerful message to high ranking executives that corporate rank is no shield to criminal liability,” stated Capers. “CEOs and other members of the C-suite who commit crimes will be held to account to the full extent of the law.” Sweeney added, “Kobi Alexander thought he could outwit the law… twice. This case serves as a reminder that the FBI’s reach is global.”

The investigation benefited from the cooperation of the Securities and Exchange Commission (SEC) and the Department of Justice’s Office of International Affairs (OIA). This case stands as a stark reminder that even those at the highest levels of corporate power will be pursued and punished for financial crimes, no matter how long it takes or where they try to hide.