EMC Israel unaware of new CEO's criminal past

EMC Israel, a subsidiary of the international data storage company EMC, announced that its chief executive of 10 years would be stepping down, and that Eyal Copitt had been appointed to succeed him.

The announcement came as a surprise to the local information technology industry: Copitt, who is relatively unknown, had been catapulted into one of the most coveted positions in the Israeli computer industry.

What neither EMC nor his former employer was apparently aware of is that Copitt had been convicted of tax offenses and served a year in jail. The tax violations were committed at a number of the 11 companies he had founded in the 1990s and the early 2000s, including manpower placement agencies for foreign workers.

Prior to his appointment to manage EMC Israel, Coppit served as regional sales manager for the Africa region at NetApp, EMC's main competitor in Israel in the area of storage services. He filled a similar position at Gilat Satcom as well, and founded a company called Ekeko Software Solutions. TheMarker IT investigated and found that at least a few of these companies were unaware of his past.

In November 2002, the Tel Aviv Magistrate's Court sentenced him to 20 months in prison, and handed down a suspended sentence of an additional 10 months. On his own admission, Copitt was convicted of failing to maintain appropriate accounting records, filing false tax reports and other offences, with the aim of avoiding about NIS 3 million in tax.

He and his codefendant, one of the companies that he founded, were found to have claimed deductible VAT expenses totaling NIS 384,849 without appropriate documentation for the expenses.

At Copitt's request to consolidate pending cases, the court also heard an additional charge against him and a second company that Copitt had founded after the first ceased operation, which was heard in the Petah Tikva Magistrate's Court.

In this case, Copitt and his company were accused of filing 13 false tax reports in 2000-2001, of issuing 81 tax receipts without paying NIS 96,000 in taxes that were included in the receipts, and of improperly deducting a total of NIS 28,000 in taxes without the required documentation to back the claim.

In total, Copitt was convicted of tax evasion of some NIS 5 million. He served one year in prison, from November 2002 to November 2003, after his sentence was shortened for good behavior.

The court documents show that Copitt had established 11 companies, in which he owned varying stakes. The defense had testified that the offences were committed after Copitt turned to the secondary loan market when one of his company's major clients defaulted on its billing debt.

At EMC Israel, Moshe Brauner is said to have stepped down following ongoing friction with the U.S. holding firm, which apparently demanded that the Israeli subsidiary trim its workforce as part of the company's world-wide employee cuts. The source believes that Brauner opposed the cuts.

An investigation by TheMarker IT found that EMC was simply unaware of Copitt's past. A senior source said the company conducted two interviews with Copitt, and quickly appointed him.

Nor did his past seem to be known to NetApp, EMC's competitor, where Copitt had been employed prior to the recent new appointment. A senior source in the company said that he had not been aware of Copitt's conviction and imprisonment, and did know about the series of placement agencies that he had founded, even though he had been involved in Copitt's hiring.

The affair was not included in the resume that Copitt submitted to the company, the source added. Over the past year Copitt had not worked at NetApp's Israeli office but at the company's branch in Dubai and was fired after just a short stint.

"Copitt's appointment took the industry very much by surprise. No one knows anything about him," says an analyst close to the affair. "There is no way that EMC know about his criminal past when he was appointed," the analyst added. "Such offences are a black flag. U.S. companies that operate in Israel try to be as transparent as possible, and they fire managers for far more minor things. They apparently didn't check his resume closely."

In this particular case there was no need for a meticulous investigation. A Google search of Copitt's name comes up with a news item from 2000 on the second page of the search results. The item reports that Copitt had been released on bail after admitting to tax evasion.

EMC is one of the most prominent companies in the IT industry. The firm's Israeli sales and services branch employs about 120 people. In addition, the international company operates a series of development centers in Ramat Gan, Kfar Sava, Netanya and Herzliya based on strategic acquisitions in six Israeli companies that the EMC acquired between 2005 and 2008 for a total investment of $425 million. The development centers in Israel are headed by Gil Shapira. The largest storage server company in the world, EMC employs 42,000 people worldwide and is traded on the New York Stock Exchange on a market cap of around $40 billion.

In a statement from NetApp, the company responded that the resume presented by Copitt (which is still held by the company) did not include certain facts. In discussions with people names as references at an Israeli high-tech company where he had been employed a few years earlier (Gilat Satcom) these details were not mentioned.

No comment was available from EMC as the paper went to press. Efforts to obtain a comment from Copitt, who is overseas, were unsuccessful.