FBI: Kobi Alexander Offered Colleague $5m to Take the Fall

Namibian court denies bail to former Comverse chief

Jacob "Kobi" Alexander, the founder and former leader of Comverse Technologies (NASDAQ: CMVT), was denied bail last week in Namibia, whence he fled to avoid facing charges over criminal fraud related to stock options in the United States. The court also heard that Alexander apparently tried to bribe another Comverse executive to take the fall for him.

After hearing testimony for the prosecution from South Africa-based FBI agent Marlene Williams, magistrate Uatjo Uanivi denied bail to Alexander on grounds that he was likely to flee the country.

Alexander, an Israeli citizen who is a permanent resident of the United States, had pleaded that his property investments in the southwest African country, amounting to some 120 million Namibian dollars ($15.5 million), meant that he was unlikely to abscond.

Alexander and others at the voicemail-software maker based in New York allegedly backdated and millions of stock options to days when the shares were trading at lower prices, allowing executives to reap substantial gains.

The adventures of Alexander - from the time he fled U.S., authorities until his arrest last week in Namibia - have been garnering increasing exposure in recent days as well as cynical treatment by economic commentators around the world.

Take, for example, Martin Waller of the Sunda Times. Referring to Alexander's complaint about the low quality of food in his Windhoek jail cell, Waller noted it was Alexander who chose Namibia. He also told Alexander to hope that the food in U.S. jails would be better.

Colin Barr, a senior editor at TheStreet.com, included Alexander's attempt to escape the law in his weekly "The Five Dumbest Things on Wall Street" column.

Bought home through a realtor

Alexander, who was the CEO of Comverse until May, was arrested last Wendesday in the Casino Resort country club in Windhoek, the capital of Namibia. He was hiding there with his wife and three children. According to his lawyer, he was held in a jail under conditions relatively easier than usual suspects receive at least for the first night. It is unclear where he has been held since.

Alexander and his family moved to a Windhoek hotel July 28, some two weeks before the U.S. FBI declared him a wanted man. The hotel manager in an interview to Bloomberg news agency saidthat the family seemed close-knit. He also told Bloomberg that Alexander seemed very busy, glued to the television. He was particularly worred that he would not be able to watch CNN, the manager noted.

Alexander was seemingly prepared for an extended stay in Namibia. He registered his three children at the international school in Windhoek. A month ago he bought a two-story, 500 square meter home for $457,000 in a secure residential complex adjacent to the country club in Windhoek.

"The sale was handled smoothly," tells Collen Matheson, whose husband Ludwig sold the home to the Alexanders. "They were very welcoming. Some of our stuff are still stored in their garage," said Matheson. "A real estate agent carried out the sale of the hosue", said Ludwig Matheson. "We never met before the deal."

Namibian authorities arrested Alexander after a court issued a warrant at the request of the U.S. government, according to U.S. prosecutors. Alexander, who was arrested while eating with his family in the home adjacent to the Windhoek Country Club casino resort, was cooperative with the Namibian police and Interpol during his arrest.

However, he displayed nervousness when he was handcuffed, one police investigator related. "There were many people there," said the maid of one of the neighbors. "At first I thought it was guests. However, after a while, I heard the children burst out crying."

No extradition deal with the U.S.

Before he disappeared, Alexander allegedly transferred $57 million to Israel, fuelling speculation he may have fled there. The magistrate said he would reject bail for Alexander for the next 30 days, in which time the U.S. must formally submit an application for extradition.

Alexander is charged with 32 criminal counts, ranging from conspiracy to securities fraud and money laundering. If convicted, he faces up to 25 years in prison according to the U.S. Attorney's office.

The expected extradition of Alexander from Namibia raises questions because the southwest African state has no such agreement with the U.S. In order to extradite Alexander, Namibia initiated legislation. A short time before his arrest in the capital, the justice minister made a special appeal to parliament to grant approval of Alexander's extradition. Immediately afterward the arrest warrent was issued. Alexander is thus slated to be the first person ever extradited from Namibia to the U.S.

U.S. authorities seek to force Alexander to pay back $138 million, half of his fortune, which a survey by TheMarker of Israel's 500 richest people estimated to be around $250 million last year.

No bail

In a declaration he submitted to the court, Alexander said he is prepared to deposit his Israeli passport and bail of 10 million Namibian dollars - about $1.3 million - as collateral guaranteeing he would not flee the country and would appear for all future legal proceedings concerning him.

Alexander, in an open black shirt and a dark jacket, "seemed most relaxed", Namibian journalist Warner Menges of The Namibian, told TheMarker.

Menges, who is covering the story for his daily, said, "He seems much more relaxed than during last week's hearing, in which he was under the shock of spending his first night in jail."

The Windhoek Magistrate's Court in Katutura was packed. Among those attending were Kobi's sister Shaula, who is also a high-tech entrepreneur and company owner, and his wife Hanna. Several members of the press, state prosecution representatives and a battery of Alexander's three lawyers were also there.

Likewise, a delegation from the U.S. embassy was also prominent, including Marlene Williams, whom the press has identified as an agent of the FBI. Williams, who arrived from Pretoria, presented herself as assistant legal adviser of the U.S. embassy and as such is qualified in several countries in the south of the continent.

At a certain stage Williams took the witness stand and explained her request to keep Alexander under arrest and to have him extradited. She emphasized that Alexander is a fugitive of U.S. law.

"We don't have any reason to believe that he wouldn't try to flee again," she proclaimed.

Take any amount

During her testimony she revealed that after the investigation against Alexander commenced, he turned to a senior manager at Comverse and offered him a $2 million bribe if he would take the blame for what was facing Alexander.

"The manager refused and then Alexander raised his offer to $5 million. When that was rejected, he offered the executive: Take whatever sum you want. The executive refused again." She did not testify how this information was obtained, whether by wiretapping or by the executive's testimony.

One of Alexander's lawyers attempted to dismiss Williams' testimony, claiming she was passing on hearsay from the prosecution in New York.

The hearing yesterday and today just deals with the question of bail. The hearing on extradition has yet to commence. The hearing did forbid Alexander from talking to the press, though he managed to exchange a few pleasantries with Israeli journalists. One of his lawyers told TheMarker that the sub judice nature of the case means neither Alexander nor he could discuss the case in public.

According to Alexander's statement to the court, the extradition request and the international arrest warrant against him are full of technical and administrative flaws and are therefore invalid.

Alexander also claims that the decision by the Namibian judge to arrest him is full of legal flaws. In his statement he explains that he does not have U.S. citizenship and is not a resident of the U.S., and that he only holds Israeli citizenship.

Alexander claims he entered Namibia after taking a planned vacation from Israel in June 2006. He came to Namibia intending to invest there and live there and even obtained a two-year work permit. As additional evidence he points to the fact that he entered the country under his own name and that in all of his meetings with government clerks, he used his real name and did not try to hide his identity. As additional proof of the honesty of his intentions, he raised the point that he entered the country with his wife and three children, who had already begun studying in the international school in Windhoek.