Israeli Fugitive Tech Titan Kobi Alexander Jailed in New York

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Jacob 'Kobi' Alexander, the former Comverse Technology Inc. chief executive officer, waits for court proceedings to begin, Namibia, July 9, 2007.
Jacob 'Kobi' Alexander, the former Comverse Technology Inc. chief executive officer, waits for court proceedings to begin, Namibia, July 9, 2007.Credit: Naashon Zalk, Bloomberg

Jacob “Kobi” Alexander, the fugitive Israeli high-tech executive, has been jailed in the U.S. after a Brooklyn judge took him and his attorneys by surprise by ordering his detention after he agreed to return to the United States to face securities charges.

Alexander, who as CEO of Comverse Technology was one of the leading lights of Israeli high-tech a decade or more ago, pleaded guilty to securities fraud last Wednesday after he arrived in New York on bond following a decade as a fugitive from the law. 

But rather than being released as he and his attorney, Benjamin Brafman, had expected, U.S. District Judge Nicholas Garaufis ordered Alexander detained, calling him a flight risk.

"His intelligence and his guile are a clear indication that he can't be trusted," Garaufis said.
Benjamin Brafman, Alexander's lawyer, said he was "bitterly disappointed." It was unclear if Alexander would appeal.

Alexander, 64, had fled to Namibia in July 2006 as U.S. investigators were preparing an indictment against him and other at Comverse, which grew to a $1 billion-a-year company after inventing voicemail. Charges were announced that August against Alexander, William Sorin, Comverse's general counsel, and David Kreinberg, its finance chief.

The case was one of the last open U.S. prosecutions arising from government or internal investigations of stock options backdating at over 200 companies, including Comverse, which was acquired in 2013 by former unit Verint Systems.

Last week Alexander agreed to face charges and to post a $25 million bond pending his December 16 sentencing, which Garaufis rejected.

In backdating, a company retroactively grants stock options on dates when stock prices are lower, making them more valuable. Concealing the practice through improper accounting is illegal, and can inflate earnings.

In court, Alexander admitted he and other executives from 1998 to 2001 used "hindsight" to select the effective dates for granting options for employees, resulting in misleading statements to investors.

"I deeply regret having participated in this conduct," said Alexander, who faces up to 10 years in prison.

Extradition proceedings were still pending when Alexander reached a deal in May to return to the United States to plead guilty to the single count. He had faced 35 counts.

In court, Brafman said Alexander returned "so he would have this nightmare behind him." Alexander's effective exile forced him to attend his parents' funerals by Skype, he said.

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.

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