Jacob “Kobi” Alexander, who was a leading light of the Israeli high-tech industry until he fled justice before being indicted for securities violations a decade ago, has agreed to return to the United States to face charges.
- End of Family Reign at Comverse
- FBI: Kobi Alexander Offered Colleague $5m to Take the Fall
- Kobi Alexander Will Be Facing Charges of Money-laundering
Alexander will plead guilty Wednesday to a one-count superseding indictment, his New York-based criminal attorney, Benjamin Brafman, said on Monday. The news was first reported by the U.S. CNBC television network.
Alexander, who had been chairman and CEO of Comverse Technology when he became enmeshed in a stock options scandal, fled to the African country of Namibia in 2006 as the scandal was unfolding and has remained there ever since, fighting off U.S. efforts to have him extradited.
However, it was revealed Monday that over the last two years Alexander’s attorneys have been in secret negotiations with the U.S. Justice Department. He was scheduled to appear before a Namibian judge on Monday morning to end the extradition proceedings there and clear the way for his return to New York
Together with Boaz Misholi and Yechiam Yemini, Alexander founded Comverse, originally known as Efrat Future Technologies, in 1982 and eventually took it public on Wall Street. A pioneer in developing voicemail technology, the company grew rapidly and at its peak was the first-ever Israeli company to win a place on the S&P 500 index.
In 2001 it had revenues of a billion dollars and net profit of $250 million. But Comverse got hit hard, like many other tech companies of that era, after the dot.com bubble burst.
Comverse’s problems were first exposed by The Wall Street Journal, which accused Alexander and other top executives of backdating stock options to give them an issue date that would increase their value to the employees who held them.
In 2006, a U.S. federal grand jury indicted Alexander on 35 counts for being the alleged mastermind behind a 15-year scheme to manipulate the value of millions of dollars’ worth of Comverse options.
Alexander was also accused of money laundering after moving millions of dollars to personal accounts in Israel, as well as bribery and witness tampering for attempting to persuade the company’s chief financial officer to accept blame for the scandal. The others indicted in the affair remained to face charges.
Other companies were also caught up in the backdating scandals, but it was one of the biggest violators. Besides leading to Alexander’s fall, Comverse itself never recovered from the affair. The company has shrunk and sold of much of its businesses, and today operates under the name Xura, which has a market cap of about $630 million.
While in Namibia, Alexander and his wife gave generously to local charities and other causes, leading to suspicions that local officials were helping him evade extradition.
And while Alexander avoided trial on criminal charges, he settled lawsuits brought by Comverse shareholders and agreed to pay $60 million to the company he founded while dropping his countersuit for $72 million in severance. Six years ago he settled with the U.S. Securities and Exchange Commission for more than $53 million.