Ex-Comverse Chiefs Charged In Options Case
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.
A former chief executive officer for Comverse Technology Inc., Jacob “Kobi” Alexander, and two other ex-company officials were criminally charged as the government intensified a crackdown on stock-option manipulation.
Prosecutors in Brooklyn, said yesterday Mr. Alexander, 54, David Kreinberg, 41, a Comverse ex-finance chief, and William Sorin, 56, a former general counsel, backdated “millions of stock options” so employees could buy shares at low prices. The former CEO hasn’t surrendered to authorities and is being sought.
More than 90 companies including Apple Computer Inc. have said they are the subject of government or internal stock option inquiries. The FBI said yesterday it is investigating 45 backdating cases. Prosecutors in the past three weeks have charged five former executives of two companies, including two ex-CEOs.
“Rest assured, Comverse will not be the last,” a former Securities and Exchange Commission lawyer now in private practice in Rockville, Md., Jacob Frenkel, said. “I think we’re likely to see a steady stream of these cases over the next six to 12 months, some criminal, some SEC civil cases.”
Mr. Alexander, who has dual American and Israeli citizenship, wired “nearly $60 million” to Israel last month from an account at Citigroup Inc.’s Smith Barney Unit containing proceeds of fraudulent stock options, the government said. It called the transfer an effort to “launder the proceeds of the fraud.” Authorities have seized $45 million from two American investment accounts in Mr. Alexander’s name, according to court papers.
The Justice Department declined to comment on Mr. Alexander’s whereabouts, saying a warrant was issued for his arrest.
“We are in the process of getting hold of Mr. Alexander,” the deputy attorney general, Paul McNulty, said yesterday at a press conference in Washington.
The former officials of New Yorkbased Comverse, the world’s largest maker of voice-mail software, were charged with conspiracy to commit securities fraud, mail fraud, and wire fraud from 1998 to 2001. The conspiracy charges are punishable by as much as five years in prison. The company wasn’t charged.
Messrs. Kreinberg and Sorin appeared in court yesterday and were formally charged. They were released on $1 million bonds secured with their residences and were ordered to turn in their passports. They will enter pleas later.
Mr. Alexander, an Israeli immigrant, founded Comverse in 1984. The ex-CEO has a degree in economics from Hebrew University and a master’s degree in finance from New York University, the government filing said.
Mr. Kreinberg is a certified public accountant and former senior manager at Comverse’s outside auditor Deloitte & Touche LLP. He has an accounting degree from Yeshiva University and a master’s in finance and international business from Columbia University, the government said.
Mr. Sorin earned a law degree at Harvard University and is a member of the New York state bar.