Jacob “Kobi” Alexander, the former chairman and CEO of voicemail software maker Comverse Technology Inc. who fled to Namibia in 2006 to avoid prosecution over stock option backdating, has agreed to pay nearly $54 million to settle a civil action by the U.S. Attorney’s office.
The settlement was filed Tuesday with the U.S. District Court Eastern District of New York. Alexander has agreed to forfeit more than $47.6 million from two investment accounts _ allegedly the proceeds from a stock option manipulation scheme that also involved two other former Comverse executives. The funds will go to Comverse, which will use them to settle shareholder suits related to the backdating allegations.
Alexander also will pay a $6 million civil penalty to the Securities and Exchange Commission.
“Alexander fled halfway around the world, but he was not able to escape the financial consequences of his crimes,” Brooklyn-based U.S. Attorney Loretta E. Lynch said in a statement.
The civil settlement does not affect Alexander’s status as a fugitive, and extradition proceedings are still pending to get him back to the U.S. to stand trial for criminal charges. Namibia does not have an extradition treaty with the U.S., and Alexander has remained in the African nation fighting in court against the prospect of being sent back to the U.S.
In 2006, the SEC and federal prosecutors charged Alexander and other former Comverse executives, all of whom left the company that year, with a scheme to manipulate stock options for profit. The options’ grant dates were allegedly falsified to coincide with a low point in the stock’s value, thereby boosting the value of the stock option. The SEC alleged that Alexander also created a slush fund of backdated options by causing options to be granted to fictitious employees, and later used these options to recruit and retain key personnel. Regulators said the scheme resulted in Comverse overstating its earnings for more than a decade.
Woodbury, N.Y.-based Comverse settled charges regarding the allegations of improper backdating of stock options and other accounting problems with federal regulators last year. The company, which didn’t admit or deny guilt to the Securities and Exchange Commission, wasn’t fined.
In June, a federal judge approved a $225 million class-action settlement related to the alleged stock option backdating with the company and several former officers and directors. That agreement included a $60 million recovery from Alexander. The roughly $48 million announced today will make up the bulk of that, said Alexander’s attorney, Jeremy Temkin. The $6 million owed to the SEC will bring Alexander’s total settlement payout to $66 million.
Temkin said Tuesday that Alexander “is pleased to have resolved the SEC and civil forfeiture actions and to put these matters behind him.” He noted that, as with the other settlements, resolving these actions comes “without any admission of fault on his part.”
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