Former CEO of Comverse Technology, Inc. Settles Civil Case with U.S. Attorney's Office and Forfeits Over $46 Million

Jacob “Kobi” Alexander, the former CEO of Comverse Technology, Inc. (“Comverse”), and his wife have agreed to forfeit over $46 million to the government to settle a civil forfeiture action. Comverse is a publicly held technology company located in Woodbury, Nassau County, New York, that develops and markets telecommunications software.

The settlement was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Janice K. Fedarcyk, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office.

The forfeiture action was filed in 2006 after Alexander fled the United States to Namibia in order to avoid criminal prosecution arising from a scheme he and other Comverse executives allegedly orchestrated to fraudulently backdate employee option grants. In the criminal prosecution, the October 11, 2006, superseding indictment charges Alexander with conspiracy, securities fraud, making false filings with the Securities and Exchange Commission, mail and wire fraud, money laundering, and obstruction of justice. Alexander remains a fugitive from justice and continues to fight his extradition to the United States.

In the forfeiture litigation, the government sought to forfeit two investment accounts containing over $46 million that it alleged were the proceeds of Alexander’s unlawful backdating scheme. Alexander and his wife contested the forfeiture and twice moved to dismiss the government’s complaint. Both efforts were unsuccessful, and the court ultimately struck Alexander’s claims to the accounts because he was a fugitive. Alexander’s appeal from that decision remained pending, and his wife’s claims to the accounts are pending in the district court. In this settlement, Alexander and his wife have consented to the forfeiture of the two accounts in exchange for the government’s agreement to return the forfeited funds to Comverse, the victim of the charged crimes. Comverse has committed to use the monies to settle shareholder litigation arising from the backdating scandal.

The settlement, which is subject to the court’s approval, does not affect the pending extradition proceedings in which the government seeks Alexander’s return to the United States to stand trial on the criminal charges pending against him.

“This case underscores the important role asset forfeiture plays in recovering stolen money from criminals and returning it to the victims of their crimes,” stated United States Attorney Lynch. “Alexander fled halfway around the world, but he was not able to escape the financial consequences of his crimes.” Ms. Lynch extended her grateful appreciation to the United States Securities and Exchange Commission for its assistance.

FBI Assistant Director-in-Charge Fedarcyk stated, “When Alexander’s scheme went south, he went east, thinking he could evade law enforcement by fleeing the country. However, he miscalculated the inevitable outcome of his actions and the dedication of the FBI to protect the victims of this crime.”

The government’s case was prosecuted by Assistant United States Attorneys Kathleen Nandan and Ilene Jaroslaw.


  1. So, let me see if I have this right: The CEO of Comverse, who built the company up from a penny stock, that initially went public through Stuart James & Co. (remember them?), to a stock that traded at over $100 a share, backdated some options, that the government says he gained about $50 million in excess profit.
    The government goes after Comverse and the CEO, and after 3 years, the stock is now trading around $6-7/share, sales declining, Comverse has spent hundreds of millions on internal audits and law firms to untangle the options issues, to the point where they are burning cash faster than they can earn it.
    And the government claims recovering 46 million from the CEO is a big victory?
    With help like this from the government, its no wonder the economy is in such a mess.


Post a Comment