We’ve been doing a lot of writing about backdating lately but what about the poster-child for criminal backdating fugitives, Kobi Alexander? The founder of Comverse vanished after US authorities sought to arrest him on charges related to backdating, securities fraud and bribery. He later turned up in Namibia, where he was arrested by authorities and awaits an extradition hearing in April.
Over the weekend, Bloomberg reported that Alexander has started a low-income home construction business in Namibia.
His Namibian company, Kobi Alexander Enterprises, has already developed two projects in the coastal city of Walvis Bay involving the construction of 200 houses for low-income residents, the company said in an advertisement yesterday in The Namibian, a local newspaper.
“Mr. Kobi Alexander, its founder, brings with him a wealth of business acumen,” the advertisement said. “He is the founder of Comverse Technology, the world’s leading supplier of enhanced services for telecommunications companies.”
We can only imagine how that “business acumen” line strikes the US prosecutors who have done their best to paint Alexander as the worst sort of corporate criminal.
U.S. Fugitive Starts Over in Namibia [Bloomberg in NYT]
Nope. Not that one. The other guy wanted by the Feds who was found in Namibia.
Wesley Snipes, the Hollywood action star, was taken into custody this morning and will appear before a federal judge to answer charges of tax fraud and conspiracy later today.
Wearing his signature black sunglasses, a black 2-piece suit and a blue shirt, Snipes walked through the back entrance of the courthouse at 9:30 a.m., escorted by federal agents and a prosecutor.
Snipes had an initial appearance and arraignment in front of Magistrate Gary Jones at 10:30 a.m. today. Jones released Snipes on $1 million bond and allowed him to go back to Namibia to complete filming of Gallow Walker, a motion picture Snipes is starring in. The judge orderd that Snipes come back to the states for another appearance on Jan. 10.
During the court appearance, Snipes pleaded not guilty to all the charges against him.
In an article generally praising Checkpoint Technologies CEO Gil Shwed, Shlom Greenberg writes:
Shwed is unquestionably one of Israel’s best entrepreneurs and managers. He took a technology idea, applied it, and then became the leader in the emerging sector on Main Street. Few people can do this, and he did it in a way that can hardly be compared. He is definitely a member of the same cadre as Comverse Technology Inc. (Nasdaq: CMVT) founder Kobi Alexander, the Zisapel brothers, and Retalix Ltd. (Nasdaq: RTLX; TASE: RTLX) president and CEO Barry Shaked, men who turned ideas into successful products on Main Street.
Uhm, Shlo, you mean this Kobi Alexander? One of the most famous financial fugitives in the world? That’s probably a comparison Israeli tech-chief executives can do without.
And, in related news, our little brother AboveTheLaw tells us that Wesley Snipes is apparently still a fugitive in Namibia.
Wake up call for Check Point [Globes Online]
The noose just got a little tighter around the neck of ex-Comverse CEO Kobi Alexander. The company’s former general counsel, William F. Sorin, is expected to plead guilty to charges stemming from controversially “backdated” stock options grants made by Comverse.
Under a practice now known as backdating, dozens of companies have revealed that they pegged the options to dates earlier than the date they were actually granted, making the grants potentially more valuable to recipients. Because the date fudging wasn’t disclosed to investors or tax-authorities, backdating has led to investigations and indictments by the SEC and federal prosecutors.
Sorin is the second Comverse executive to plead guilty to backdating charges. It is expected that they are cooperating with prosecutors. Federal officials currently seek the extradition of Alexander from Namibia, where the fugitive executive has been since sometime this summer. Although many companies have revealed that backdating occurred in years past, federal prosecutors seem to have focused on Comverse because high-level executives seem to have gone to extraordinary lengths to conceal the practice from shareholders and board members. ANd it probably doesn’t hurt that, everyone knows, Kobi Alexander is no where near as popular as the CEO of another famous backdating Company, Steve Jobs. That guy invented the Ipod so you totally can’t indict him.
Comverse Executive to Plead Guilty [Reuters in the New York Times]
Yesterday’s guilty plea by the former chief financial officer of Comverse Technology may help shed some light on the government’s view of criminal liability for backdating stock options. David Kreinberg is the first executive to plead guilty to backdating charges.
When the backdating scandal first broke, many observers assumed that the government would focus its attention on executives who engaged in secretive self-dealing by granting themselves in the money stock options dated to appear as if they had been granted at an earlier date. In other words, many assumed criminal liability would arise from executives who had inflated their own compensation and while hiding the real value of their options from shareholders.
And many companies who have disclosed their own backdating practices have gone out of the way to point out that the individuals approving the stock options did not directly benefit from the grants. The most prominent case of this is probably Apple, which said its CEO, Steve Jobs, “did not receive or otherwise benefit from any of the improperly granted stock options.”
But that’s not what the government is focused on in the Comverse backdating investigation.
Prosecutors claim the three men backdated stock option grants so employees could buy shares at low prices and make the maximum profit, prosecutors said. Stock options typically give an employee the right to buy a specified number of company shares at the market price on the option grant date.
Which means that federal prosecutors are not restricting their view of criminal liability for backdating to self-dealing executives. They are going after the Comverse executives for creating backdated options intended to address what Kreinberg calls “employee retention and recruitment challenges.”
Uhm, Steve Jobs, call your lawyer.
Comverse Ex-CFO Names Jacob Alexander in Guilty Plea [Bloomberg]
Prosecutors filed new charges against Kobi Alexander, former chief executive of Comverse last week, alleging that Alexander attempted to bribe an unidentified person $5 to take the blame for manipulating the timing of stock options at the company. Alexander was recently arrested in Namibia, where he had fled after being charged by US officials with criminal violations for his role in manipulating stock option grants at Comverse, including linking stock options to dates earlier than the actual date they were granted. In short, engaging in the practice that has become known as “backdating.”
In some sense, the new witness tampering and obstruction of justice charges may signal a lack of confidence on the part of government’s part with respect to the original case. Alexander is now charged with “cover up” crimes and not just the underlying offenses. This may mean that prosecutors are not sure they can prove the backdating (and other stock option manipulations) Alexander is alleged to have committed really amount to a crime. Afterall, backdating seems to have been a widespread and well-accepted corporate practice, as Apple’s recent admissions have demonstrated. But, as the world learned from Martha Stewart’s trial, just because prosecutors cannot prove the underlying conduct is not a crime doesn’t mean the cover-up won’t land you in jail.
So maybe Kobi is the next Martha Stewart. Ex-Comverse CEO charged with bribery [Reuters on Cnnmoney.com via DealBook]