The first guilty plea from a Comverse executive:
Former Comverse executive admits fraud, will aid probe
October 25, 2006
BY TOM HAYS
NEW YORK -- A former executive with leading voicemail software maker Comverse Technology Inc. pleaded guilty to conspiracy and securities fraud Tuesday after agreeing to cooperate in the investigation of a scheme to make millions of dollars by manipulating stock options.
Former head of finance David Kreinberg told a federal judge in Brooklyn that he conspired with former chief executive Jacob ''Kobi'' Alexander to backdate the options and to falsify financial statements to conceal the fraud from shareholders.
''Your honor, I knew at the time that my actions and agreements with others at the company ... were wrong,'' he said.
He faces up to 15 years in prison at sentencing on Feb. 23. He also could be ordered to pay tens of millions of dollars in restitution.
Kreinberg, 41, and former senior general counsel William Sorin surrendered in August and were released on $1 million bond each. Alexander, meanwhile, became the target of an international manhunt.
Before he disappeared, Alexander, 54, an Israeli citizen and a U.S. permanent resident, allegedly transferred $57 million to Israel. He was located last month in the Republic of Namibia in southwest Africa, where he was briefly detained before being freed on bail pending a ruling on an extradition request by U.S. authorities.
In a sworn statement filed in Namibia, Alexander said he had been living openly with family in the desert country since July. After transferring $16 million from Israel to Namibian banks, he bought a $500,000 home and began investing in local business ventures, he said.
Prosecutors allege Alexander, Kreinberg and Sorin made stock options more lucrative by backdating their exercise price to a low point in the stock's value. Usually, a stock option's exercise price coincides with the market value at the time of a grant to give the recipient an incentive to drive the price higher.
''The company was in fact issuing backdated options with an exercise price lower than the fair market value on the grant date,'' Kreinberg said during his plea. ''After learning this, I agreed with the CEO and others at the company to assist them in continuing the practice.''
AP
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