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Surveillance software boss thrown in the clink for cooking the books

Comverse CEO Kobi sent down for a record 2.5 years after back-dating stock options

By Shaun Nichols, 24 Feb 2017

The head of a defunct surveillance and communications software company has been given the longest-ever prison sentence for back-dating stock options.

Jacob "Kobi" Alexander will spend the next 30 months behind bars, ordered by Judge Nicholas Garaufis of the US District Court in Brooklyn, New York.

Alexander had been the CEO of Comverse Technology, a New York-based software developer that, with the backing of the Israeli government, offered both services for phone providers and surveillance tools for government and law enforcement agencies to record conversations.

The company collapsed in 2006 when the stock options scandal broke, and Alexander himself went on the run. He was later found in Namibia, and prior to returning to the US last August had spent a decade fighting extradition from the African nation.

That period on the lam was factored in by Judge Garaufis when he handed down the record sentence. He decided to tack additional time onto what the defense had hoped would be an 18- to 24-month prison term.

Alexander has already had to pay a $53m penalty, thanks to a 2010 settlement with the US Securities and Exchange Commission.

A fairly common practice in the 2000s tech world, backdating allowed companies to reward executives with more lucrative stock options by claiming the options were issued at an earlier time, thus allowing the exec to buy at a lower price when the options vested. While the backdating can be legal if properly disclosed and documented, many companies illegally worked the tactic and ran afoul of the law.

Between 2005 and 2010, big names including Apple, Juniper and Brocade were brought before the courts over their illegal backdating shenanigans. ®

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