Comverse Alleges New Fraud by Ex-Chief

A new internal report commissioned by Comverse Technology could spell further legal trouble for Jacob "Kobi" Alexander, according to a report in Newsday.

Alexander, the former head of Manhattan-based Comverse, fled to Namibia in 2006 shortly before he was indicted on charges of illegally making $6 million by backdating the timing of his company stock options.

The report, filed with the Securities and Exchange Commission last week, says that not only was Alexander involved in the stock-options scheme, but he also engaged in manipulating the price of Comverse's stock through "improper accounting." Such an action might be considered securities fraud.

Alexander's attorney, Robert Morvillo, told Newsday that his client "believes the [report] contains a substantial number of inaccuracies, and he is prepared to defend himself against any [further] allegations." Morvillo previously has said that his client is not guilty of the stock-options charges.

Robert Nardoza, a spokesman for Eastern District U.S. Attorney Benton Campbell, declined to comment on the Comverse report.

Comverse also declined to comment on the report's legal implications. Mark C. Terrell, chairman, said in a statement that as a result of the report's findings, "a number of remedial measures have been or will be implemented. These measures are designed to enhance corporate governance, internal controls, training and compliance."

Alexander, who was indicted on numerous federal charges, including conspiracy and securities, mail, and wire fraud, has been fighting in Namibian courts being extradited to the United States.

According to the new report, Alexander orchestrated a fraudulent scheme to keep the company stock from either jarring declines or sharp increases by underreporting earnings from 1996 to 1999. These unreported earnings were then used to inflate the company's earnings from 2000 to 2002, a period when they were actually declining.

Over time, the report says, the company reported its correct earnings, but falsely reported them in individual years. Shareholders who bought or sold stock in a given year, however, might have done so based on false information.