CEO of FalconStor Software of Melville resigns

The chief executive of FalconStor Software Inc. of Melville has resigned in connection with "improper payments" made to a customer, and the company said it is cooperating with law enforcement investigating the payments.

ReiJane Huai, who also was president and board chairman of the company, on Wednesday "resigned from all of his positions with the company, effective immediately," FalconStor said in a statement. "The company has fully cooperated with law enforcement authorities with respect to the ongoing investigation, and it will continue to do so."

Huai's resignation followed "his disclosure that certain improper payments were allegedly made in connection with the company's contract with one customer," the statement said.

In addition, the company has formed a special committee and retained counsel to conduct its own investigation, a company statement said.

Seth Horowitz, a vice president and FalconStor's general counsel, declined to comment further. Local and federal law enforcement officials declined to say whether their agencies were investigating the situation.

The company noted among its risk factors in its second-quarter filing with the Securities and Exchange Commission that it had suffered two consecutive quarters of losses. FalconStor also cautioned that two companies, each of which had accounted for 10 percent or more of revenues, might not continue to provide that level of sales for the company.

The board accepted Huai's resignation and appointed one of its members, Eli Oxenhorn, as nonexecutive chairman of the board. It appointed James McNiel, the chief strategy officer, as interim chief executive and interim president. And the board decided to have James Weber, the chief financial officer, keep that job as well as becoming interim chief operating officer.