Jacob “Kobi” Alexander, the executive who fled to Namibia a decade ago amid allegations he masterminded a multimillion-dollar stock option fraud at his Long Island company, is expected to ask a judge to free him on a $25 million bond when he appears in federal court in Brooklyn Wednesday.
Alexander’s attorneys will ask Judge Nicholas Garaufis to allow him to post a $25 million personal recognizance bond, secured by $10 million cash and guaranteed by two family members, the attorneys, Benjamin Brafman and Jeremy Temkin, wrote in a letter to the judge Monday.
Prosecutors expect to oppose that request. Alexander “intends to make an argument for bail, which the government will oppose,” the United States attorney for the Eastern District, Robert L. Capers, wrote in letter unsealed on Tuesday.
The judge could impose a sentence ranging from no prison time to 10 years, and attorneys expect to ask for a “lenient sentence,” Brafman said in an email Tuesday.
Alexander, the former chief executive of Comverse Technology, is expected to plead guilty Wednesday to one count of securities fraud for backdating stock options. Comverse was based in Westbury when he fled the country; it later moved to Manhattan.
If he is freed on bail, Alexander will surrender his passport, limit his travel and reside in Manhattan with his wife, Hana Alexander, and their youngest child, Alexander’s attorneys wrote. The 64-year-old has no criminal record, and it “defies logic” that he would flee after agreeing to return from Namibia, his attorneys wrote.
Alexander moved to Namibia in July 2006. Federal prosecutors issued a subpoena to Comverse in May 2006. He was indicted in August 2006.
Alexander’s attorneys wrote Monday that they expect to ask for a prison term “substantially below the ten-year maximum sentence” allowed under the law. Roughly 2,270 companies have been accused of backdating stock options, but only 29 people have been prosecuted, and the longest prison term for an executive who pleaded guilty was 15 months, the attorneys wrote.
Prosecutors tend to be “extremely unforgiving” to those who flee the country, John C. Coffee Jr., a professor at Columbia Law School who focuses on white collar crime, said this week.
Backdating stock options is like “gambling on last week’s races,” since it allows executives to purchase stock at artificially low prices, Coffee said.
The practice harms companies and their shareholders, said Benjamin Kaufman, an attorney who represented shareholders who sued Alexander and other Comverse executives. The lawsuit was settled for $62 million.
Kaufman said in an email that backdating stock options undermines “the entire purpose of the shareholder-approved stock option plans — namely, to provide senior executives with an incentive to boost the company’s future profitability and value above that which exists on the grant date.”