Former Executives Of Comverse Charged With Creating A Secret Stock Options Slush Fund

Press Release, Sep 06, 2006

Washington - Three former executives of Comverse Technology Inc. ("Comverse"), a publicly-held computer software company, were charged today for their roles in orchestrating a long-running scheme to manipulate the grant of millions of Comverse stock options to themselves and to employees, the Department of Justice announced today. Former Chief Executive Officer Jacob "Kobi" Alexander, former Chief Financial Officer David Kreinberg, and former General Counsel William F. Sorin allegedly orchestrated the scheme by fraudulently backdating the options and operating a secret stock options slush fund.

The charges were announced by Deputy Attorney General Paul J. McNulty and Director of the Division of Enforcement Linda Thomsen of the Securities and Exchange Commission (SEC), joined by U.S. Attorney Roslynn R. Mauskopf of the Eastern District of New York and Acting Assistant Director James "Chip" Burrus of the FBI. The charges stem from a coordinated investigation led by the Department of Justice's Corporate Fraud Task Force.

Alexander, Krienberg and Sorin, all of whom resigned from Comverse on May 1, 2006, in the midst of an internal company investigation relating to options backdating, have been charged by criminal complaint filed in the Eastern District of New York with conspiracy to commit securities fraud, mail fraud and wire fraud. According to the complaint, between 1998 and 2002, the defendants reaped millions of dollars in profits as a result of their scheme and issued false and misleading financial statements to the company's shareholders and the investing public regarding the true value of the options grants.

"The Justice Department is determined to see that our markets operate fairly and honestly," said Deputy Attorney General McNulty. "Investors take risks and do their best to see into the future when picking companies in which to invest. We cannot allow corporate leaders to operate under different rules, using 20-20 hindsight to line their own pockets. We will continue to pursue misconduct in any boardroom where we find it." Read more at newyork.fbi.gov