Federal court in Brooklyn, N.Y., denied bail to Jacob “Kobi’ Alexander, the Israeli fugitive who was hiding in Namibia 10 years rather than face criminal charges in millions of dollars stock-options backdating scandal .
Alexander, the founder and former CEO of Israeli high-tech company Comverse Technology, pleaded guilty Wednesday to one count of securities fraud then promptly thrown in jail by a sour judge who refused to release the fraudster on $25 million bail.
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In dismissing Alexander’s request for bail Judge Nicholas Garaufis ordered him detained, rejecting his lawyers’ arguments that their client wasn’t a flight risk. ” Spare me, I wasn’t born yesterday”, Judge Garaufisago said.
Alexander told the court, “The use of hindsight to select the date on which stock options were granted was inconsistent with representations in the company’s 10-Ks. I also knew it was illegal to make false statements in these documents and I deeply regret having participated in this conduct.”
Defense attorney Benjamin Brafman told CNBC, “We are bitterly disappointed by the judge’s ruling, but he’s the judge and I’m not.”
Alexander has returned to the US after two years of secret negotiations between the US Justice Department, the Namibian government and Alexander’s lawyers, which ended in a plea bargain agreement. Namibia has no extradition agreement with the US.
“In hindsight, Kobi Alexander will surely be worse off by having fled from U.S. justice, “explained Andrew Solomon, partner, ZAG-S&W. “But the context of his flight explains his thinking. Kobi Alexander was one of the first executives charged criminally in connection with what became the ‘stock option backdating’ scandal.”
According to Solomon, Alexander’s indictment came on the heels of the sentencings from the immediately prior “dot com” scandal, with fraudster-CEOs from that period receiving 20+ year criminal sentences (e.g., Bernie Ebbers, Jeffrey Skilling and Tim Rigas).
“Alexander may also have taken heart from the story of Marc Rich, ” added Solomon, “who fled U.S. justice, after an indictment, only to be pardoned in January 2001 by President Clinton. But the misconduct with backdating was nothing compared to what happened in the “dot com” era. As a result, when it came to criminal sentencing, most judges either imposed no jail time or just minimal sentences. Having fled from justice, Alexander will not likely see such leniency.”
