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It takes chutzpah to allegedly scam a company out of millions of dollars, flee the country, and then sue your former employer for $72 million in severance and past compensation. But that’s just what Jacob “Kobi” Alexander is trying to do, from a comfortable perch in Namibia. The company, Comverse Technology Inc., is fighting back. Last month, Dickstein Shapiro partner Howard Schiffman, who is working for a special Comverse committee assigned to investigate Alexander’s actions, filed suit against Alexander in New York State Supreme Court, claiming fraud and breach of fiduciary duty. The suit also targets another of the company’s former executives, who has already plead guilty to fraud stemming from backdating company stock options, and will seek at least $150 million in damages from Alexander, the former CEO of Manhattan-based Comverse. The suit (and a countersuit filed by Alexander on Jan. 25) is just the latest batch of work stemming from the backdating scandals of the past two years. In this case, Dickstein Shapiro is getting the benefit: “It’s the largest securities case we’ve had in a long time,” says Richard Leveridge, Dickstein’s Washington managing partner. Schiffman says Dickstein has used 70 attorneys on the case and has pulled in lawyers from other practice areas to help the 40-member securities team with the workload. The Securities and Exchange Commission and the Justice Department have conducted investigations. And Dickstein mounted an internal investigation for the company that involved more than 180 interviews of current and former Comverse employees and a review of more than 2 million documents (which Dickstein then reported to the SEC), according to SEC filings by the company. Dickstein New York securities partner Daniel Horwitz focused on the Justice investigation, and Schiffman oversaw the relationship with the SEC. New York partner Ira Kotel handled corporate governance issues. Schiffman, Horwitz, Washington partner Eric Bensky, and Robert Higgins, head of Dickstein’s litigation practice, are working on litigation against Alexander and the two other Comverse execs. “I couldn’t imagine finding a more intellectually satisfying case. This has everything,” says Schiffman, head of the firm’s securities practice, who also oversaw Comverse’s internal investigations. “The complexity of the accounting issues — not to mention Kobi off somewhere in Africa — make for interesting work.” NAMIBIA PHILANTHROPIST Alexander has been fighting extradition to the United States, while living the life of a philanthropist in his new town of Windhoek, Namibia. But he’s not been out of touch. On Jan. 25, his lawyer, Robert Morvillo, a partner at New York’s Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer filed suit asking for the severance and back pay. Along with his wife and two children, Alexander fled the United States in summer 2006, shortly before he was indicted in the U.S. District Court for the Eastern District of New York for allegedly backdating stock options and creating slush fund schemes that netted him $6 million. That $6 million was just a small portion of the money Alexander made on his stock in Comverse. Over a 10-year period ending in 2001, he made nearly $140 million. He’s been able to hold on to much of it. Court documents show that he funneled more than $57 million to offshore bank accounts before the government was able to freeze another $49 million. Dickstein lawyers were also able to freeze Alexander’s Manhattan real estate, which the lawyers value at approximately $30 million. Schiffman contends that Comverse will seek to dismiss Alexander’s countersuit on the grounds that he’s a fugitive and should not be able to receive payment for a job he has been indicted for doing fraudulently. White-collar lawyers, however, say Alexander’s countersuit may be allowed to continue unless he is convicted. Morvillo did not return calls seeking comment. If Alexander returns to the country, he also faces 32 criminal counts involving securities fraud, falsifying SEC filings, money laundering, wire fraud, and mail fraud brought by the U.S. Attorney’s Office for the Eastern District of New York. Two other former Comverse execs — David Kreinberg, former chief financial officer, and William Sorin, former general counsel — have pleaded guilty to securities fraud. The Justice Department and the SEC started looking into Comverse in March 2006, after the company’s board notified the feds of a possible backdating scandal, says Schiffman. �I.M. FANTON’ The feds also say Alexander created bogus accounts by using fictitious names to generate thousands of backdated options that were tucked away in a secret slush fund, dubbed “I.M. Fanton,” and awarded to employees as favors or bribes. Schiffman says the internal investigation — the final report was filed with the SEC last month — went a long way in helping investigators at Justice and the SEC. “The reason the government was able to file charges so quickly is because of the work we did,” says Schiffman. Suzanne Romajas, assistant chief litigation counsel for the SEC, did not return calls for comment. According to the company’s 8-K, filed with the SEC last month, Alexander also orchestrated fraudulent schemes by underreporting earnings from 1996 to 1999. The goal: to keep the company’s stock on a steady incline. The earnings were then used to artificially inflate profits from 2000 to 2002, when the company’s revenue was actually in decline. Schiffman says the conclusion of this report shows that Comverse, as the injured party, is due restitution. The roughly $150 million Schiffman says the company will seek comprises at least $80 million to cover the costs of investigations and about $70 million to recover losses incurred by Alexander’s activities. Schiffman adds that the funds would come from money the SEC recovered from Sorin and Kreinberg, Alexander’s $49 million in frozen funds, and the $30 million in real estate assets. Good news for Comverse: Securities lawyers say that Alexander’s exile in Namibia, which does not have an extradiction agreement with the United States, only increases the likelihood that the government will eventually disburse his money back to Comverse stockholders. “Our strategy was to save the company money by letting the government go first with its investigation,” says Schiffman. “Now we intend to get money back to our client.”
Nathan Carlile can be contacted at [email protected].

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