Former Comverse executive to plead guilty
Comverse Technology Inc.’s former general counsel, William Sorin, will plead guilty today in the stock option backdating prosecution that has ensnared his onetime boss, fugitive Jacob “Kobi” Alexander.
Sorin would be the second Comverse executive to admit guilt in the case and might become a witness against Alexander, now in Namibia fighting extradition. David Kreinberg, the company’s former finance chief, pleaded guilty last month and implicated Alexander, former chief executive of New York-based Comverse, the biggest maker of voicemail software.
“The government appears to be working in concentric circles, moving inward and tightening the noose against the ultimate target of their investigation, Mr. Alexander,” said Charles Ross, a former federal public defender now in private practice.
Sorin is scheduled to enter his plea before U.S. District Judge Nicholas Garaufis in Brooklyn, N.Y., according to court records.
Sorin, 57, is a Harvard Law School graduate who lives in New York City, according to the U.S. attorney’s office and court papers. His lawyer, James Brochin, didn’t return a call seeking comment.
Kreinberg pleaded guilty Oct. 24 to conspiracy and securities fraud, admitting that he took part in a fraud allegedly directed by Alexander to manipulate Comverse stock option grants to financially benefit executives and other employees in the 1990s and early 2000s.
The government charged Alexander, Kreinberg and Sorin with criminal wrongdoing in a complaint filed Aug. 9.
More than 150 U.S. companies have disclosed internal or federal investigations into backdating, which entails boosting the value of stock option grants by dating them when the stock price was at its lowest in a particular period. The practice can inflate a company’s reported earnings by understating compensation expenses, and may be fraudulent if it isn’t disclosed to shareholders.
Alexander is one of two former CEOs charged criminally in the spreading scandal. The other is Gregory Reyes of San Jose-based Brocade Communications Systems Inc., who was charged in July. He has pleaded not guilty and is awaiting trial.
The cooperation of Kreinberg and Sorin could assist prosecutors in their effort to extradite Alexander from Namibia, which requires testimony from individuals with direct knowledge of a person’s alleged crimes to allow extradition.
In other developments in the backdating scandal Wednesday:
* Computer graphics chip maker Nvidia Corp. said it would restate at least three years of results to add as much as $150 million in costs from backdated stock option grants.
* Back Yard Burgers Inc. announced an internal investigation of its option practices and said it might delay filing quarterly results because of the probe.
* Dean Foods Co., the biggest U.S. milk producer, said the Securities and Exchange Commission started an informal inquiry into its option grants.
