After 10 years of hiding and running from the government, Long Island businessman Jacob Alexander pled guilty to securities fraud in federal court this week. The case has spawned a new type of fear of financial crimes.
Alexander was the CEO of Comverse, the Woodbury-based tech company that helped invent voicemail. In 2006 he backdated stock options for himself and fellow employees. Doing so inflated salaries at the expense of investors, but the practice was relatively common and not necessarily illegal.
Still, a media sensation caused a unique reaction by federal prosecutors, according to John Despriet, a securities defense lawyer at Womble Carlyle. “It’s also a time of high enforcement activity because of Enron and WorldCom and all that that was going on.” Despriet says Alexander faced as much as 40 years in jail, so he fled to Namibia in southwest Africa.
Johnny Truter, a former Namibian prosecutor, says, “He lived in a very secluded area with very strict security. We know he did a lot of traveling inside the country. I mean he was here for 10 years, all the time in the world, all the money in the world. So he did travel extensively in Namibia.”
Truter was actually the district attorney assigned to force Alexander back to the U.S. to face charges. Despite this, Truter says Alexander was friendly to him and everyone else in the country. Alexander set up businesses, developed real estate and made powerful political connections.
When asked if he thought Alexander could have stayed in Namibia forever, Truter says, “Yeah, I think so. I honestly think so. I know his dad died a few years ago and he couldn’t attend the funeral. So that all adds up. I think he just wanted to go back.”
While Alexander was in exile, his colleagues and other company executives got far less jail time than initially expected. Most of the penalties amounted to hefty fines. A few got a year in jail. Alexander eventually worked out a plea deal with U.S. attorneys and returned to New York. He was hoping to get bail and be free for a few months before prison, but prosecutors fought hard and the judge denied bail.
David Hoffner is a securities lawyer who defended a related case. Hoffner says, “I think from the government’s perspective, he fled justice and in those circumstances the government is intent on bringing a person back.”
Alexander is now in federal custody in Brooklyn. He could face ten years in prison. He will be sentenced in December.
