Court: Ex-Comverse CFO to plead guilty

David Kreinberg, who left Comverse in May, is scheduled to appear in US District Court in Brooklyn before Judge Nicholas G. Garaufis to enter a guilty plea, a clerk for the judge said.

Kreinberg's lawyer could not immediately be reached for comment.

Prosecutors charge that Kreinberg, Comverse's former general counsel, William Sorin, and the company's former chief executive, Jacob "Kobi" Alexander, engaged in an options scheme that allowed them to reap millions of dollars in profits by altering the grant dates of stock option awards.

According to court documents filed in July, Kreinberg personally profited USD 1 million by exercising stock options that had been wrongly backdated.

In backdating, stock option award grant dates are manipulated in such a way that locks in a risk-free profit for the recipient. In a typical scheme, option grant dates are changed to days when a company's stock hits a low price.

Released on USD 1 million bond

Alexander and Kreinberg are also accused of creating fake names to generate hundreds of thousands of backdated options that were parked in a slush fund meant to evade the company's restrictions on options, the court documents show.

Kreinberg and Sorin had both been in plea talks with the government. The two men surrendered in New York in August, when both were released on a USD 1 million bond.

After an international manhunt, Alexander was arrested and detained in Namibia. He was released on bail by a magistrate judge there and remains free as the Namibian government mulls a recent extradition request from the United States.

Kreinberg's guilty plea would be the first in a wide-ranging investigation of past stock options practices by US prosecutors on both coasts.

So far, the government has only arrested and charged executives from New York-based Comverse and Brocade Communications Systems Inc., but others are under scrutiny for possible criminal behavior and more than two dozen executives have resigned due to the probes.