But don’t flee justice! This is not legal advice to you, but I really don’t mean to recommend avoiding problems with federal prosecutors by going to other countries where it’s hard for those prosecutors to catch up with you. Still, there’s a back story, and I have some thoughts for someone who may have fled justice in the recent past.


First, the story (link is external): Kobi Alexander is the former CEO of Comverse Technology, Inc., a New York company that made voice-mail systems. Not Converse (link is external). Comverse (link is external). Anyway, the government alleges that for years Alexander, along with Comverse’s general counsel and CFO, would look for historical trading days when the company’s stock traded at low prices. Then they and other employees adjusted stock options to say the options had been awarded at those days’ prices. Since an option grants its holder the right to buy shares at a fixed price, the alleged manipulation scored them instant gains. The backdating added millions to Alexander’s compensation. You can do this sort of thing if you disclose it to investors, but if you disclose it, the investors sometimes ask things like, uh, why are you doing that? People don’t always like answering those questions.

A March 2006 statistical analysis by the Wall Street Journal characterized Alexander’s grants as wildly improbable. Alexander and two other Comverse executives resigned several weeks later, and over that summer, the FBI sought their arrest. The other two executives turned themselves in, but Alexander fled to Israel and then to Namibia, in western Africa. It turns out that Namibia has no formal extradition treaty with the U.S. Back in Brooklyn, a grand jury handed down a 35-count indictment charging him with, among other things, securities fraud, wire fraud and money laundering – for whisking $57 million out of the U.S. while under the FBI’s investigation. And he never came back. Instead, Alexander sort of built a life in Namibia and stayed there for ten years. It must have gotten old, because he set foot on American soil on Wednesday for the first time since his indictment, purportedly under a deal that would charge him with only one count of securities fraud.

Current Proceedings

Alexander’s arraignment and detention hearing in the U.S. District Court for the Eastern District of New York happened on Wednesday. His lawyers argued (link is external) that he should be released on a $25 million bail package because he had voluntarily returned to the U.S. when he could have stayed in Namibia forever. Judge Garaufis wasn’t having it and denied bail, saying Alexander may only have returned to assess how lenient a sentence he would receive. Alexander faces a ten-year maximum sentence, and could get something close to that given the comments from Judge Garaufis in the hearing.

How could Alexander be damaged by his prior flight? He isn’t pleading to any crimes associated with it, but still – lots of ways. The court could find him to have been an organizer or leader of “extensive” criminal activity under Section 3B1.1 of the Sentencing Guidelines. 18 U.S.C. § 3553 offers a variety of options for prosecutors to argue, and the court to find, that Alexander’s “history” and the “seriousness of [his] offense” compel a long prison sentence.

What Now

And running away to Namibia may have been bad. But I’ll tell you this: it’s not as bad as destroying evidence. Because no matter how long a fugitive from justice stays away from the United States, he can always come back. And if he does, the case can restart. The case probably hasn’t been prejudiced. Spoliation of evidence is almost certainly a lot more common than fleeing to Namibia, and it’s definitely a lot easier to conceal. And it is irreversible. One can never unring that bell. Alexander’s lawyers don’t have a lot of arrows in their quiver. But they might consider pointing this contrast out. The flight wasn’t good, but the prosecution is not in a worse place than it was in 2006.