Teaneck, NJ - Philanthropist Accused in Stock Scam
Teaneck, NJ - A man and two other former executives of a software company were charged with orchestrating a scheme to cheat the company of millions of dollars by manipulating stock options.
David Kreinberg, who resigned as chief financial officer of Comverse Technology Inc. amid an internal probe into accounting irregularities, made nearly $1 million through the scheme, according to a criminal complaint. And Kreinberg, who is known in Teaneck for his philanthropy to Jewish causes, allegedly helped his boss, CEO Jacob "Kobi" Alexander, cheat the company out of $6.4 million.
At first Alexander, 54, has fled the country, and a warrant was issued for his arrest. In a related action, the government seized $45 million from two investment accounts held in the United States in Alexander's name. Authorities allege that Alexander, who made a total of more than $130 million through stock options at Comverse, transferred $57 million to accounts in Israel to conceal the funds.
Now Kreinberg, 41, and Sorin, 56, of New York, surrenderd. They were arraigned before U.S. Magistrate Viktor Pohorelsky in Brooklyn, who set bail at $1 million and revoked the passports of each. Kreinberg, dressed in a maroon golf shirt and black slacks, stood stiffly next to his attorney with his arms crossed during the brief arraignment and spoke only to confirm his signature on papers that put his house up for his bail.
To his neighbors in Teaneck, Kreinberg is known as a philanthropist, giving time and money to the local Jewish community, including local synagogues and religious schools.
"He's very involved in a number of local organizations," said a family friend who asked not to be identified. "Their home is always open to organizations for fund-raisers."
Kreinberg was listed as treasurer of Yeshiva of North Jersey in River Edge.
posted by VOS IZ NEIAS @ 8/13/2006 07:31:00 PM
3 Comments:
At 7:42 PM,
Anonymous said…
A woman who answered the phone at the school gasped when told that Kreinberg had been indicted. She said there were no school officials available for comment.
Kreinberg -- who made a total of $12.6 million in options over the last 10 years at Comverse, according to authorities -- was also said to be a large benefactor to the ongoing expansion of the Teaneck Mikvah, a ritual bath. A call to the mikvah was not returned.
At 7:45 PM,
Anonymous said…
The family, which previously lived in a more modest home on Carlton Terrace, paid $1.6 million in 2001 for a Winthrop Road property, knocking down the existing house and building a stately, two-story brick colonial on a sprawling lawn.
At 7:55 PM,
Anonymous said…
The prosecution is the second nationwide resulting from a growing series of federal probes into backdating, in which options are retroactively issued to coincide with low points in a company's share price.
"By backdating these options, the defendants, in effect, gave themselves and others an opportunity to place a bet in the middle of a race,'' when stocks were trading at lower values, U.S. Attorney Roslynn Mauskopf said in a statement.
It's murky whether the backdating itself is illegal, but Kreinberg, Alexander and former chief counsel William Sorin were charged with conspiracy and mail fraud, partly for what appears to be a clumsy attempt to cover up the grants.
According to authorities, the scheme involved a secret slush fund, initially in the name of a fictitious employee, "I.M. Fanton," to park money earmarked for favored employees. But the account, which was named after "The Phantom of the Opera,'' was renamed Fargo after an employee "thought better'' of the first name, according to court documents.
Kreinberg was also accused of falsifying documents to hide the slush fund from an outside auditor.
His attorney declined comment after the hearing in Brooklyn. According to court papers, when Comverse began probing the suspicious transactions, Kreinberg and Alexander said Fargo was shut down in April 2002, with the advent of the Sarbanes-Oxley law and a more stringent enforcement environment.
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