You are on page 1of 24

Case 1:06-cr-00628-NGG Document 33 Filed 02/08/17 Page 1 of 13 PageID #: 1263

U.S. Department of Justice

United States Attorney


Eastern District of New York
JPL 271 Cadman Plaza East
F. #2006R000740 Brooklyn, New York 11201

February 8, 2017

By ECF

The Honorable Nicholas G. Garaufis


United States District Judge
Eastern District of New York
225 Cadman Plaza East
Brooklyn, New York 11201

Re: United States v. Jacob Alexander, also known as Kobi Alexander,


Criminal Docket No. 06-628 (S-1) (NGG)

Dear Judge Garaufis:

The government respectfully submits this letter in response to the defendants


sentencing memorandum (Def. Mem.), supplemental memorandum (Def. Supp. Mem.) and
sentencing letters (Def. Ltrs.), which were all filed on January 25, 2017. In his submissions
the defendant argued that a sentence of 18-24 months imprisonment, which is far below the
applicable advisory United States Sentencing Guidelines (U.S.S.G. or Guidelines), would be
sufficient to meet the statutory goals set forth in 18 U.S.C. 3553(a). In support of his position,
the defendant argued, among other things, that: (a) many other companies backdated options and
were not criminally prosecuted, (b) the defendants good works warrant a substantial variance,
(c) the defendants backdating scheme was not as serious as other securities fraud cases such as
Enron, (d) the defendants age and health warrant a substantial variance, (e) the need to avoid
unwarranted sentencing disparities requires a substantial variance and (f) the defendants flight to
Namibia warrants a modest increase to the defendants sentence of less than 6-12 months. (See
Def. Mem. pp. 1-4, 62-93.) In addition, the defendant disputes the Guidelines calculations of
both the government and the Probation Department. (See Def. Supp. Mem. pp. 1-24.) The
parties agree that the defendant faces a statutory maximum term of imprisonment of 10 years.

The government acknowledges that a variance from the advisory Guidelines may
be appropriate in this case, but respectfully submits that the sentence proposed by the defendant
of 18-24 months imprisonment would fail to meet the statutory goals set forth in 18 U.S.C.
3553(a). More specifically and as described in detail below, an 18-24 month sentence would
fail to reflect: (a) the serious nature of the offense, (b) the consequences of the defendants crime,
(c) the seriousness of defendants bad faith negotiations with the government while moving
money offshore and fleeing prosecution, (d) the need to promote respect for the law, and (e) the
Case 1:06-cr-00628-NGG Document 33 Filed 02/08/17 Page 2 of 13 PageID #: 1264

importance of general deterrence. For these reasons, the government respectfully submits that a
substantial sentence is warranted in this case.

I. Background and Procedural History

A. The Offense Conduct

The defendant was a founder of Comverse Technology Inc., (Comverse or the


Company) and served as the Companys Chief Executive Officer (CEO) and Chairman of the
Board of Directors. (See Presentence Investigation Report (PSR) 2.) From these positions
of authority and trust, the defendant directed a wide-ranging securities fraud scheme, which
involved the use of false corporate documents, fictitious employees, an options slush fund and
false statements to Comverses shareholders and the investing public. (See PSR 2-
4.) Pursuant to this scheme, the defendant and his coconspirators falsely represented, repeatedly,
that all stock options granted at Comverse had strike prices set at the market price of the
Companys stock at the time of the grant. (See PSR 2.) These representations were untrue
because the defendant and his coconspirators used hindsight to backdate options to dates when
Comverses stock was trading at low points during the relevant quarter and thereby set strike
prices below the trading prices of the stock at the time of the actual grant. (See PSR 2, 26.)
In this way, the defendant was able to award himself, his coconspirators and other Comverse
employees so-called in the money options. (See PSR 2.)

Between 1998 and 2001, every Company-wide stock option award was backdated
by the defendant and his coconspirators. (See PSR 3, 27.) The defendant received more
options than any other employee at Comverse. Between 1998 and 2001, the defendant received
more than 7 million options in company-wide grants, with a total paper profit at the time of the
grants of approximately $30 million as a result of the backdating scheme. (See PSR 3, 35, 37,
39, 41, 44, 50.) In addition, the defendant and his coconspirators set up a slush fund of options,
which the defendant could grant without getting the requisite board approvals. (See PSR 3,
59-69.) The defendant generated the options for the slush fund by submitting requests for small
options grants for phony employees using fake names. Once the options were approved, the
defendant directed that the options granted to the fake employees be stashed in a secret options
slush fund nicknamed I.M. Fanton and Fargo. (See id.)

By backdating options, the defendant and his coconspirators violated accounting


rules and caused Comverse to overstate its profits (or understate its expenses). (See PSR 4,
17.) Additionally, the backdated options also violated the terms of Comverses stock option
plans that were approved by its shareholders. (See PSR 4, 19, 72-82.) Moreover, the
defendant and his coconspirators specifically misled large institutional investors who were
opposed to any grant of in-the-money options. (See PSR 87-90.)

On or about March 3, 2006, a news reporter contacted Comverse to inquire about


its stock options grants. (See PSR 102.) Initially, the defendant and his coconspirators tried to
cover up the criminal scheme by maintaining that Alexander contemporaneously picked dates for
options grants on days he noticed a decrease in the Companys stock price and that there was
nothing wrong with picking good prices for options grants. (See PSR 102-07.) This false

2
Case 1:06-cr-00628-NGG Document 33 Filed 02/08/17 Page 3 of 13 PageID #: 1265

story, however, could not explain the existence of the Fanton/Fargo options slush fund, which
Alexander became increasingly worried about. (See Gov. Ex. A at 8-9.)1 The defendant
attempted to buy his way out of responsibility for his central role in setting up the slush fund by
offering bribes of millions of dollars to David Krienberg, the defendants coconspirator, in
exchange for Kreinberg falsely taking the blame for the slush fund and exonerating the
defendant. (See PSR 130; Gov. Ex. A at 9.) During a meeting at the defendants apartment on
or about March 11, 2006, the defendant initially offered Kreinberg a $2 million bribe and then
increased the offer to $5 million. 2 (See PSR 130; Gov. Ex. A at 9.) The defendant eventually
asked Kreinberg to name his price. (See id.) Kreinberg did not accept the defendants offer. As
he was leaving the defendants apartment, Alexander told Kreinberg not to expense the parking,
presumably to avoid creating a corporate record of their meeting. (See id.) Several days later,
the defendant again approached Kreinberg and asked him to falsely shoulder the blame, telling
Kreinberg, in substance, that it did not make sense for both of them to go down. (See id.)

On March 10, 2006, the Comverse Board of Directors formed a Special


Committee to investigate the Companys conduct with respect to options grants. (See PSR
109). Subsequent to the formation of the Special Committee, Alexander told Kreinberg, in
sum and substance, I dont care, Im not going to jail even if I have to run away. (See Gov.
Ex. A at 9.) The government does not contest that Alexander directed Comverse employees,
including employees in Israel, to fully cooperate with the Special Committees investigation.
The government understands that the defendant himself did cooperate with the Special
Committees investigation.

On March 14, 2006, Comverse publicly announced the creation of the Special
Committee to review matters relating to the Companys stock option grants, including, but not
limited to, the accuracy of the stated dates of option grants and whether all proper corporate
procedures were followed. (See PSR 113; Gov Ex. B.) The Company also publicly disclosed
that management believed that the Company would have to restate its financials. (See id.) That
same day, Comverse stock lost more than 14.75 percent of its value. (See PSR 113.) This
decline represented a loss of more than $800 million to shareholders.3 On or about April 17,

1
The government respectfully requests to file Government Exhibit A under seal. This
exhibit is an investigative report of statements made to the government by David Kreinberg.
This report includes statements about uncharged individuals and entities. To avoid prejudicing
these individuals and entities, the government requests to file the report under seal.
2
The defendant asserts that [g]iven Mr. Alexanders state of mind at the time, we are
not in a position to reconstruct the conversation in question with precision. While Mr.
Krienberg wrote a letter on behalf of the defendant in support of leniency (see Dft. Ltrs. at Ex.
9), Mr. Krienberg stands by his account of the defendants attempted bribery.
3
The March 13, 2006 closing price of $29.15 minus the March 14, 2006 closing price of
$24.85 multiplied by the number of outstanding shares of stock of 202,004,846 equals a total loss
to shareholders of $868,620,837. Government economists who have performed event studies
have found that the loss caused by the public disclosure of the options backdating investigation
may have been greater than 14 percent of the companys market capitalization.

3
Case 1:06-cr-00628-NGG Document 33 Filed 02/08/17 Page 4 of 13 PageID #: 1266

2006, the Company publicly confirmed that it was going to have to restate its financial
statements for several years as a result of the backdating scheme.4 (See PSR 113.) On or about
February 1, 2007, Comverse was delisted from NASDAQ. (See Gov. Exh. D.)

B. The Defendants Flight from Prosecution

Until June 2006, the defendants primary residence was in New York, where he
was employed, owned property, and sent his children to school. (See PSR 131.) On or about
June 21, 2006, the defendant and his family travelled to Israel. (See id.) On or about July 10,
2006, while the defendant was in Israel, prosecutors met with the defendants lawyers at the U.S.
Attorneys Office. (See id.) The defendants lawyers expressed, among other things, a desire to
engage with the line prosecutors and supervisors in a discussion of the facts of the case and the
defendants purported defenses, in an effort to persuade the Office, among other things, not to
charge Alexander for the backdating scheme. It was apparent at this time that such charges were
likely to be brought.

On or about July 12, 2006, prosecutors called the lead attorney for the defendant
and advised him that the government was aware that the defendant was in Israel and that the
government would not engage in any furtherer discussions unless the defendant returned to the
United States. (See id.) The lead attorney stated that he intended to contact the defendant with a
view toward returning him to the United States for the duration of negotiations with the
government. The lawyer further requested that the defendant be allowed to self-surrender rather
than undergo an arrest if charged. (See id.) The government only agreed not to arrest the
defendant at the airport upon his arrival into the United States. (See id.) Two days later, on or
about July 14, 2006, the defendant wired $23 million out of the United States to a bank account
in Israel. (See PSR 133.)

On or about July 20, 2006, the defendants lead lawyer advised the government
that the defendant had agreed to return to the United States on July 28, 2006. (See PSR 132.)
Based on this representation, the prosecution team and senior executive staff of the U.S.
Attorneys Office and the defendants lawyers scheduled a meeting for July 31, 2006. (See id.)
Four days after the defendants counsel informed the government of Alexanders purported
intention to return to the United States, Alexander wired $14.7 million out of the United States to
banks in Israel. (See PSR 133.)

On July 26, 2006, one of the defendants lawyers sent a letter to the government,
which confirmed that the defendant was returning to New York on El Al flight number 1,
arriving into John F. Kennedy International Airport on the morning of July 28, 2006. The next

4
Comverses stock price continued to decline. On April 17, 2006, the closing price was
$23.31. Overall, the average closing price for Comverse stock for the three months preceding
the announcement of the options investigation was $27.50. The average closing price for
Comverse stock post-dating the announcement of the investigation was $23.013. This
represented a loss of $906,395,744 to shareholders. (See List of Comverse Closing Prices, Gov.
Exs. C-1 and C-2.)

4
Case 1:06-cr-00628-NGG Document 33 Filed 02/08/17 Page 5 of 13 PageID #: 1267

day, on or about July 27, 2006, the defendant wired approximately $11.4 million out of the
United States to a bank in Israel. (PSR 133.)

As of July 27, 2006, the defendants lawyers believed Alexander was still coming
to the United States the next day. One of the defendants lawyers contacted the government and
requested that border authorities not single out the defendant upon his arrival in New York for a
search beyond normal procedures. However, on July 28, 2006, the government determined that
the defendant had not boarded his flight to New York. (See PSR 132.) When prosecutors
informed the defendants lawyers, they indicated their surprise. Subsequent investigation
determined that, instead of flying to the United States on July 28, the defendant had flown to
Frankfurt, Germany the day before, on July 27 and then subsequently to Namibia. (See id.) On
or about July 31, 2006, the government obtained an arrest warrant for Alexander based on a
complaint.

In total, the defendant wired more than $49 million out of the United States
during the time period when the defendants lawyers were negotiating his return to the United
States from Israel. (See PSR 133.). In addition, on July 31, 2006, the day that the defendants
lawyers were scheduled to meet with the government, the defendant attempted to transfer another
$12 million from the United States to Israel. (See PSR 134.) This transfer was, however,
thwarted because, having learned of the defendants failure to return to the United States, the
government obtained an order seizing his bank accounts. (See id.)

C. The Defendants Extradition

On September 20, 2006, a grand jury returned an indictment that charged the
defendant with 32 counts arising from his involvement in the backdating scheme, including
securities fraud, wire fraud, mail fraud and money laundering. On or about September 27, 2006,
the defendant was arrested in Namibia based on a Provisional Arrest Warrant issued in
connection with this case. (See PSR 135.) The defendant was originally denied bail and was
held in custody in Namibia. (See id.) By sworn affidavit, dated October 2, 2006, the defendant
made his case for bail. He noted that since his arrival to Namibia in late July 2006, he, among
other things, (a) transferred N$120 million from Israel to banks in Namibia, (b) purchased a
home in Namibia worth N$3.8 million where he resided with his wife and children, (c) invested
approximately N$11 million in various business ventures in Namibia with Namibian citizens as
his business partners, (d) entered into a strategic equal partnership with [a] well known
Namibian business personality, (e) purchased additional properties for business purposes, (f)
purchased properties to build low cost housing for low income earners in Namibia, and (g) paid
off N$5.9 million in debt for a company entirely owned and staffed by previously
disadvantaged Namibians. In addition, the defendant noted that he was in the process of
negotiating and considering various other business opportunities concerning low cost housing
and tourism. Alexander did not describe any ties to Namibia that predated his arrival in late
July 2006. Alexander was subsequently granted bail pending extradition and remained in
Namibia for ten years. (See PSR 135.)

On October 11, 2006, a grand jury returned a superseding indictment that charged
the defendant with 34 counts, adding obstruction of justice and witness tampering counts to the

5
Case 1:06-cr-00628-NGG Document 33 Filed 02/08/17 Page 6 of 13 PageID #: 1268

previously charged offenses. Ultimately, to resolve this matter, the government and defense
counsel engaged in negotiations, which resulted in the plea agreement. Pursuant to the
agreement, the defendant waived his right to an extradition hearing only as to count two of the
superseding indictment, which charged him with securities fraud, in violation of Title 15, United
States Code, Sections 78j(b) and 78ff. On or about September 22, 2016, the defendant was
ordered extradited by a Namibian court to the United States on count two of the superseding
indictment. (See PSR 136.)

D. The Defendants Guilty Plea

On August 24, 2016, Alexander pleaded guilty to a single-count superseding


information that charged him with committing securities fraud, in violation of Title 15, United
States Code, Section 78(j)(b). During his allocution, the defendant admitted to his role in
backdating options and making false statements to shareholders.

II. Applicable Law

In United States v. Booker, the Supreme Court held that the Guidelines are
advisory and not mandatory, and the Court made clear that district courts are still require[d] ...
to consider Guidelines ranges in determining sentences, but also may tailor the sentence in light
of other statutory concerns. 125 S. Ct. 738, 743 (2005); see 18 U.S.C. 3553(a). Subsequent to
Booker, the Second Circuit held that sentencing judges remain under a duty with respect to the
Guidelines ... to consider them, along with the other factors listed in section 3553(a). United
States v. Crosby, 397 F.3d 103, 111 (2d Cir. 2005). Although the Court declined to determine
what weight a sentencing judge should normally give to the Guidelines in fashioning a
reasonable sentence, the Court cautioned that judges should not return to the sentencing regime
that existed before 1987 and exercise unfettered discretion to select any sentence within the
applicable statutory maximum and minimum. Id. at 113.

Later, in Gall v. United States, the Supreme Court elucidated the proper procedure
and order of consideration for sentencing courts to follow: [A] district court should begin all
sentencing proceedings by correctly calculating the applicable Guidelines range. As a matter of
administration and to secure nationwide consistency, the Guidelines should be the starting point
and the initial benchmark. 552 U.S. 38, 49 (2007) (citation omitted). Next, a sentencing court
should consider all of the 3553(a) factors to determine whether they support the sentence
requested by a party. In so doing, he may not presume that the Guidelines range is reasonable.
He must make an individualized assessment based on the facts presented. Id. at 49-50 (citation
and footnote omitted).

III. Guidelines Calculation

The PSR calculated a Guidelines range of 120 months, due to the statutory
maximum sentence. (See PSR Add. 200). Absent the statutory maximum, the Probation

6
Case 1:06-cr-00628-NGG Document 33 Filed 02/08/17 Page 7 of 13 PageID #: 1269

Department calculated the defendants Guidelines as 360 months to life imprisonment,


predicated on the following calculation:5

Base Offense Level ( 2B1.1(a)(1)) 07


Plus: More than $25 Million Loss ( 2B1.1(b)(1)(L)) +22
Plus: Substantial Financial Hardship ( 2B1.1(b)(2)(B)) +04
Plus: Sophisticated Means ( 2B1.1(b)(10(C)) +02
Plus: Officer of Public Company ( 2B1.1(b)(19)(A)(i)) +04
Plus: Role Enhancement ( 3B1.1(a)) +04
Plus: Obstruction of Justice ( 3C1.1) +02
Adjusted Offense Level 45

The Probation Department did not give the defendant any credit for acceptance of
responsibility. (See PSR 164.) The defendant is a first time offender and has zero criminal
history points, which corresponds to a criminal history category of I.

In the plea agreement, the government also estimated a Guidelines range of 120
months, predicated on the following calculation using the 2002 Guidelines manual:

Base Offense Level ( 2B1.1(a)) 06


Plus: Loss amount ( 2B1.1(b)(1)(M)) +24
Plus: More than 50 victims ( 2B1.1(b)(2)(B)) +04
Plus: Abuse of Position of Trust ( 3B1.3) +026
Plus: Obstruction of Justice ( 3C1.1) +02
Minus: Acceptance of Responsibility ( 3E1.1(b)) -03
Adjusted Offense Level 35

This offense level corresponds to Guidelines range of imprisonment of 168-210


months, but again, due to the statutory maximum sentence, the effective Guidelines range was
estimated to be 120 months. The government stands by the Guidelines calculation set forth in
the plea agreement with the following modifications.

First, the government does not believe the victim enhancement applies. This is
due to the manner in which loss has been calculated in this case. The Guidelines define a
victim as any person who sustained any part of the actual loss determined under subsection
(b)(1) [the loss table]. (U.S.S.G. 2B1.1, application note 3(A)(ii).) In this case and the

5
Probation used the 2016 Guidelines Manual.
6
The two-level abuse of trust enhancement undoubtedly applies to the instant offense
conduct. As the CEO and Chairman of the Board of Directors, the defendant occupied a position
of private trust which he used in a significant way to facilitate the commission of the offense.
See U.S.S.G. 3B1.3, application note 1. The omission of this enhancement in correspondence
with the Probation Department was inadvertent. I have conferred with defense counsel and they
concede that the enhancement should be included in the defendants Guidelines calculation.

7
Case 1:06-cr-00628-NGG Document 33 Filed 02/08/17 Page 8 of 13 PageID #: 1270

cases of the defendants coconspirators, loss has been predicated on the discounts received
due to the back-dated options by the number of back-dated options actually exercised at the
various discounts. (PSR 139.) In other words, loss was based on the in-the-money portion
of the backdated options that were actually exercised, which equaled more than $51 million.
This $51 million represented a loss to the Comverse corporate treasury, which was entitled to
receive the fair market value of the options granted. (See PSR 139.) The individual
Comverse shareholders were not entitled to receive any portion of the $51 million. Thus, under
this calculation of loss, Comverse is the only victim under the Guidelines and the
enhancement set forth by U.S.S.G. 2B1.1(b)(2)(B) cannot be applied.

Second, the government acknowledges that the Probation Department properly


included a two-level enhancement under U.S.S.G. 2B1.1(b)(8)(C) for the use of sophisticated
means. (See PSR 157.) However, this enhancement was not included in the plea agreement
estimate or in either of William Sorins or David Kreinbergs Guidelines calculations during
their respective sentencings. For the sake of consistency in the application of the Guidelines
in this case, the government will not object to the exclusion of this enhancement at sentencing.
In that event, the government respectfully submits that the defendants applicable offense level
is 31 with a corresponding Guidelines range of 108-135 months imprisonment.

The defendant objects to this calculation in several respects. Of most


significance, the defendant objects to the loss calculation of $51 million. (Def. Supp. Mem. at
6-12.) The defendant argues that there is no way to clearly calculate loss in options backdating
cases (id. at 7), the loss is unrelated to the criminal conduct (id. at 7) and the loss calculation
is indeterminate and unreliable (id. at 10). As an initial matter, and as the defendant
recognizes, on two previous occasions, the Court has determined that the loss caused by the
defendants securities fraud scheme was $51 million. (See Sentencing Tr. for William Sorin
and David Kreinberg.) The Guidelines do not require the Court to calculate loss with exact
precision; [t]he court need only make a reasonable estimate of the loss. (U.S.S.G 2B1.1,
application note 2(C).) The government respectfully submits that $51 million is a reasonable
estimate of loss in this case.

To be consistent with the Guidelines methodology used at the sentencings of the


defendants coconspirators, the government does not rely on the losses sustained by
Comverses shareholders after the defendants scheme came to light, which totaled hundreds
of millions of dollars as described above. Instead, the $51 million represents the amount
Comverses treasury should have been paid had the executed options been granted at the
money, as had been falsely represented by the defendant as part of his scheme. The defendants
argument that this loss amount was unrelated to the defendants criminal scheme is plainly
wrong. While backdating options in and of itself is not legal, the defendants secret backdating
of options as part of his fraudulent scheme was illegal, and therefore the actual loss sustained
by the Comverse treasury was related to the defendants criminal conduct.7

7
To the extent the defendant suggests that loss under the Guidelines should be limited to
the defendants personal gain (Def. Supp. Mem. at 7), the government notes that the loss
calculation should include: all reasonably foreseeable acts and omissions of others in

8
Case 1:06-cr-00628-NGG Document 33 Filed 02/08/17 Page 9 of 13 PageID #: 1271

The defendant also objects to the application of the obstruction of justice


enhancement on the basis that the conversations between the defendant and Kreinberg were
at worst . . . brief idle chatter between two long-time friends and colleagues[.] (Def. Supp.
Mem. p. 20). The government respectfully disagrees. Kreinberg, who knew the defendant well,
understood the defendants offer to be serious, which is corroborated by the defendants
instruction to Kreinberg to not expense his parking, which would have created a record of the
meeting. The fact that Alexander encouraged Comverse employees to cooperate with the Special
Committee after Kreinberg did not accept his bribe offer is of little value to the analysis. The
cases cited by the defendant, which involve defendants who called government witnesses
disparaging names, can be easily distinguished from the facts present here where the defendant
unsuccessfully attempted to buy his way out of trouble with multiple offers of millions of dollars.
(See U.S.S.G. 3C1.1, application note 4(a).)

In addition, the government does not believe that the defendants flight to
Namibia technically triggers the obstruction of justice enhancement because there was no arrest
warrant in place at the time of his flight. However, the defendants false statements to law
enforcement officials through his lawyers concerning his intent to return to the United States
from Israel significantly impeded an official investigation of the instant offense insofar as the
government delayed charging the defendant to engage in good faith discussions with his counsel.
Charges brought while the defendant was in Israel would have been a basis for an Interpol Red
Notice, which could have prevented the defendants flight from prosecution. The government
respectfully submits that the defendants bad faith representations to the government are an
independent basis to impose the enhancement. (See U.S.S.G. 3C1.1, application note 4(g).)

furtherance of the jointly undertaken criminal activity, all acts and omissions that were part of
the same course of conduct or common scheme or plan as the offense of conviction and all
harm that resulted from the acts and omissions [described above] and all harm that was the object
of such acts and omissions. U.S.S.G. 1B1.3(a)(1)(B), (2) and (3). Moreover, the defendants
claim that there would be no loss enhancement under a personal gain methodology because the
defendant did not exercise any of the options identified in the Superseding Indictment is
wrong. Up until January 2006, prior to public disclosure of the defendants criminal scheme, the
defendant exercised more than 4 million options for a total value in excess of $150 million. To
the extent the market value of Comverse stock was fraudulently inflated, the defendant
personally benefited by exercising options and selling stock while simultaneously concealing his
scheme from the investing public. In January 2006 alone, the defendant exercised more than
250,000 options for a total value of $7,455,766. The 14 percent market inflation from the
scheme suggested by the March 13-14, 2006, price decline would result in more than a $1
million benefit to the defendant solely in connection with his January 2006 options exercises. A
more conservative 10 percent market inflation still results in more than a $700,000 personal
benefit to the defendant for this one-month period. The defendant conducted this scheme over
the course of years and exercised more than two million options during the charged time period
between January 1998 and March 2006.

9
Case 1:06-cr-00628-NGG Document 33 Filed 02/08/17 Page 10 of 13 PageID #: 1272

IV. The Sentencing Factors

The government respectfully submits that the sentencing factors set forth in 18
U.S.C. 3553(a) warrant a substantial sentence in this case.

A. Nature and Circumstances of the Offense

Far from being a minor or technical offense, the core of the defendants criminal
conduct is rather simple: he knowingly lied to shareholders over and over again. The defendant
repeatedly told the Companys shareholders and the investing public that all stock options
granted at Comverse had strike prices set at the market price of the Companys stock at the time
of the grant. These statements were lies because, as the defendant knew at the time, he and his
coconspirators used hindsight to backdate options to dates when Comverses stock was trading at
low points during the relevant quarter and thereby set strike prices below the trading prices of the
stock at the time of the actual grant.8 In this way, the defendant was able to award himself, his
coconspirators and other Comverse employees so-called in the money options. While
backdating options in and of itself was not illegal, lying to shareholders and the investing public
about backdating options was plainly illegal. The good and decent man portrayed in the
defendants sentencing submissions undoubtedly had both the intellect and moral compass to
know that what he was doing was both criminal and wrong, and yet he persisted in his lies and
fraudulent scheme for years. The defendants attempts to minimize the seriousness of the
offense are unavailing. (See Def. Mem. at 75-80.) At its heart, secret backdating of options is a
transfer of power and wealth from shareholders. (See Fried, Jesse, Options Backdating and Its
Implications, 65 Wash. & Lee L. Rev 853, 863 (2008).9 The defendants actions resulted in the
overstatement of income in the companys public filings, which required a massive investigation
and years of financial restatements, which ultimately led to the company being delisted from the
NASDAQ stock exchange. Shareholders lost hundreds of millions of dollars as a result of the
defendants scheme coming to light. Countless people were thus harmed directly and indirectly
by the defendants criminal scheme.

8
In his sentencing submission the defendant makes the point that it would be misleading
to imply that Mr. Alexander and Mr. Kreinberg selected the as of dates at a time when the in
the money value of the options were at their height. (Def. Mem. p. 54 n. 14.) This is true. As
recounted by Mr. Kreinberg to the government, the defendant explained to Mr. Kreinberg that he
did not select the lowest strike price because he did not want to be a chazir (Hebrew for pig) in
case anyone looks back. (See Gov. Ex. A at 4.)
9
The fact that many other companies may have been committing the same crime should
not weigh in favor of leniency; widespread criminal conduct does not typically result in leniency
for non-white collar crimes and it should not here. Moreover, the fact that the financial crisis
began in 2007 may have contributed to the shift in focus for the government that the defendant
relies on to argue for leniency.

10
Case 1:06-cr-00628-NGG Document 33 Filed 02/08/17 Page 11 of 13 PageID #: 1273

B. History and Characteristics of the Defendant

The defendant is undoubtedly smart and hard-working. He has been blessed with
a loving family and has been a good friend to many, as reflected in the numerous letters
submitted to the Court. (See Def. Ltrs. Exs. 1-88.) The government has no basis to contest these
aspects of the defendants history and characteristics. The defendant rightly wants credit for
building an extraordinary company; but at the same time, he needs to accept responsibility for
causing the Companys ruin. Tellingly, the defendant to this day blames the Companys demise
on the lawyers hired by the Special Committee who destroy[ed] the core of the company[.]
(Def. Ltrs. Ex.1 at p. 12.) The defendant is, of course, wrong. The defendants own lying and
scheming were the root causes of Comverses demise and of the collateral consequences that
flowed therefrom to the Companys shareholders and employees.

Furthermore, when his criminal scheme came to light, the defendant attempted to
bribe David Kreinberg with millions of dollars to escape responsibility for the Fanton/Fargo
options slush fund, at the very least. When that did not work, the defendant used his lawyers to
negotiate with the government in bad faith (unbeknownst to the lawyers at the time) while he
moved tens of millions of dollars out of U.S. bank accounts to an Israeli bank (PSR 133) and
then fled to Namibia to avoid U.S. prosecution. The defendant remained in Namibia for ten
years and every day he was there he made a choice to avoid this Court. To the extent the
defendants flight was motivated by the fear of a draconian multi-decade sentence (see Def. Ltrs.
Ex. 1), that fear should have been assuaged by May 2007 at the latest when this Court sentenced
the defendants coconspirator, William Sorin, to a one-year term of imprisonment. The
defendant, however, chose to remain in Namibia for another nine years until he could return to
the U.S. on terms agreeable to the defendant. In light of his decision to delay facing justice, the
government respectfully submits that defendants argument for a variance based on his advanced
age should receive little to no weight. Furthermore, the government respectfully submits that
while the Court should consider all of the good things in the record about the defendants history
and characteristics, the defendants decisions to lie to his lawyers, deceive the government, move
his money out of the country, flee prosecution and remain abroad for ten years weigh in favor of
a substantial sentence.

C. Promote Respect for the Law

The defendants actions have demonstrated a palpable and public lack of respect
for the law. He used esteemed counsel to dupe the government and buy himself time to make his
arrangements to flee prosecution. He remained abroad, under indictment, for ten years, until he
could arrange to return on terms that were acceptable to him. The defendant now asks for
leniency on the basis that he fled only because he was scared to go to jail and be separated from
his family during his incarceration. However, that fear applies to almost every defendant who
stands before the Court for sentencing. A substantial sentence is necessary to promote respect
for the law from this defendant and other defendants who will appear before the Court in the
future, and who may be weighing the costs and benefits of fleeing prosecution so they too can
remain with their families rather than face the prospect of incarceration.

11
Case 1:06-cr-00628-NGG Document 33 Filed 02/08/17 Page 12 of 13 PageID #: 1274

D. Adequate General Deterrence

The government respectfully submits that specific deterrence is not a significant


factor in this case. However, the defendant was the CEO and Chairman of the Board of
Directors of a publicly traded company and the need to deter senior executives from engaging in
fraud weighs in favor of a substantial sentence. Because economic and fraud-based crimes are
more rational, cool and calculated than sudden crimes of passion or opportunity, these crimes are
prime candidates for general deterrence. See, e.g., United States v. Martin, 455 F.3d 1227,
1240 (11th Cir. 2006) (quoting Stephanos Bibas, WhiteCollar Plea Bargaining and Sentencing
After Booker, 47 Wm. & Mary L. Rev. 721, 724 (2005)) (internal quotation marks omitted));
United States v. Heffernan, 43 F.3d 1144, 1149 (7th Cir. 1994) (Considerations of (general)
deterrence argue for punishing more heavily those offenses that either are lucrative or are
difficult to detect and punish, since both attributes go to increase the expected benefits of a crime
and hence the punishment required to deter it.); Drago Francesco, Roberto Galbiati & Pietro
Vertova, The Deterrent Effects of Prison: Evidence From a Natural Experiment, 117 J. of
Political Econ. 257, 278 (2009) (Our findings provide credible evidence that a one-month
increase in expected punishment lowers the probability of committing a crime. This corroborates
the theory of general deterrence.).

E. Sentencing Disparities

The government respectfully submits that this factor, more than any other, weighs
in favor of a variance. The defendants coconspirator, William Sorin, was sentenced to one-year
imprisonment. Sorin can be distinguished from the defendant in significant ways. Sorin pleaded
guilty to conspiracy, which carried a five-year statutory maximum sentence, whereas the
defendant pleaded to securities fraud with a ten-year statutory maximum sentence. Sorin was
less culpable than the defendant insofar as Sorin was not involved in the Fanton/Fargo options
slush fund and was not CEO and Chairman of the Board of Directors of the Company. In
addition, Sorin immediately accepted responsibility by agreeing to plead guilty before he was
even charged with a crime, while the defendant took the exact opposite approach as detailed
above. Nevertheless, the government respectfully submits that the need to avoid unwarranted
sentencing disparities weighs in favor of a variance (albeit a variance that still results in a
substantial sentence).

V. Restitution and Fine

Pursuant to the plea agreement, the government has agreed that the defendant has
resolved all financial aspects of this case (apart from the special assessment). The government
does not, therefore, argue for the imposition of restitution or a fine.

12
Case 1:06-cr-00628-NGG Document 33 Filed 02/08/17 Page 13 of 13 PageID #: 1275

VI. Conclusion

For the reasons set forth herein, the government respectfully submits that the
sentencing factors warrant a substantial term of imprisonment to reflect the seriousness of the
offense and the defendants conduct thereafter, to promote respect for the law and to afford
adequate general deterrence.

Respectfully submitted,

ROBERT L. CAPERS
United States Attorney

By: /s/
James P. Loonam
Assistant U.S. Attorney
(718) 254-7520

cc: Defense counsel (via e-mail)


Clerk of the Court (by hand)

13
Page 1 of 4
Case 1:06-cr-00628-NGG Document 33-1 Filed 02/08/17 Page 1 of 4 PageID #: 1276

<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>jd3-14_8k.txt
<TEXT>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_____________________

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):


March 14, 2006
__________________

COMVERSE TECHNOLOGY, INC.

(Exact name of registrant as specified in its charter)

NEW YORK 0-15502 13-3238402

(State or other jurisdiction (Commission (IRS Employer


of incorporation) File Number) Identification No.)

909 Third Avenue,


New York, New York
10022

(Address of Principal Executive Offices)


(Zip Code)

Registrant's telephone number, including area code: (212) 652-6801

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:

[_] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)

[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)

[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the


Exchange Act (17 CFR 240.14d-2(b))

[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the


Exchange Act (17 CFR 240.13e-4(c))

<PAGE>

https://www.sec.gov/Archives/edgar/data/803014/000090951806000277/jd3-14_8k.txt 2/8/2017
Page 2 of 4
Case 1:06-cr-00628-NGG Document 33-1 Filed 02/08/17 Page 2 of 4 PageID #: 1277

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On March 14, 2006, Comverse Technology, Inc. (the "Company") issued a


press release announcing selected unaudited financial information for the fourth
quarter of fiscal year 2005 ended January 31, 2006. A copy of the press release
is attached hereto as Exhibit 99.1 to this report and incorporated herein by
reference.

In accordance with General Instruction B.2. the foregoing information


and the Exhibit 99.1, is furnished pursuant to Item 2.02 and shall not be deemed
"filed" for the purposes of Section 18 of the Securities Exchange Act of 1934,
as amended, or otherwise subject to the liabilities of that Section. The
information in this Current Report shall not be incorporated by reference into
any registration statement or other document pursuant to the Securities Act of
1933, as amended, except as shall be expressly set forth by a specific reference
in such filing.

ITEM 8.01 OTHER EVENTS.

On March 14, 2006, the Company announced the creation of a special


committee of its Board of Directors composed of outside directors to review
matters relating to the Company's stock option grants, including, but not
limited to, the accuracy of the stated dates of option grants and whether all
proper corporate procedures were followed. The committee will be assisted by
independent legal counsel.

Although it has not been determined whether the review will result in
any restatement of the Company's historical financial statements and, if so, the
years affected and the amounts involved, management believes that certain
restatements will likely be required. Any such restatements will not have an
impact on historical revenues or operating results excluding stock option
related expenses.

The foregoing may contain "forward-looking statements" under the


Private Securities Litigation Reform Act of 1995 that involve risks and
uncertainties. There can be no assurances that forward-looking statements will
be achieved, and actual results could differ materially from forecasts and
estimates. Important factors that could cause actual results to differ
materially include: the results of the special committee's review; risks
associated with integrating the business and employees of the GSS division of
CSG Systems, International; changes in the demand for the Company's products;
changes in capital spending among the Company's current and prospective
customers; the risks associated with the sale of large, complex, high capacity
systems and with new product introductions as well as the uncertainty of
customer acceptance of these new or enhanced products from either the Company or
its competition; risks associated with rapidly changing technology and the
ability of the Company to introduce new products on a timely and cost-effective
basis; aggressive competition may force the Company to reduce prices; a failure
to compensate any decrease in the sale of the Company's traditional products
with a corresponding increase in sales of new products; risks associated with
changes in the competitive or regulatory environment in which the Company
operates; risks associated with prosecuting or defending allegations or claims
of infringement of intellectual property rights; risks associated with
significant foreign operations and international sales and investment
activities, including fluctuations in foreign currency exchange rates, interest
rates, and valuations of public and private equity; the volatility of
macroeconomic and industry conditions and the international marketplace; risks
associated with the Company's ability to retain existing personnel and recruit
and retain qualified personnel; and other risks described in filings with the
Securities and Exchange Commission. These risks and uncertainties, as well as

https://www.sec.gov/Archives/edgar/data/803014/000090951806000277/jd3-14_8k.txt 2/8/2017
Page 3 of 4
Case 1:06-cr-00628-NGG Document 33-1 Filed 02/08/17 Page 3 of 4 PageID #: 1278

others, are discussed in greater detail in the filings of the Company with the
Securities and Exchange Commission, including its most recent Annual Report on
Form 10-K and subsequent Quarterly Reports on Form 10-Q. These documents are
available through the Company, or its website, www.cmvt.com, or through the
SEC's Electronic Data Gathering Analysis and Retrieval system (EDGAR) at
www.sec.gov. The Company makes no commitment to revise or update any
forward-looking statements in order to reflect events or circumstances after the
date any such statement is made.

2
<PAGE>
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits:

Exhibit No. Description


----------- -----------
99.1 Press Release of Comverse Technology, Inc. dated March 14, 2006

3
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,


the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

COMVERSE TECHNOLOGY, INC.

Date: March 14, 2006 By: /s/ David Kreinberg


-----------------------------
Name: David Kreinberg
Title: Executive Vice President
and Chief Financial Officer

https://www.sec.gov/Archives/edgar/data/803014/000090951806000277/jd3-14_8k.txt 2/8/2017
Page 4 of 4
Case 1:06-cr-00628-NGG Document 33-1 Filed 02/08/17 Page 4 of 4 PageID #: 1279

4
<PAGE>
EXHIBIT INDEX

Exhibit No. Description


----------- -----------

99.1 Press Release of Comverse Technology, Inc. dated March 14, 2006

5
</TEXT>
</DOCUMENT>

https://www.sec.gov/Archives/edgar/data/803014/000090951806000277/jd3-14_8k.txt 2/8/2017
Case 1:06-cr-00628-NGG Document 33-2 Filed 02/08/17 Page 1 of 2 PageID #: 1280

Date LastPrice
12/13/2005 $28.040
12/14/2005 $27.990
12/15/2005 $27.540
12/16/2005 $27.270
12/19/2005 $27.000
12/20/2005 $26.880
12/21/2005 $27.180
12/22/2005 $27.450
12/23/2005 $27.090
12/27/2005 $26.800
12/28/2005 $26.500
12/29/2005 $26.570
12/30/2005 $26.590
1/3/2006 $26.620
1/4/2006 $27.030
1/5/2006 $27.010
1/6/2006 $27.300
1/9/2006 $26.960
1/10/2006 $26.800
1/11/2006 $26.760
1/12/2006 $26.520
1/13/2006 $26.580
1/17/2006 $26.320
1/18/2006 $26.130
1/19/2006 $26.720
1/20/2006 $26.000
1/23/2006 $25.900
1/24/2006 $26.100
1/25/2006 $26.120
1/26/2006 $27.240
1/27/2006 $27.220
1/30/2006 $27.390
1/31/2006 $27.390
2/1/2006 $27.550
2/2/2006 $27.110
2/3/2006 $26.800
2/6/2006 $26.480
2/7/2006 $26.350
2/8/2006 $26.830
2/9/2006 $27.250
2/10/2006 $27.570
2/13/2006 $28.250
2/14/2006 $28.200
2/15/2006 $28.480
2/16/2006 $28.710
2/17/2006 $28.820
Case 1:06-cr-00628-NGG Document 33-2 Filed 02/08/17 Page 2 of 2 PageID #: 1281

2/21/2006 $28.490
2/22/2006 $28.800
2/23/2006 $28.600
2/24/2006 $28.720
2/27/2006 $29.040
2/28/2006 $28.760
3/1/2006 $29.240
3/2/2006 $28.980
3/3/2006 $29.180
3/6/2006 $28.770
3/7/2006 $28.550
3/8/2006 $28.540
3/9/2006 $28.390
3/10/2006 $28.900
3/13/2006 $29.150
Average $27.500
Case 1:06-cr-00628-NGG Document 33-3 Filed 02/08/17 Page 1 of 2 PageID #: 1282

Date LastPrice
3/14/2006 $24.850
3/15/2006 $25.040
3/16/2006 $24.320
3/17/2006 $24.290
3/20/2006 $22.870
3/21/2006 $23.260
3/22/2006 $23.840
3/23/2006 $23.600
3/24/2006 $24.000
3/27/2006 $23.740
3/28/2006 $23.500
3/29/2006 $23.380
3/30/2006 $23.280
3/31/2006 $23.530
4/3/2006 $23.480
4/4/2006 $23.630
4/5/2006 $24.570
4/6/2006 $25.020
4/7/2006 $24.480
4/10/2006 $24.450
4/11/2006 $23.950
4/12/2006 $24.040
4/13/2006 $24.200
4/17/2006 $23.310
4/18/2006 $22.940
4/19/2006 $22.630
4/20/2006 $22.660
4/21/2006 $22.770
4/24/2006 $22.820
4/25/2006 $22.840
4/26/2006 $22.680
4/27/2006 $22.850
4/28/2006 $22.650
5/1/2006 $23.650
5/2/2006 $23.950
5/3/2006 $24.010
5/4/2006 $24.030
5/5/2006 $22.980
5/8/2006 $22.970
5/9/2006 $22.830
5/10/2006 $22.690
5/11/2006 $22.270
5/12/2006 $22.030
5/15/2006 $21.820
5/16/2006 $21.660
5/17/2006 $21.500
Case 1:06-cr-00628-NGG Document 33-3 Filed 02/08/17 Page 2 of 2 PageID #: 1283

5/18/2006 $21.600
5/19/2006 $21.910
5/22/2006 $22.080
5/23/2006 $21.710
5/24/2006 $21.760
5/25/2006 $22.840
5/26/2006 $22.820
5/30/2006 $22.630
5/31/2006 $22.520
6/1/2006 $23.200
6/2/2006 $23.230
6/5/2006 $22.420
6/6/2006 $22.290
6/7/2006 $22.883
6/8/2006 $22.850
6/9/2006 $23.570
6/12/2006 $20.480
6/13/2006 $19.660
6/14/2006 $19.510
Average $23.013
Comverse Technology Announces Delisting From NASDAQ Effective February 1, 2007 |... Page 1 of 3
Case 1:06-cr-00628-NGG Document 33-4 Filed 02/08/17 Page 1 of 3 PageID #: 1284

Comverse Technology Announces Delisting From


NASDAQ Effective February 1, 2007
January 31, 2007 08:30 AM Eastern Standard Time

NEW YORK--(BUSINESS WIRE)--Comverse Technology, Inc. (NASDAQ: CMVT) today announced


that the company received a decision, dated January 30, 2007 (the Decision), from the NASDAQ
Listing and Hearing Review Council (the Listing Council), stating that the companys common stock
will be delisted from NASDAQ, effective at the open of business on Thursday, February 1, 2007. As
previously disclosed, the Nasdaq Listing Qualifications Panel, in a decision dated September 26,
2006, determined to delist the companys common stock from NASDAQ, which decision was stayed
pending further action by the Listing Council.

Following the delisting of the companys common stock from NASDAQ, the company expects that its
common stock will be quoted in the Pink Sheets beginning on February 1, 2007. The company
expects that the trading symbol of its common stock will remain the same (CMVT or CMVT.PK).
Information about the Pink Sheets can be found at its Internet web site www.pinksheets.com.

Mark Terrell, Comverse Technologys Chairman, said, Comverse Technology remains a financially
strong, world class company with more than 7,000 employees serving customers in more than 100
countries. The NASDAQ decision will not affect our ability to continue providing outstanding products,
technology and service to our customers worldwide. We are committed to regaining compliance with
all filing requirements and obtaining relisting of our common stock in a timely manner.

As a result of the delisting of the companys common stock from NASDAQ, holders of the companys
Zero Yield Puttable Securities (ZYPSSM) due May 15, 2023 and New Zero Yield Puttable Securities
(ZYPSSM) due May 15, 2023 (collectively, the ZYPS) will have the right to require the company to
repurchase their ZYPS at a purchase price equal to 100% of the principal amount of the ZYPS
purchased. The aggregate outstanding principal amount of ZYPS under the applicable Indentures was
approximately $419,647,000. As of October 31, 2006, the Company had cash and cash equivalents,
bank time deposits and short term investments of $1,867,761,000.

About Comverse Technology, Inc.

Comverse Technology, Inc., through its Comverse, Inc. subsidiary, is the worlds leading provider of
software and systems enabling network-based multimedia enhanced communication and billing
services. The companys Total Communication portfolio includes value-added messaging,
personalized data and content-based services, and real-time converged billing solutions. Over 450
communication and content service providers in more than 120 countries use Comverse products to
generate revenues, strengthen customer loyalty and improve operational efficiency. Other Comverse

http://www.businesswire.com/news/home/20070131005483/en/Comverse-Technology-Ann... 2/8/2017
Comverse Technology Announces Delisting From NASDAQ Effective February 1, 2007 |... Page 2 of 3
Case 1:06-cr-00628-NGG Document 33-4 Filed 02/08/17 Page 2 of 3 PageID #: 1285

Technology subsidiaries include: Verint Systems (NASDAQ: VRNT), a leading provider of analytic
software-based solutions for communications interception, networked video security and business
intelligence; and Ulticom (NASDAQ: ULCM), a leading provider of service enabling signaling software
for wireline, wireless and Internet communications. Comverse Technology is an S&P 500 and
NASDAQ-100 Index company.

For additional information, visit the Comverse website at www.comverse.com or the Comverse
Technology website at www.cmvt.com

All product and company names mentioned herein may be registered trademarks or trademarks of
Comverse or the respective referenced company(s).

Note: This release contains "forward-looking statements" under the Private Securities Litigation
Reform Act of 1995 that involve risks and uncertainties. There can be no assurances that forward-
looking statements will be achieved, and actual results could differ materially from forecasts and
estimates. Important factors that could cause actual results to differ materially include: the results of
the investigation of the Special Committee, appointed by the Board of Directors on March 14, 2006, of
matters relating to the company's stock option grant practices and other accounting matters, including
errors in revenue recognition, errors in the recording of deferred tax accounts, expense
misclassification, the possible misuse of accounting reserves and the understatement of backlog; the
impact of any restatement of financial statements of the company or other actions that may be taken
or required as a result of such reviews; the company's inability to file reports with the Securities and
Exchange Commission; the effects of the delisting of the companys common stock from The Nasdaq
National Market and the quotation of the companys common stock in the Pink Sheets, including any
adverse effects relating to the trading of the stock due to, among other things, the absence of market
makers; the right of holders of the company's ZYPS to require the company to repurchase their ZYPS
as a result of the delisting of the company's shares from NASDAQ at a repurchase price equal to
100% of the principal amount of ZYPS to be purchased; risks of litigation and of governmental
investigations or proceedings arising out of or related to the company's stock option grants or any
other accounting irregularities or any restatement of the financial statements of the company, including
the direct and indirect costs of such investigations and restatement; risks associated with integrating
the businesses and employees of the Global Software Services division acquired from CSG Systems
International, Netcentrex S.A. and Netonomy, Inc.; changes in the demand for the company's
products; changes in capital spending among the company's current and prospective customers; the
risks associated with the sale of large, complex, high capacity systems and with new product
introductions as well as the uncertainty of customer acceptance of these new or enhanced products
from either the company or its competition; risks associated with rapidly changing technology and the
ability of the company to introduce new products on a timely and cost-effective basis; aggressive
competition may force the company to reduce prices; a failure to compensate any decrease in the sale
of the company's traditional products with a corresponding increase in sales of new products; risks
associated with changes in the competitive or regulatory environment in which the company operates;
risks associated with prosecuting or defending allegations or claims of infringement of intellectual
property rights; risks associated with significant foreign operations and international sales and
investment activities, including fluctuations in foreign currency exchange rates, interest rates, and
valuations of public and private equity; the volatility of macroeconomic and industry conditions and the
international marketplace; risks associated with the company's ability to retain existing personnel and
recruit and retain qualified personnel; and other risks described in filings with the Securities and
Exchange Commission.

http://www.businesswire.com/news/home/20070131005483/en/Comverse-Technology-Ann... 2/8/2017
Comverse Technology Announces Delisting From NASDAQ Effective February 1, 2007 |... Page 3 of 3
Case 1:06-cr-00628-NGG Document 33-4 Filed 02/08/17 Page 3 of 3 PageID #: 1286

These risks and uncertainties discussed above, as well as others, are discussed in greater detail in
the filings of the company with the Securities and Exchange Commission, including its most recent
Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K. These documents are available through the company, or its website, www.cmvt.com, or
through the SEC's Electronic Data Gathering Analysis and Retrieval system (EDGAR) at
www.sec.gov. The Company makes no commitment to revise or update any forward-looking
statements in order to reflect events or circumstances after the date any such statement is made.

Contacts
Comverse Technology, Inc.
Paul D. Baker, 516-677-7226

http://www.businesswire.com/news/home/20070131005483/en/Comverse-Technology-Ann... 2/8/2017