Wednesday, November 1, 2006

Second Plea Expected in Comverse Case

The Wall Street Jrl is reporting here the likelihood of a second plea being entered in the stock options backdating scheme related to Comverse.  The report is that corporate executive William Sorin (former senior general counsel) will enter a plea to one count - criminal conspiracy. Former CFO David Kreinberg recently plead guilty (see here) and is cooperating with the government.  The key figure remaining in this case is former CEO Kobi Alexander, who remains free on bail in Namibia. (see here)

It is apparent that this investigation is now moving extremely quickly, and this is not surprising.  When the government secures a high level cooperator it is much easier to accelerate an investigation.  Individuals who cooperate are often anxious to provide information to the government to lower their sentence. The government is then able to use the material obtained through this cooperation to secure additional cooperation.  Like dominoes falling, as each individual provides additional information more tiles fall.  The individual who is last in the chain is placed at a disadvantage in that they have nothing to offer the government as everyone has already fallen. Clearly those who cooperate near the beginning of an investigation provide a greater benefit to the government.  In some cases, one sees a "race to the courthouse" to obtain the best cooperation agreement.


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