Feeds

Former CA chief Kumar indicted as firm coughs up $225m

Could face 100 years behind bars

  • alert
  • submit to reddit

Choosing a cloud hosting partner with confidence

Former Computer Associates chief Sanjay Kumar has been hit with charges of securities fraud, obstruction of justice and conspiracy by the US DoJ (Department of Justice) - a result of the company's long-running accounting scandal.

The Feds today unsealed the charges, which were initially handed down last week by a federal grand jury in New York. Kumar was additionally slapped with one count of perjury and one count of making false statements to law enforcement officers. Former CA Head of Sales Stephen Richards was also charged with securities fraud conspiracy and obstruction of justice.

"The defendants are accused of perpetrating a massive accounting fraud that cost public investors hundreds of millions of dollars when it collapsed. Then they allegedly tried to cover up their crimes by lying,” said Deputy Attorney General Comey, who chairs the President’s Corporate Fraud Task Force. “If proven true, such conduct cannot be tolerated and the Corporate Fraud Task Force’s track record shows that it will be met with severe penalties.”

CA today agreed to shell out $225m to pay back victims of the fraud. The US Attorney's Office has agreed not to prosecute CA, if it follows an agreement laid down by the office. CA's financial results will be watched by an outside monitor for the next 18 months. The software maker had once offered up $10m to settle the investigation into its accounting practices. Bit short; it seems.

Along with today's charges, Stephen Woghin, CA's former general counsel, pleaded guilty to securities fraud conspiracy and obstruction of justice charges.

Kumar and Richards are accused of engineering what has now become infamously known as the "35-day month" accounting scheme. This plan would see CA allegedly count revenue on the books before deals had actually been closed. CA has chalked up $2.2bn in premature revenuelation so far.

"The indictment alleges that on Oct. 23, 2003, Richards perjured himself while testifying under oath before the SEC by attempting to conceal the existence of the 35-day month practice and his involvement in it," the DoJ said. "The indictment also alleges that Kumar, in an interview with the FBI and the U.S. Attorney’s Office on Nov. 5, 2003, made materially false statements to conceal the same scheme and his involvement in it."

Both former executives could face prison sentences up to 100 years, if convicted on all counts.

“With these agreements, CA has taken a critical step in closing this deeply troubling chapter in its history,” said CA Chairman Lewis Ranieri. “On behalf of the company and all its employees, we tender our sincere apologies to our shareholders and customers.

“Some former members of CA’s management engaged in illegal activity,” Ranieri said. “Violations of law and ethical standards, including securities fraud, obstructing a government investigation, and lying to CA’s Board of Directors and CA’s lawyers cannot be condoned. We fully support the government’s efforts to bring all responsible parties to justice."

Kumar initially stepped down from the CEO and Chairman's positions to take on a software chief role at CA after the conclusion of an SEC investigation into the company's practices. He then decided it was best to leave CA all together. ®

Related stories

Former CA boss Kumar exits stage left
CA 2003 results delayed
CA puts 35-day month and $2.2bn in revenue behind it
Man overboard! CA chief Kumar walks plank...
CA makes nine workers remedial
CA faces SEC action

Secure remote control for conventional and virtual desktops

More from The Register

next story
Netscape Navigator - the browser that started it all - turns 20
It was 20 years ago today, Marc Andreeesen taught the band to play
Sway: Microsoft's new Office app doesn't have an Undo function
Content aggregation, meet the workplace ... oh
Sign off my IT project or I’ll PHONE your MUM
Honestly, it’s a piece of piss
Return of the Jedi – Apache reclaims web server crown
.london, .hamburg and .公司 - that's .com in Chinese - storm the web server charts
NetWare sales revive in China thanks to that man Snowden
If it ain't Microsoft, it's in fashion behind the Great Firewall
Chrome 38's new HTML tag support makes fatties FIT and SKINNIER
First browser to protect networks' bandwith using official spec
Admins! Never mind POODLE, there're NEW OpenSSL bugs to splat
Four new patches for open-source crypto libraries
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Cloud and hybrid-cloud data protection for VMware
Learn how quick and easy it is to configure backups and perform restores for VMware environments.
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.