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Sanjay Kumar "Betrayed the Trust of the Board," Says CA's Attorney

But Ex-CEO Pleads Not Guilty to Conspiracy and Obstruction of Justice

Related Links:
  • Not Guilty," Both Kumar and Richards Tell Judge
  • "Deferred Prosecution" Could Cost CA $400 - $500 Million
  • Wanted, on a Platter, by US Govt.: Head of CA's ex-CEO Sanjay Kumar

    Although his attorney insists that he "denies any wrongdoing and expects to be exonerated of all charges," the former chairman and CEO of Computer Associates, Sanjay Kumar, has been charged with conspiracy and obstruction of justice in an indictment unsealed yesterday. Both Kumar and his one-time top lieutenant, former executive vice president of sales Stephen Richards, were charged with 10 counts each of securities fraud and obstruction of justice.

    Both men today pleaded not guilty to both the fraud and the obstruction charges and Judge Leo Glasser ordered each executive to post $5 million in bail - money that money will be secured against their homes.

    As we reported here at SYS-CON.com already last week, while charging Kumar the US government has agreed to defer prosecution of the company itself for 18 months in an unusual move known as "deferred prosecution."

    The idea of this is to give Computer Associates time to show that it has cleaned up its act, and thereby avoid punishing CA shareholders twice over - it being understood that they have already suffered once over through the share price hit that CA took when it revealed back in April that it was restating its financial results from 2000 and 2001. 

    CA, which has roughly $2.17 billion in the bank, is required as part of the deferred prosecution arrangement to pay $225 million cash and 5.7m shares to investors in compensation, explained Deputy Attorney General James Comey at a news conference yesterday in Washington.

    Deferred prosecution will give CA "the opportunity to demonstrate that it has a culture that can be saved," Corney said. 

    "Our focus," he continued, "is not on doing harm for harm's sake."

    He added though that, if CA didn't take steps to mend its egregious ways, "the consequences will be severe." The software company has been accused of improperly booking $2.2 billion in revenues during 2000-2001, and obstructing the subsequent investigation procedures.

    CA has accepted responsibility for the improper accounting practices and misstatement of revenue from Jan. 1, 1998, through Sept. 30, 2000, and for impeding and failing to cooperate with the Department of Justice and the SEC investigations.  "This conduct was wrong," said CA chairman Lewis Ranieri in a conference yesterday.  

    "I want to be very clear on this point: We fully support the government's efforts to bring wrongdoers to justice," Ranieri added. 

    While Kumar and Richards pleaded not guilty today. Steven Woghin, the company's onetime top lawyer and former general counsel , has in contrast already entered a guilty plea to securities fraud conspiracy and obstruction of justice charges and faces a long jail stretch.


    Related Links:

  • Not Guilty," Both Kumar and Richards Tell Judge
  • "Deferred Prosecution" Could Cost CA $400 - $500 Million
  • Wanted, on a Platter, by US Govt.: Head of CA's ex-CEO Sanjay Kumar
  • More Stories By Jeremy Geelan

    Jeremy Geelan is Chairman & CEO of the 21st Century Internet Group, Inc. and an Executive Academy Member of the International Academy of Digital Arts & Sciences. Formerly he was President & COO at Cloud Expo, Inc. and Conference Chair of the worldwide Cloud Expo series. He appears regularly at conferences and trade shows, speaking to technology audiences across six continents. You can follow him on twitter: @jg21.

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    Most Recent Comments
    a b 03/06/08 03:12:19 PM EST

    Sanjay Kumar, the Computer Associates crook and now jailbird, was son-in-law of Charlie Wang, who started CA. CA treated employees like sh*t. Sanjay commited securities fraud and duped his shareholders.

    We invite people like this to come here from foreign countries and they use the American opportunity to rape and pillage American workers and shareholders alike.

    Mike Flanaghan 09/24/04 09:40:47 AM EDT

    As a former employee of CA,there were violations and deceptions all the way to the Tampa Call Center. From having open alcohol on the Sales Floor during close dates to
    firing violations(such as military employees being let go once it was known they were to be deployed overseas).
    There were mgr.to rep.intimidations, yelling and generally unprofessional dealings. ISO regulations were violated and inspections padded. Sales mgrs.routinely encouraged stretching the truth to get a sale.
    There's no bitterness, since resigned on my own after wanting to work in a better environment.

    severanceforsk 09/23/04 09:38:41 AM EDT

    Here is something people may be overlooking...

    Sanjay will lose his overbloated severance package since he was indicted.

    CA has been holding the money portion back waiting for this. He also loses his payments that CA would make for office space and an assistant.

    dreamgolf 09/23/04 09:33:55 AM EDT

    I suspect that the SEC will tap existing CA personnel for info that will help slam the door shut on Kumar and I suspect eventually Wang. Of course, if Sanjay sings like a canary and tells on everyone, a few more still with the company will fall.

    Masseur73 09/23/04 05:58:49 AM EDT

    Let's be clear here. CA was only doing what most IT companies do to some degree, that is booking late revenue to massage its quarterly results.

    Kumar's problem arises 1. from the massive scale of the massage and 2. from the sizable bonus he got that related to the then-boosted results.

    It's the implication that he conspired to massage the figures for personal benefit that's cost him his job. Very bad move.