Click here to close now.

Welcome!

Java Authors: Plutora Blog, Harry Trott, Liz McMillan, Pat Romanski, Andreas Grabner

Related Topics: Open Source, Linux

Open Source: Article

Ex-CA CEO Sanjay Kumar's Looking at Doing 100 Years

Ex-CA CEO Sanjay Kumar's Looking at Doing 100 Years

Related Links:
  • "Not Guilty," Both Kumar and Richards Tell Judge
  • Computer Associates Founder Charles Wang Government's Next Target

    Ex-Computer Associates CEO Sanjay Kumar could be sentenced to 100 years in the slammer if he's found guilty of everything he was charged with on Wednesday, according to the Justice Department. Not exactly a Martha Stewart reprise.

    Ditto the former head of the company's worldwide sales Stephen Richards.

    CA's former general counsel Stephen Woghin, who turned state's evidence and has reportedly been drawing the noose tighter and tighter around the necks of Kumar and Richards, pleaded guilty to charges of conspiracy to commit securities fraud and obstruction of justice in federal court in Brooklyn Wednesday morning. He could get 25 years.

    CA, on the other hand, which turned a blind eye to the company's so-called 35-day month shenanigans until recently, got off easy. It cut a sweetheart deal with the government and escaped being branded a criminal. Instead of being hauled into court, it has agreed, as expected, to a rarely used form of probation called deferred prosecution that will last about 18 months.

    During that time CA has to toe the straight and narrow and prove to a court-appointed examiner that it has truly seen the light and reformed otherwise the government could dust off its case and drag it into court for fraud and obstruction.

    The company has also agreed to help the government's prosecution of Kumar and Richards, set up a $225 million stockholder restitution fund and get ex-employees who benefited from the company's vast $3.3 billion fraud to disgorge their ill-gotten gains.

    Despite the fact that CA was late in getting religion and is only now accepting responsibility for its illegal conduct, the Justice Department is giving it points for its recent corporate reforms and the fact that it finally threw out the culprits accused of raping the joint.

    It also got points for settling shareholder suits last year to the tune of roughly $163 million in stock and cash - which effectively pushes its restitution to $388 million.

    The government, which has been gunning for Kumar and Richards, particularly Kumar, unsealed a grand jury indictment against them Wednesday charging them with 10 counts of conspiracy to commit securities and wire fraud, securities fraud, obstruction of justice and conspiracy to obstruct justice.

    Richards was also charged with perjury and Kumar with lying to law enforcement officials though not under oath.

    The charges stem from CA's 35-day months, CA's internal name for the systematic, company-wide practice of backdating contracts to inflate its results, and then covering it up. In the fiscal years 2000 and 2001 alone, the government said, $2.2 billion of revenue was booked prematurely. Another $1.1 billion was prematurely booked before that.

    The indictment says Kumar personally and "routinely" kept CA's books open past the end of the quarter and that he and Richards directed CA sales managers and salespeople to backdate license agreements.

    Sanjay himself negotiated and signed some of those last-minute deals, the government said, in one case flying to Paris on the company jet to bring in a belated $32 million contract, later bragging that his "Paris caper saved the quarter." The quarter had closed eight days before.

    Revenues from those agreements were then improperly recognized in the quarter just ended, propping up CA's stock price. Afterwards the paperwork was "cleaned up" for the benefit of CA's outside auditors. When the practice finally ended and CA missed its numbers, the stock dropped 43%.

    The indictment says that Kumar, Richards and Woghin lied to CA's own outside lawyers about the 35-day months, knowing that the firm would carry their tall tales back to the US Attorney's Office, the SEC and the FBI, which had started investigating the company in early 2002.

    The government says Kumar instructed Woghin to coach CA employees on how to answer questions about the 35-day months before the government or CA's attorneys interviewed them. It also says Kumar did some of the coaching himself.

    Until Woghin's testimony and that of ex-CA CFO Ira Zar, who pleaded guilty to securities fraud and obstruction of justice in April, delivered Kumar squarely into the government's hands, the Justice Department was reportedly going to indict a bunch of more than a dozen lesser fish. The DOJ tore up that plan in the last few weeks, sources said, as its case against Kumar grew more detailed.

    CA's former senior VP of finance and administration David Kaplan, former VP of finance David Rivard and former divisional senior VP in charge of the company's Global Sales Organization Lloyd Silverstein have also turned state's evidence and plead guilty to securities fraud, obstruction of justice and conspiracy charges.

    Zar, Kaplan, Rivard and Silverstein await sentencing, an appointment with destiny that has been repeatedly postponed. Rivard and Kaplan face 10 years each, Zar 20, but they will probably draw a lesser sentence for copping a plea.

    In a partial settlement with the SEC, Woghin, who's supposed to be sentenced December 10, can never be an officer or director of a public company again and will be fined.

    Folks close to Sanjay, who was arraigned Thursday and didn't answer his cell phone, say he's determined to fight the charges against him to the bitter end.

    He's also given little chance of wiggling free. The government says he admitted to the existence of the "three-day window" and to encouraging salespeople to finalize deals after the end of the quarter, but ascribed it to innocent motives.

    He also denied meeting with his staff at the end of the quarter to discuss whether CA had met its revenue forecast.

    Unfortunately for him there's an e-mail trail indicating he was aware of bookings with fake dates. One e-mail discusses a company that couldn't backdate a contract to March 31 because it wasn't legally formed until April 1. It was told to leave the date blank.

    Supposedly he's going to claim such things are forgeries and that the government coerced the witnesses against him. His trial is set for next July and is reportedly supposed to run six-10 weeks. Given an appeal, it's unlikely he'll know his fate until 2007-2008, sources said.

    Meanwhile, the deal CA cut with the government demands that it tighten up even more than it has on corporate governance. It's supposed to add two more independent directors to its board, ensuring that two-thirds of the board, which was lax beyond belief, are outsiders.

    It's also supposed to establish both a compliance committee and a disclosure committee, hire a compliance officer, reorganize both its finance and internal audit departments, install a worldwide ERP system to tighter its controls and start teaching its staff ethics.

    The deal, signed by CA chairman Lewis Ranieri, gives CA 18 months to set aside the $225 million it's been ordered to put in the restitution fund. It's got to write a check for $75 million in 30 days, another one for $75 million in a year and the last one for $75 million a year-and-a-half from now. It will write the money off.

    It has to appoint a government-approved administrator to dole out the money to past and present shareholders injured by the fraud. The company has to figure out a way to identify these people and come up with a formula to recompense them.

    The prospective compliance officer is supposed to get full access to the company's audit department and the compliance side of its legal and finance departments.

    The examiner, on the other hand, is supposed to vet CA's revenue recognition procedures, its internal accounting controls, its ERP system, its audit department, its ethics and compliance policies and its records management. The minder is supposed to stay in place until the company puts in two successive quarters with all the required reforms substantially implemented. The government anticipates this could take more than 18 months.

    The new disclosure committee, made up of CA's CEO, COO, CFO, chief compliance officer and the general counsel, is supposed to vet SEC filings and significant press releases. It's also supposed to set up a telephone hotline for whistleblowers and advertise the fact.

    If CA gets bought before its 18-month probation is up, the buyer will be bound by the pact.

    The Wall Street Journal, which called the breadth of the indictment "surprising," described deferred prosecution, also called "pretrial diversion," as being pretty unusual in corporation prosecutions. It's usually reserved for first-time offenders accused of minor crimes. It was, however, used in a stock fraud case against Prudential Securities in 1994, in an accounting fraud case against PNC Financial Services Group last year and in a money laundering case against Banco Popular de Puerto Rico also last year.

    Deputy Attorney General James Comey acknowledged that deferred prosecution was unusual and said that the government had to decide whether the company was redeemable or whether like Arthur Andersen it had to be "put down."

    Prudential remarks that the outcome was better than anticipated "since CA's fine will be paid to shareholders" rather than the government.

    Related Links:

  • "Not Guilty," Both Kumar and Richards Tell Judge
  • Computer Associates Founder Charles Wang Government's Next Target
  • More Stories By Maureen O'Gara

    Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

    Comments (4) View Comments

    Share your thoughts on this story.

    Add your comment
    You must be signed in to add a comment. Sign-in | Register

    In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


    Most Recent Comments
    Ingalill Richardsson 12/27/04 11:40:57 AM EST

    I think the old board has something to dig up.I do not think that Sanjay Kumar need to betrade, and bee an betrader. he is a men of onnor.I hoop the god can protect him aginst the cruel buissnis in the U.S.A.He has no reccord of such life in the past.He has two children and a loved wife. He would not do suc things and risk their happines. He has been an American and he has been praud of his new land. He is a father and husband for the first.I am happy that it will take time to the next triel. I am subjektiv,I know,but i belive Sanjay is not gilty. Please corect my spelling, I am better in my mind.I know Sanjay sinc he was a young student,he is a men of onnor i belive .
    try to do some more resurcic about him.Your artkel is interested. thanks.

    itiswhatitis_2001 09/25/04 11:43:59 AM EDT

    The Board is complicit in all this. Why are they paying Kumar's legal fees? Their Sargent Schultz defense for not knowing of the 35-day month "I know nothing, I see nothing" isn't going to protect them forecver. There are big Republican interests protecting Wang and CA right now, just like Enron.

    From a CA Employee 09/25/04 11:07:27 AM EDT

    I hope Sanjay loses everything and spends a lomg time in jail.

    He was involved in a lengthy cover-up that damaged our business, the shareholders and the employees. If he had come clean years ago, we might have been able to recover and we might have been able to avoid some of the layoffs that came down. In my mind, some innocent people and their families were hurt, to protect Sanjay.

    Every time a new revelation about the cover-up was reported in the news, orders would come down from Islandia, and everyone would be gathered into conference rooms and on conference calls, and be instructed how to spin the news. We were all basically enlisted to cover-up for Sanjay. This was done to "protect the business", but in reality it was done to protect Sanjay.

    Sanjay's blather about "Core Values" and "Corporate Governance" were transparent attempts to make him seem ethical. The Core Values, in particular, were quite obnoxious. He was really overplaying his hand. Every email from hom, every internal conference call, he would robotically talk about Core Values. I remember thinking, "Methinks he doth protest too much". The main person who needed to change his behavior to reflect some ethical standards was Sanjay himself.

    Sanjay's crimes of revenue recognition were abusive, but frankly not uncommon in the software business during the years that it occurred. His cover-up, and his easy willingness to put himself ahead of the company, the shareholders, and the employees whose livelihoods and credibility he would so readily sacrifice, were worse. He gets no sympathy from me.

    In my mind, Charles W needs to go to jail as well. And while we're at it, the fact that Russ Artzt is not only un-indicted, but still employed, and still on the Board of Directors, is outrageous.

    I hope Sanjay pays dearly for what he did, and I hope Charles and Russ are not far behind.

    rocket2002 09/25/04 09:05:47 AM EDT

    Deputy Attorney General James Comey acknowledged that deferred prosecution was unusual and said that the government had to decide whether the company was redeemable or whether like Arthur Andersen it had to be "put down."

    It should be put down. Like a sick horse. For Kumar, it is time for jail. Lights out at 9:00 PM and don't sleep on your stomach.

    @ThingsExpo Stories
    Roberto Medrano, Executive Vice President at SOA Software, had reached 30,000 page views on his home page - http://RobertoMedrano.SYS-CON.com/ - on the SYS-CON family of online magazines, which includes Cloud Computing Journal, Internet of Things Journal, Big Data Journal, and SOA World Magazine. He is a recognized executive in the information technology fields of SOA, internet security, governance, and compliance. He has extensive experience with both start-ups and large companies, having been involved at the beginning of four IT industries: EDA, Open Systems, Computer Security and now SOA.
    The industrial software market has treated data with the mentality of “collect everything now, worry about how to use it later.” We now find ourselves buried in data, with the pervasive connectivity of the (Industrial) Internet of Things only piling on more numbers. There’s too much data and not enough information. In his session at @ThingsExpo, Bob Gates, Global Marketing Director, GE’s Intelligent Platforms business, to discuss how realizing the power of IoT, software developers are now focused on understanding how industrial data can create intelligence for industrial operations. Imagine ...
    Operational Hadoop and the Lambda Architecture for Streaming Data Apache Hadoop is emerging as a distributed platform for handling large and fast incoming streams of data. Predictive maintenance, supply chain optimization, and Internet-of-Things analysis are examples where Hadoop provides the scalable storage, processing, and analytics platform to gain meaningful insights from granular data that is typically only valuable from a large-scale, aggregate view. One architecture useful for capturing and analyzing streaming data is the Lambda Architecture, representing a model of how to analyze rea...
    SYS-CON Events announced today that Vitria Technology, Inc. will exhibit at SYS-CON’s @ThingsExpo, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Vitria will showcase the company’s new IoT Analytics Platform through live demonstrations at booth #330. Vitria’s IoT Analytics Platform, fully integrated and powered by an operational intelligence engine, enables customers to rapidly build and operationalize advanced analytics to deliver timely business outcomes for use cases across the industrial, enterprise, and consumer segments.
    The explosion of connected devices / sensors is creating an ever-expanding set of new and valuable data. In parallel the emerging capability of Big Data technologies to store, access, analyze, and react to this data is producing changes in business models under the umbrella of the Internet of Things (IoT). In particular within the Insurance industry, IoT appears positioned to enable deep changes by altering relationships between insurers, distributors, and the insured. In his session at @ThingsExpo, Michael Sick, a Senior Manager and Big Data Architect within Ernst and Young's Financial Servi...
    SYS-CON Events announced today that Open Data Centers (ODC), a carrier-neutral colocation provider, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place June 9-11, 2015, at the Javits Center in New York City, NY. Open Data Centers is a carrier-neutral data center operator in New Jersey and New York City offering alternative connectivity options for carriers, service providers and enterprise customers.
    The explosion of connected devices / sensors is creating an ever-expanding set of new and valuable data. In parallel the emerging capability of Big Data technologies to store, access, analyze, and react to this data is producing changes in business models under the umbrella of the Internet of Things (IoT). In particular within the Insurance industry, IoT appears positioned to enable deep changes by altering relationships between insurers, distributors, and the insured. In his session at @ThingsExpo, Michael Sick, a Senior Manager and Big Data Architect within Ernst and Young's Financial Servi...
    PubNub on Monday has announced that it is partnering with IBM to bring its sophisticated real-time data streaming and messaging capabilities to Bluemix, IBM’s cloud development platform. “Today’s app and connected devices require an always-on connection, but building a secure, scalable solution from the ground up is time consuming, resource intensive, and error-prone,” said Todd Greene, CEO of PubNub. “PubNub enables web, mobile and IoT developers building apps on IBM Bluemix to quickly add scalable realtime functionality with minimal effort and cost.”
    Sensor-enabled things are becoming more commonplace, precursors to a larger and more complex framework that most consider the ultimate promise of the IoT: things connecting, interacting, sharing, storing, and over time perhaps learning and predicting based on habits, behaviors, location, preferences, purchases and more. In his session at @ThingsExpo, Tom Wesselman, Director of Communications Ecosystem Architecture at Plantronics, will examine the still nascent IoT as it is coalescing, including what it is today, what it might ultimately be, the role of wearable tech, and technology gaps stil...
    In the consumer IoT, everything is new, and the IT world of bits and bytes holds sway. But industrial and commercial realms encompass operational technology (OT) that has been around for 25 or 50 years. This grittier, pre-IP, more hands-on world has much to gain from Industrial IoT (IIoT) applications and principles. But adding sensors and wireless connectivity won’t work in environments that demand unwavering reliability and performance. In his session at @ThingsExpo, Ron Sege, CEO of Echelon, will discuss how as enterprise IT embraces other IoT-related technology trends, enterprises with i...
    When it comes to the Internet of Things, hooking up will get you only so far. If you want customers to commit, you need to go beyond simply connecting products. You need to use the devices themselves to transform how you engage with every customer and how you manage the entire product lifecycle. In his session at @ThingsExpo, Sean Lorenz, Technical Product Manager for Xively at LogMeIn, will show how “product relationship management” can help you leverage your connected devices and the data they generate about customer usage and product performance to deliver extremely compelling and reliabl...
    The Internet of Things (IoT) is causing data centers to become radically decentralized and atomized within a new paradigm known as “fog computing.” To support IoT applications, such as connected cars and smart grids, data centers' core functions will be decentralized out to the network's edges and endpoints (aka “fogs”). As this trend takes hold, Big Data analytics platforms will focus on high-volume log analysis (aka “logs”) and rely heavily on cognitive-computing algorithms (aka “cogs”) to make sense of it all.
    With several hundred implementations of IoT-enabled solutions in the past 12 months alone, this session will focus on experience over the art of the possible. Many can only imagine the most advanced telematics platform ever deployed, supporting millions of customers, producing tens of thousands events or GBs per trip, and hundreds of TBs per month. With the ability to support a billion sensor events per second, over 30PB of warm data for analytics, and hundreds of PBs for an data analytics archive, in his session at @ThingsExpo, Jim Kaskade, Vice President and General Manager, Big Data & Ana...
    One of the biggest impacts of the Internet of Things is and will continue to be on data; specifically data volume, management and usage. Companies are scrambling to adapt to this new and unpredictable data reality with legacy infrastructure that cannot handle the speed and volume of data. In his session at @ThingsExpo, Don DeLoach, CEO and president of Infobright, will discuss how companies need to rethink their data infrastructure to participate in the IoT, including: Data storage: Understanding the kinds of data: structured, unstructured, big/small? Analytics: What kinds and how responsiv...
    Since 2008 and for the first time in history, more than half of humans live in urban areas, urging cities to become “smart.” Today, cities can leverage the wide availability of smartphones combined with new technologies such as Beacons or NFC to connect their urban furniture and environment to create citizen-first services that improve transportation, way-finding and information delivery. In her session at @ThingsExpo, Laetitia Gazel-Anthoine, CEO of Connecthings, will focus on successful use cases.
    Sensor-enabled things are becoming more commonplace, precursors to a larger and more complex framework that most consider the ultimate promise of the IoT: things connecting, interacting, sharing, storing, and over time perhaps learning and predicting based on habits, behaviors, location, preferences, purchases and more. In his session at @ThingsExpo, Tom Wesselman, Director of Communications Ecosystem Architecture at Plantronics, will examine the still nascent IoT as it is coalescing, including what it is today, what it might ultimately be, the role of wearable tech, and technology gaps stil...
    The true value of the Internet of Things (IoT) lies not just in the data, but through the services that protect the data, perform the analysis and present findings in a usable way. With many IoT elements rooted in traditional IT components, Big Data and IoT isn’t just a play for enterprise. In fact, the IoT presents SMBs with the prospect of launching entirely new activities and exploring innovative areas. CompTIA research identifies several areas where IoT is expected to have the greatest impact.
    Wearable devices have come of age. The primary applications of wearables so far have been "the Quantified Self" or the tracking of one's fitness and health status. We propose the evolution of wearables into social and emotional communication devices. Our BE(tm) sensor uses light to visualize the skin conductance response. Our sensors are very inexpensive and can be massively distributed to audiences or groups of any size, in order to gauge reactions to performances, video, or any kind of presentation. In her session at @ThingsExpo, Jocelyn Scheirer, CEO & Founder of Bionolux, will discuss ho...
    SYS-CON Events announced today that GENBAND, a leading developer of real time communications software solutions, has been named “Silver Sponsor” of SYS-CON's WebRTC Summit, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. The GENBAND team will be on hand to demonstrate their newest product, Kandy. Kandy is a communications Platform-as-a-Service (PaaS) that enables companies to seamlessly integrate more human communications into their Web and mobile applications - creating more engaging experiences for their customers and boosting collaboration and productiv...
    From telemedicine to smart cars, digital homes and industrial monitoring, the explosive growth of IoT has created exciting new business opportunities for real time calls and messaging. In his session at @ThingsExpo, Ivelin Ivanov, CEO and Co-Founder of Telestax, shared some of the new revenue sources that IoT created for Restcomm – the open source telephony platform from Telestax. Ivelin Ivanov is a technology entrepreneur who founded Mobicents, an Open Source VoIP Platform, to help create, deploy, and manage applications integrating voice, video and data. He is the co-founder of TeleStax, a...