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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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