Ex-Executive Agrees to Pay $800 Million in Restitution
A federal judge approved a restitution agreement today that will require Sanjay Kumar, the former chief executive of Computer Associates, to pay almost $800 million in restitution to investors who lost money because of the companys accounting fraud.
Mr. Kumar, who is scheduled to begin serving a 12-year prison term this month, will actually pay about $52 million over the next two years, the majority of his and his familys assets. Most of the remaining restitution will probably never be paid, although when Mr. Kumar leaves prison the government will have the right to garnish 20 percent of his wages.
The agreement was filed last week in Federal District Court in Brooklyn before Judge I. Leo Glasser, who has overseen the long-running case. Judge Glasser approved the deal today after a brief hearing.
Several other former company executives also pleaded guilty in the scheme, though Charles B. Wang, the founder and longtime chairman of Computer Associates, was never charged. The statute of limitations on securities fraud is five years, making further indictments on fraud charges impossible.
The company, now called CA Inc., makes software that helps companies manage their computer networks and mainframes. At the height of the fraud in 2000, the company claimed it had more than $6 billion in sales. Last year, it reported less than $4 billion in sales.
Former employees have said that during the late 1990s, Computer Associates engaged in many tricks to inflate its sales and profits, including booking sham sales and backdating contracts. As part of his guilty plea, Mr. Kumar admitted backdating contracts, and the indictment and other supporting evidence refer to repeated sham sales.
As part of the restitution agreement, Mr. Kumar will pay about $20 million from his own assets, while trusts he created for his wife and children will pay the remainder. Mr. Kumars family will probably be left with several million dollars in assets.
The company has already paid $225 million to the restitution fund. Other senior executives who pleaded guilty in the case will also have to make restitution, although their contributions will be much less than Mr. Kumars.
Even so, the fund will be able to repay only a small part of what shareholders in the company including many employees lost in the fraud. The companys stock trades at one-third of its peak in 2000. Yesterday, CA shares closed at $26.36, up 40 cents.
Besides the restitution, Mr. Kumar must pay an $8 million fine that Judge Glasser imposed last year.
Lawyers for Mr. Kumar and a spokesman for federal prosecutors in Brooklyn did not return calls seeking comment.
Ex-CA chief gets 12 years
Sanjay Kumar also fined $8M for his role in $2.2B accounting fraud at software firm.
November 2 2006: 4:33 PM ESTNEW YORK (CNNMoney.com) -- Sanjay Kumar, the former CEO of Computer Associates, was sentenced to 12 years in prison Thursday for his role in a $2.2 billion accounting fraud at the software company.
He was also fined $8 million. Kumar is due to report to a federal prison in New Jersey on Feb. 27, pending appeal.
Kumar, 44, pleaded guilty to charges including conspiracy, securities fraud and obstruction of justice in federal court in Brooklyn in April, Reuters reported.
The government said as part of the accounting scheme, Kumar improperly booked software license revenue from 1999 to 2000 in order to meet Wall Street analysts' profit expectations and then lied to investigators about it.
Assistant U.S. Attorney Eric Komitee told the judge that Kumar's actions represented "the most brazen and comprehensive obstruction in the modern era of corporate crime," Reuters reported.
Kumar's lawyers reportedly asked for leniency, citing his good works.
CA, previously known as Computer Associates International, restated its results for fiscal years 2001 through 2004 after Kumar left the company in 2004.
In 2004, CA reached an agreement with the Securities and Exchange Commission to pay $225 million in compensation to shareholders.
Earlier news on this: CA Pleads Guiltyin Computer Associates Case from 2004
Justice was done!
|Digi.no at Tidligere
CA-sjef må betale tilbake milliarder
Tidligere CA-sjef må betale tilbake milliarder
Av Anders BrennaSanjar Kumar har gått fra rikdom og
makt, til mange år i fengsel og en bunnløs gjeld.
Tidligere CA-toppsjef Sanjay Kumar må
betale tilbake 800 millioner dollar, cirka 4,8 milliarder
kroner, til aksjonærer i selskapet etter
regnskapssvindelen i CA.
Kommer ut i 2018:
CA-sjef fikk fengelsstraff som en morder
Av Einar RyvardenEx-toppsjef
i CA, Sanjay Kumar, trikset tungt med regnskapene og får
nå en dom på linje med drapsmennCA/Computer Associates
ble et av verdens største programvarehus, blant annet
takket være Sanjay Kumar som etterhvert ble toppsjef.
Men Kumar tuklet med regnskapene i en skala som bare
sjefene i energiselskapet Enron og teleselskapet Worldcom
fikk seg til å gjøre.