Kumar Latest Ex-CA Exec to Be Sentenced

 
 
By Paula Musich  |  Posted 2006-11-02
 
 
 

Former CA CEO Sanjay Kumar on Nov. 2 was sentenced to 12 years in prison and fined $8 million for his actions in CAs customer contract backdating scandal.

Kumar pleaded guilty earlier in 2006 to several charges, including obstructing justice, securities fraud, false filings to the Security Exchange Commission and others.

He was convicted on eight counts of securities fraud, obstruction of justice and false statements.

In addition to the fines imposed by US District Judge Leo Glasser, Kumar will also be ordered to pay restitution to victims of the fraud. That amount will be determined by the court within 90 days.

To read more about the fraud charges against Kumar, click here.

While he is the highest profile CA executive brought to justice so far for CAs practice of backdating the signing of customer contracts, called the 35-day month, still others are awaiting sentencing.

Former lead sales executive Stephen Richards, who also pleaded guilty, will be sentenced Nov. 14.

The accounting fraud, which took place in 1999 and 2000, totaled some $2.2 billion dollars.

According to the Department of Justice, that fraud cost CA shareholders over $400 million.

Judge Glasser in the sentencing also found that Kumar erased evidence on the hard drive of his laptop to keep it from both the government and from CAs audit committee.

"The sentence imposed today sends the message that accounting fraud is a serious crime and that obstructing justice will inevitably make things worse, not better, for defendants under investigation," said U.S. Attorney Roslynn Mauskopf in a statement released Nov. 2.

In addition to Kumar and Richards, former Chief Financial Officer Ira Zar and former General Counsel Steven Woghin pleaded guilty to securities fraud.

Also caught in the scandal were David Rivard and David Kaplan, both former financial executives who also pleaded guilty. Lloyd Silverstein and Thomas Bennett, both former CA executives, also pleaded guilty to obstruction of justice in the scandal.

Bennetts plea was in connection with a $3.7 million payoff to a potentially hostile witness, according to the U.S. Attorneys office.

The securities scandal continues to plague CA. The company last June announced that it may have to restate results yet again because of problems the company found with contract renewals and stock option grants.

CA will report its second fiscal quarter for 2007 on the afternoon of Nov. 2.

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