Three former financial executives at Computer Associates International Inc., including the ex-chief financial officer, pleaded guilty Thursday to criminal charges related to a federal investigation of the companys bookkeeping.
Former CFO Ira Zar pleaded guilty in U.S. District Court in New York to charges of securities fraud conspiracy, substantive securities fraud and obstruction of justice conspiracy. Zar faces a maximum sentence of 20 years.
David Rivard and David Kaplan, both former senior financial executives, pleaded guilty to securities fraud conspiracy and obstruction of justice conspiracy. They each face a maximum of 10 years in prison, according to a spokesman at the U.S. Attorneys Office for the Eastern District of New York.
Roslynn Mauskopf, U.S. attorney for district, said the pleas demonstrate the corrupt culture of the companys management.
“The pleas represent a major advance in our continuing effort to bring to justice those at Computer Associates who are responsible for committing securities fraud and obstructing the governments investigations.”
The U.S. Department of Justice and the U.S. Securities and Exchange Commission have been investigating CAs accounting practices for about two years.
The SEC on Thursday filed complaints against Zar, Rivard and Kaplan, charging each with committing accounting fraud. The complaints, filed in U.S. District Court in New York, allege that the former executives actions resulted in improper revenue recognition. Zar, Rivard and Kaplan neither admitted to nor denied the allegations but agreed to a permanent bar against serving as officers or directors of any publicly held company, the SEC said.
According to the SEC, CA held its books open after the close of each quarter and recorded revenue from contracts that hadnt been finalized. In some instances, executives concealed the practice by using contracts with preprinted signature dates for the last day of the quarter, the SEC said. Zar, Rivard and Kaplan misled outside auditors on the practice, the SEC charged.
The SEC also alleged that Zar backdated his own signature on a large customer contract.
The commissions investigation and litigation are ongoing.
Editors Note: This story was updated to include the pleas entered by Zar and Kaplan.