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1/24/2004
11:20 AM
John Soat
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IT Confidential: White-Collar Crime In The Software Industry

Lloyd Silverstein, a former Computer Associates senior executive, pleaded guilty in U.S. District Court in Brooklyn last week to charges of obstructing justice in connection with an investigation into CA's revenue-recognition practices by the U.S. Attorney and the Securities and Exchange Commission. In a statement, CA pointed out that an audit committee it commissioned "preliminarily determined, in its continuing independent investigation, that CA had prematurely recognized revenue in its fiscal year 2000." And that "as a result, [CA] demanded Lloyd Silverstein's and two other executives' resignations" late last year. Far from being limited to those three executives, one of whom was CFO Ira Zar, Silverstein told the court the premature revenue-recognition strategy was a "widespread practice" at the company, according to published reports. Silverstein could face up to five years in prison and a $250,000 fine, according to the reports. CA said in its statement that the company "is unable to predict the scope, the timing, or the outcome of the government investigation, but it could result in the commencement of administrative, civil injunctive, and criminal proceedings."

Microsoft has asked a California judge to shift the site of an antitrust lawsuit filed by rival--and neighbor--RealNetworks to Washington state from San Jose, Calif. Last month, Seattle-based RealNetworks filed a federal antitrust lawsuit against Microsoft in San Jose for more than $1 billion, claiming that the Redmond, Wash.-based company is using its monopolist position with Windows to squeeze out competition in the digital-media market. San Jose is the location of the U.S. District Court, Northern District for California, and is in the heart of Silicon Valley, home to some of Microsoft's archenemies, such as Sun Microsystems and Oracle. "Many of Microsoft's fiercest competitors are based in Silicon Valley," Microsoft said in the court filing. "For this reason, RealNetworks likely perceives the jury pool in this district to be the most hostile to Microsoft of any jury pool in the country." A hearing on the request is scheduled for March 1.

Virginia went with one of its own for its new CIO. Lemuel Stewart Jr., 57, begins work Feb. 1 as the first state CIO under the newly created Virginia Information Technology Agency. Past CIOs reported to the governor; Stewart will answer to the independent Virginia Technology Investment Board and serve as its chief administrative officer. Stewart has a five-year contract, an unusual employment arrangement for a CIO in either government or business. Stewart served as Virginia's IT director in the 1980s.

Hey, that's like what professional athletes get. So can CIOs start referring to themselves in the third person? "Joe Smith doesn't do Windows, Joe Smith is a Linux man all the way." And John Soat could use an industry tip, so send it to jsoat@cmp.com or phone 516-562-5326. If you want to talk about white-collar crime in the software industry, the relative merits of Seattle versus San Jose, or free agency for CIOs, meet me at InformationWeek.com's Listening Post: informationweek.com/forum/johnsoat.


To discuss this column with other readers, please visit John Soat's forum on the Listening Post.

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