Former CA CEO Kumar To Plead Guilty - InformationWeek

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4/24/2006
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Former CA CEO Kumar To Plead Guilty

Former Computer Associates International chief executive Sanjay Kumar and Stephen Richards, once a top sales executive for the company, are expected to plead guilty to financial fraud charges.

Former Computer Associates International chief executive Sanjay Kumar pleaded guilty to securities fraud and obstruction of justice charges in a federal courthouse in Brooklyn Monday, a spokesman for Kumar said.

"Kumar today pleaded guilty to the charges brought against him," the spokesman said. "He told the court that he takes full responsibility for his actions and apologized for them. Mr. Kumar is now focused on helping his family get through this difficult period."

Kumar and co-defendant Stephen Richards, once a top CA sales executive, each entered guilty pleas, according to a Reuters report. The two men initially entered pleas of not guilty. During the proceeding Monday, Kumar recognized his participation in the $2.2 billion accounting fraud that has rocked the company and much of its senior management.

"I know my conduct was wrong ... I apologize for my actions," Kumar said, reading from a written statement in court, according to Reuters.

Kumar departed the Islandia, N.Y., vendor on June 4, 2004. A call to Kumar's lawyer, Jack Cooney, of the law firm Davis Polk & Wardwell, was not returned.

The hearing held before Judge Leo Glasser, began at 2 p.m. Monday, said Robert Nardoza, a spokesman for the U.S. Attorney's office. During the more than two hour duration, the judge read out loud the more than 40-page long indictment against Kumar and Richards, according to Reuters.

Kumar and Richards face a nine-count indictment charging them with securities fraud, conspiracy and obstruction of justice, making false Securities and Exchange Commission filings, perjury, and making false statements. The indictment was revised in July 2005 to include charges that Kumar authorized what amounted to a $3.7 million bribe in 2003 to keep a business client from disclosing CA's illegal accounting practices. The indictment alleges that Kumar was a man determined to hide an illegal practice of maximizing CA's earnings through the use of a "35-day month practice," which enabled CA to book licensing revenue it had not yet received.

Former CA CFO Ira Zar, and two senior vice presidents of finance, David Kaplan and David Rivard, have already pleaded guilty to unspecified charges related to the federal case against CA, which was settled in September. CA as a company avoided prosecution by agreeing to undertake strict compliance and recordkeeping procedures, and set up a restitution fund of $225 million to repay past and present shareholders for losses caused by improper accounting activities.

The trial was scheduled to begin this week. But in March, additional time was granted for Kumar and Richards to complete preparation for their defense.

Updated Monday at 5:15 PM EDT

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