Monday, October 30, 2006

Another Former CEO to be Sentenced

Former Computer Associates, Inc. CEO Sanjay Kumar will be sentenced on securities fraud and obstruction of justice charges related to accounting fraud at the computer software company now known as CA Inc.  Kumar entered a guilty plea after being indicted along with the company's former general counsel for participating in an ongoing fraud that involved booking revenues in one quarter even though the contracts had not yet been concluded.  In what was called the "CA Way" the company had "35-day months" at the end of quarters when sales made five days into the next month would be counted in the previous month, thereby increasing the revenue for that period.  Kumar was also involved in back-dating other contracts and sending the GC to Hawai'i to bribe a potential witness in the case.  An interesting aspect of the obstruction charges was that the government included in the description of the offense efforts to mislead and lie to the outside law firm hired by the company to conduct the internal investigation on the ground that Kumar knew the misstatements would be given to prosecutors.  A Wall Street Journal article (here) notes speculation that Kumar will receive a term between eight and twelve years.  One variable is whether the district court will impose a higher sentence because of the obstruction of justice, the type of charge that tends to have a very negative effect on judges. (ph)

Fraud, Sentencing | Permalink

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